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?
Dan Warner: There’s two things – kiting and then there’s what people call domain chasing or catch and release domains. I like catch and release as a term. Kiting is something that is really a bit of a horrific act; there’s a five-day grace period on registering domains. If you register them and de-register them within five days, you get your money back; and what kiting is is people actually register the domain, let it run for 4 ½ days, delete it, and then re-register it; and they do that every single week. So, they don’t have to pay the registration cost, but they get all the traffic.
Dan Skeen: I see. They’re using automated methods, too, to manage this?
Dan Warner: Oh, absolutely. It has to be completely automated. There was a registration company that was doing that and they ended up having to drop all the domains that they were kiting because they might have lost their capacity to delete them, and they would actually have had to pay for them and keep them. So, all of a sudden they lost more than half their domains in their registrar. A lot of the kiting instances stopped. All right? It’s something that occurred for a number of years, and it’s not in the interest of VeriSign or the other registries actually to allow that to happen because it is money out of their pocket; and so they stopped the kiting. It is pretty easy to stop because there’s only a certainly number of registrars, and it’s against their terms and conditions.
The thing that is much more prevalent is domain chasing or catch and release. What that is about is using the same thing where you can delete it within five days. Domainers have registered up to 800,000 domains a day, which is huge. Then, they see which ones have traffic in the five days; and anything that doesn’t have traffic, they drop and anything that does have traffic, they remain registered and they keep it. If they have traffic, they keep them; if they don’t, they get rid of them, which makes for a very efficient market, actually. It’s not something that we’ve done as a company. We chose because we were a public company not to do it because it’s against the terms and conditions for the registry, even though the registries know what’s going on and actually encouraged it, we felt that it was inappropriate for us as a company to do that.
Dan Skeen: You say the registries actually encouraged that?
Dan Warner: They did.
Dan Skeen: How so?
Dan Warner: Well, they basically told people that it was a very good thing to do, and they appreciated the new registrations that were being generated out of it. It’s in their self-interest actually to register as many domains as possible because the volume of domains that they register is their bottom line. That’s how they make the revenue.
Dan Skeen: I am very interested in the automated tools that you use to find and register quality domains. Now, there’s probably some trade secrets there you don’t want to talk about; but can you walk me through…as you know, new phrases are being created all the time, something like Google juice we hadn’t heard of years ago. But probably Googlejuice.com is not a bad domain dome. How do you go about identifying those opportunities and what sort of automated tools do you have in place to find them and register them?
Dan Warner: I would actually say the opposite that terms like Google Juice or brand or trademark infringements shouldn’t be registered.
Dan Skeen: Good point. Good point, yes.
Dan Warner: There are very few terms that are generic that are not branded or trademarked that are being created. That natural language, what we do is much closer to linguistics than it is to some sort of marketing activity. We look at how people use language, and we interpret that and those phrases are woven into domains. There is a natural way that people think about things, like SeattleSailing.com is a natural way that people will think about selling activity in a location-based place like
There’s two core metrics on how people actually generally buy domains. One is that if you have a search count for the domain phrase, so if BloggerBlues.com or SeattleSailing.com, if “Seattle Sailing” as a phrase has a search count (users actually type that into search engines) that’s a direct index to the volume of traffic that same phrase will get as a domain being typed in with a .com. The second thing is a measure of mind share, a measure of commerciality; and commerciality is whether or not advertisers pay for that same phrase when they advertise on search engines. So, if “Seattle Sailing” is a very popular phrase with advertisers and there’s a lot of competition, then the bid price goes up; and the bid price being high is a true indication of the value of the underlying commerciality of the domain. LouisianaLawyers.com might have a higher value than something like BloggerBlues.com.
Dan Skeen: Any recommendations you might have for a small business owner or somebody who’s interested in finding some domains with potential business value? It sounds like a lot of the good ones are covered; but are there still good opportunities out there, and how would somebody without all the tools you have go about finding them?
Dan Warner: I would say that the ones that actually have traffic are very limited. There’s almost none of them that are left because the domain tasting. But the greatest opportunity for business domain owners, whether you’re going to spend $10,000 building Web sites and base their company around it, isn’t to say I’m only willing to pay $10 for a domain, but I’m willing to pay a $1,000. Then you’re talking about the domain aftermarket; there are several places to go for the domain aftermarket, and you can go to fabulous.com or fabulousdomains.com and have a look. There’s stock domains that are there available for purchase in the aftermarket. Another company is BuyDomains.com, then sedo.com and afternic.com.
