Archive for June, 2007
June 5th, 2007 - Interview With Dan Warner on Domain Research and Domain Investing
This is the full transcript of my interview with Dan Warner at DarkBlueSea. The end result was a feature story in the Next technology section that appeared in the Sydney Morning Herald, The Age, and the Brisbane Times. There was some great interview material that didn’t make it into the article so with Dan’s gracious permission I’ve posted the full interview transcript here.
Dan Warner: We own around 550,000 domains or Web sites ourselves. That makes us the second largest portfolio out of all the professional domains in the world.
Dan Warner: The biggest is actually BuyDomains. They own, I believe, 675,000; we own 550,000. It goes down relatively quickly. There are probably only 15 domain portfolios in the world that own more than 100,000. I used to have a breakdown of exactly what it was; but when I did the breakdown, which was almost two years ago, it was eight people had more than 100,000, 18 or 19 had more than 10,000, and there was only something like 100 that owned more than 1,000 domains of value. Now, it’s just blown out. Everyone’s been buying like mad. It’s a havoc world.
Anyway, in the domain space I’m the guy that gets up and speaks at all the conferences. I speak at pretty much every domain conference, and I do a lot of analytics on the industry; so I pull it apart and put it back together again and figure out what’s right and wrong and report on details. I figure out who owns what domains and what portfolio and whether or not they have value and who owns trademark domains. One of the things that plagues our industry is that there is a portion of the domains that are owned, I think it’s a little bit less than 2 percent that actually have a trademark connotation like they’ve got the word Google or Yahoo or Microsoft in them, those kinds of domains. That’s just a part of the industry. Like any industry, you have people who are black hat in it; but those are the domains that a lot of people like to talk about.
Dan Skeen: What is your policy on those? When you’re buying domains, do you steer clear of anything with trademarks associated?
Dan Warner: With us, we actually have 100 percent no policy on it; so we don’t buy anything like that. The other thing is to know about that though, is when you register 550,000 domains ourselves it is impossible to vet them all for a trademark. So occasionally you run into domains that you bought, and you don’t have any idea that they were a trademark. But when you find out, the good thing is that you drop them.
Dan Skeen: Tell me a little bit about your role in the company, how long you’ve been with them.
Dan Warner: I’ve been with the company about five years. My role here at the company is a dual role of chief strategy officer and chief operations officer. I probably spend about 80 percent of my time on strategy and 20 percent on operations. I’m the spokesperson for the company as well.
Dan Skeen: And how did you accumulate all this strategic knowledge about domain buying and the domain market?
Dan Warner: We created a market intelligence engine about six years ago, or five years ago, and basically it goes and picks up data. There is a lot of data mining for things like search phrases, bids on search phrases, anything that can give us a window of information into the commercial or mind share viability of domains. We looked for all the domains that are based on search phrases or bid prices on search phrases that had volume, like users were actually searching for these phrases, and then bought was left in the market. And people naturally type these domains into their search bar and to their address bar; it’s a searching behavior. It’s absolutely identical to searching…people search for domains in search bars and people search for phrases in address bars as domains.
Dan Skeen: It amazes me how much volume there is actually with people doing that. That’s turned into quite a viable strategy for people with parked domains, hasn’t it?
Dan Warner: Oh, absolutely. The traffic is what pays the rent. There is a distinctive property analogy in this in that domain sales is actually realizing the asset value of domains. What pays the rent is the actual traffic. As you hold domains, they produce traffic; and that is oftentimes people’s primary means of making revenue. But, a secondary means is to sell domains because when you sell a domain, typically, you are getting between 25 and 100 years of revenue in a single transaction.
Dan Skeen: Based on what that revenue would be if it were just parked with no maintenance or contact?
Dan Warner: Yes, traffic.
Dan Skeen: That’s very interesting.
Dan Warner: When you can sell something for like 50 years or 100 years revenue, you do.
Dan Skeen: Yes. I would think so. So, there has been a huge accumulation based on the numbers you’re describing over recent years, in your case, using this intelligence. What’s driving it on the broader front? Why was there so much rapid accumulation of domains in the last four or five years?
Dan Warner: We’re more able to monetize revenue. The people who actually monetize this revenue are either Google or Yahoo. Those are the two primary means of actually getting parking revenue. We have a parking company ourselves, which is fabulous.com. It’s our registrar and parking company, and we park third-party domains, along with our own. We’re one of the largest services in the world for doing that. Now, we’re enabled by Google and Yahoo who go out there and find all the advertisers. So, they find all the advertisers, and then we make a call for them on every domain; and they tell us what advertisers they want to serve, and then they take a commission. Then they give us the rest of the money.
That’s definitely where we want to get some money. All right? There’s a certain amount of money that’s made in typo traffic, and there’s a certain amount of money that’s made in trademark traffic; those are the ones that people like to talk about. GoogleNews.com was not owned by Google. It’s owned by a domainer who was parking it who doesn’t actually get to make any money out of it anymore because Google stopped it, but these things have happened in the past. It’s a bit of a gold rush mentality; you get those that work on the edges, and then you get the highly professional corporations who won’t have anything to do with any that. We’re finding a major cleanup in the industry has happened over time, and a lot of the trademark domains and typos and things have actually made their way out of the industry, and it’s getting cleaner all the time.
Dan Skeen: Yet, it seems like there’s always some new scandal. Can you comment on kiting? What’s your take on that?