Dan Skeen: Now, maybe you could tell me something about those. I’ve seen a lot of the, well, this will be a tough question to ask. I typically see an asking price in services like Sedo; and I would think that probably FabulousDomains has it, and they always seem inflated to me. Is that fair to say? Do they typically sell for less or more than what the asking price is? Like I’m looking at FabulousDomains right now, and you’ve got some bargain domains listed, you’ve got some great domains listed, and they’re in the $2,000 range on the great domains. Will you typically get that price or will there be a bidding process that drives it higher or will someone get that at a discount on a typical transaction?
Dan Warner: I would say that about half the time people actually pay the listed price, and about half the time they actually negotiate the price and get it for less. I think that a good guide is 20-30 percent less if people actually contact the domain owner. When you talk more like a place like Sedo or Afternic, you get ridiculously high prices; and you get reasonably low prices as well where it’s kind of like a crap shoot on whether or not the domains are going to be priced anywhere close to being appropriate. It’s not so much about what people want for a domain as to what it’s worth to the person who’s trying to buy it. That person has a lot of different buying behaviors; actually, I did a paper on that recently. I also wrote a 50-page paper on aftermarket domain value distribution, which is not really as academic as it sounds. You can find that at aftermarketdomains.com, if you go there and click on the link. The paper gives you a very good overview and the background that people need to understand the aftermarket domains programs. It’s really an industry article. If you’re in the industry, most people of any significant size or value have all red-lined that paper at one point or another. There’s one other place, too, that you can get a bunch of other papers that are written. There really are not that many, four or five. fabulousresearch.com.
Dan Skeen: Now, it seems to me that there’s a lot of growth in a portfolio of domains, potential growth in the portfolio domains like yours. I would think that there would be people who increasingly want to invest in that potential. What are some of the ways that they can do that? I mean, I suppose they could buy your stock; but are there companies that are managing a portfolio of domains for the purpose of appreciation on behalf of investors? Sounds like a mutual fund. I think you know what I mean?
Dan Warner: I think that you’ve kind of hit the nail on the head, like there’s marchex.com , which is a public company in the
Dan Skeen: Okay, good stuff. Now, where are you from Dan? You’re accent doesn’t sound Australian?
Dan Warner: No, I’ve been in
Dan Skeen: Wow, that’s excellent. So, where I was going with that is the Australia.com.au domains, I understand have some different rules around them; and I know that some domain investors, even in
Dan Warner: One of the major differences is the amount of human manual paperwork it takes to buy them and install them. There’s lots of rules, not legislation, that say that you’re not supposed to sell domains by themselves. So, if you sell a domain, you typically have to have a business or at least a business registration to go with it, which has made it very cumbersome when you’re talking about domains that typically sell for around a $1,000. Some domains it’s quite viable to add a business registration with that and then sell it off as an asset, which is a loose way to get around the rules. We have virtually no .com.au’s in our portfolio. I can’t think of one of them.
Dan Skeen: Is that right?
Dan Warner: There are some people that have recently acquired a significant number of Australian domains; there’s been a loosening of the noose, if you would, in being able to register more than a few for your own business. There’s some recognition in the market that aftermarket domains is a viable business model and that domains are actually an asset, not just intellectual property. I foresee that, in the future, relatively near future, that we’re going to see a greater loosening of the Australian market for the .coms.
Dan Skeen: You mentioned a loosening of the restrictions there. If I were so inclined and I had some wonderful investors, I would be able to go in now and purchase whatever domains I want. Is that correct or is there still…? I mean, you certainly, you mentioned the paperwork as one thing.
Dan Warner: Oh, there is the paperwork, but it’s a hassle. It’s a real hassle, and the vast majority of the best are taken already. The domains are relatively expensive; domain costs in the
Dan Skeen: I follow. You mentioned some recent activity in
Dan Warner: I do; but I want to be, I don’t think that I want to talk about it. Just because I, it’s one of those things that I know a lot of things about the industry that people tell me; and they tell me that because it’s in confidence. Something like that is getting a little bit too close to personal information.
Dan Skeen: Now you talked about trademark infringements and how you want to stay as clear as you can of that, what about these sort of location or yeah, basically locations of specific domains. Any thoughts on where that’s going and whether your portfolio contains any of those?
Dan Warner: Sure. I think it’s been tested in courts a number of times. The reason that these cities have actually tried to get their domains back is because they didn’t recognize that they were going to be a significant assets in the future, and they didn’t pay for them up front to begin with. Locations are, in general, a qualifier. There’s a location domain that names itself as a domain, SanFrancisco.com; then, and I don’t think anyone in the world would think that the government of San Francisco would actually be the best, most qualified people to develop the site.
Dan Skeen: Except maybe the government of
Dan Warner: Yeah, of course. Cities are not trademarks; you can’t trademark a city. It’s a geographical location. I’m trying to think of a good analogy on something else, which I’m really having a difficult time with. If somebody actually named a dolphin a dolphin and then someone actually registered a dolphin as a .com, it’s like a person, place or thing, I suppose; and a place or a thing are non-trademark-type things, and person is not trademarked unless there is a specific connotation like Tiger Woods.
Human names are quite an interesting subject actually. There are probably three major areas of interest outside of generic things, and that is acronyms, human names, and locations, because locations tend to be a very strong qualifier, like SeattleSailing.com. Should the city of
Here’s one for you: Dell. Dell is a geographic annotation, Dell is a location in the
Dan Skeen: Absolutely. No-one would know more than you that there are a lot of grey areas in this. What are your thoughts on the current method of resolving these disputes and the processes in place to work these things out?
Dan Warner: I think that they’re inefficient today. I think that ICANN, in some degree, is a paper tiger, be it the EDRP process, I don’t know what you know about it, but it’s expensive for lower-value domains. I think that there’s very little regulation on trying to protect trademark owners from domains being registered in the first place. There’s over 20,000 Microsoft trademark-infringing domains that are registered out there in the world. I could tell you that most of those are not professional domain owners because professional domain owners are not that stupid. Jane Jones in the
Dan Skeen: Another thing that I’ve heard is because the arbitration process is relatively, I guess affordable or not terribly expensive, from what I’ve heard, some companies are a little aggressive in going after domains using court proceedings as a threat. Have you seen much of that going on as a practice?
Dan Warner: Oh, absolutely. Dell sues people, Microsoft sues people, and Neiman Marcus has had a landmark case.
Dan Skeen: Have you seen domain owners using this tactic to perhaps scare small individuals?
Dan Warner: To acquire domains from other people?
Dan Skeen: Yes.
Dan Warner: Those are black hat people, and nobody would ever tell me about it. I’m kind of seen as the white hat Internet evangelist about domains. I understand that these things exist, and I have a lot of market intelligence on who owns them and why. It’s not like it’s hidden from me, but I don’t think you’re going to find any professional domain owners of any real note that specifically go after trademark domains and try to fool other people into getting them. I think that’s like one of those Russian programmers sitting down and figuring out a way to do it automatically and just automatically E-mailing every person in the world saying their trademark is abuse, and they need this and transfer it to the name server in their name. It’s much more alive with E-mail spamming than it is with professional domain ownership.
Dan Skeen: Dan I appreciate your time, and I appreciate all the thought that you’re putting into these answers. I’ve got a few more for you if you can spare a few more minutes?
Dan Warner: I’ve got plenty of time. What do you think about human names?
Dan Skeen: Well, you probably noticed I own danskeen.com, so I think you’ll want to get there first as far as that goes. I think it’s tricky. They did bring out the dot name suffix, probably as a way of resolving some of that complaints about that, but names are tricky.
Dan Warner: Even something like George Clooney, for instance; or Tiger Woods is a little bit harder because it’s not really a name per se. It is but it’s almost like his father created it just for the sake of insuring his son as a brand because he was going to be a golfer before he was born. GeorgeClooney.com, how many George’s are there, and how many Clooney’s are there in the world? What’s the likelihood that there’s going to be another George Clooney in the world? What about just George? What about just Clooney? I think we own about 1,000 first names or just last names in our portfolio, so it’s Elijah.com; you know, who should own the .com, and the reality is probably whoever gets there first or whoever is willing to pay the most amount of money for it, if you believe in capitalism, and the way the market is the market, and the market decides who actually should own it.
Then you say, but GeorgeClooney.com; everyone knows George Clooney, but what about George Clooney that’s in
The example that is commonly used in trademark law is if Microsoft didn’t own Microsoft.com and it wasn’t actually used to sell computers, peripherals or software, then Microsoft would have no right to own it. The use of a domain being used in a particular way, in a particular country, is how it works; and once again, if MicrosoftDownloads.com was used in the
Trademark is, in and out, saying that a brand is in existence and that you have copyright and trademark protection in saying that on your sites or in any other published materials and then someone intentionally infringes on that as the common man.
Dan Skeen: That’s an interesting distinction.
Dan Warner: It is; and in fact, what of the type of domain…if you have someone getting away from the really, really known trademarks, let’s say Brisbane.com. What if it’s spelled differently,
Dan Skeen: Interesting, no doubt there’s a whole crop of lawyers with some expertise in this area. One thing I’m quite interested in, though, is we’re seeing more and more business assets, online assets that is, and that’s not just the domain. That’s perhaps an online store or a set of content being traded, being bought and sold, sometimes flipped for greater profit. I’m interested in how Web sites are evaluated, and I thought you’d be a great person to ask.
Dan Warner: Sure, effectively you just have to analyze it two parts. One is the domain asset as real estate; Shopping.com is a great example of this. What is Shopping.com worth as a domain versus what is Shopping.com worth as a business? You first analyze it as a domain; and then you second analyze it with an equation that says this is the value. Now, Shopping.com had almost no traffic of its own, had some; it didn’t really have any of its own technology. It was using someone else’s technology initially. All the advertisers on the site were largely not owned by Shopping.com; they were owned by other affiliates that they’d brought in and propagated its network with. Most of the traffic that went through Shopping.com was arbitrage traffic, so they bought it from Google and Yahoo; and they sent it through their site and sold products and made a commission between.
As a business, Shopping.com was a domain; and it was also a business, and they were valued separately. They were eventually bought by eBay for a large sum of money; I think it was like $165 million or something. You’ll have to look it up. So, is Shopping.com worth $165 million, or is the business worth $165 million or above? Effectively, they took a domain, hobbled together a bunch of resources, put it up and ran it as a business for three years, and then sold it off to eBay for a very large profit.
Dan Skeen: Wow, nicely done.
Dan Warner: Yes, very nicely done. That is a great business model to actually go and take domains of value, go develop them into something that’s buyable and sell them off. Like we own Dent.com, and Dent.com is largely about two things. It could be about a liquidation market for dented appliances and dented goods, you know, scratch and dent kind of stuff, or it could be about paintless dent repair. Paintless dent repair is a larger, more profitable market; there are probably 20 major paintless dent repair franchises in the
Dan Skeen: Now, is your company engaged in developing these properties at all or are you strictly…
Dan Warner: Sure, you can go to BedroomFurniture.com, and that’s the domain that we bought; and we put some money and time into turning it into a real site, and it’s listed in the search engines. It’s a nice little site. I’m just trying to think of what the other ones are that we have going at the moment. One of the ones that we’re going to build out, which I don’t think is fully built up or being close to it yet is MedicalEducation.com. I think it’s primarily a parking page. Yeah, it’s got some things on it. You know, you have to get to a point where you have…a return on an investment issue and people say oh, you know, if I owned this, whatever it might be, BruceandTaxidermy.com, I think that’s going to be a huge business. And often they buy it for ten bucks because it’s still available. Then they go and spend 80 hours developing it, and then they run around and try to sell it to somebody. You’ve got very little pressure in the market to actually buy the domain; there’s very little business of that type. It’s very, very specific; so that the amount of work that you put into it, you’re never going to get that return on investment up, so you have to find a balance between the level of development.
Dan Skeen: That’s a very, very interesting topic.
Dan Warner: There are three major areas in this industry - there are domains of assets, domains for sale, there are domains as traffic, and there are domains as developments. So, you either develop, you sell or you rent domains; that’s the three areas of the market.
Dan Skeen: Do you outsource development work?
Dan Warner: Yes and no. I mean people come to me and say you know, I’ve got this great domain; it’s a really phenomenal one, by the way. They say, oh, I want to develop it, and you’re like the authority in the industry, and we love your company and all those things. Will you develop it with us? You look at the numbers and there’s just not enough money in it. It’s easier and much cheaper for me to buy a domain that has significant value. You know, like I just bought Rosters.com, which is a nice domain. There’s lots of different things you can do; it can either be sports rosters or you could do…rostering is quite a reasonable commercial segment for software and things. Now, Rosters is a nice domain, but am I going to go spend my own time and resources developing someone else’s domain, where I might get 20 percent; or am I going to buy the domain and then put the work and resources where I get 100 percent? The domains today are actually relatively undervalued compared to their true asset value, and so it’s much better for me to go buy the asset and develop it then to actually go and try to develop it for somebody else.
Dan Skeen: So, it’s a buyers market. There’s just more opportunities than you have time for, it sounds like.
Dan Warner: There’s a mixed market, like some domainers and things actually know the true value of their domains; and they wouldn’t sell their domains for under what the full market price would be. Then there are other domains that are actually dead cheap. In particular, when you have portfolios that are like 500,000 domains, you can’t get the pricing right on all of them; it’s impossible, so you do the best you can. If somebody gets a bargain along the way, that’s all right.
Dan Skeen: That’s for sure. You mentioned Shopping.com. Are there any other wonderful flip jobs that you may have seen or speculative deals where someone held onto it, either a domain and/or a site for a relatively short amount of time and then turned it over to huge profit?
Dan Warner: Beer.com. I think it’s a bad example in some ways because it’s not being used for anything of merit today I don’t think. They sold that off for near a million dollars or something; they bought it from a university student for $100,000 and sold it for like a million dollars a couple of months later. I don’t think I’d use this one; it’s got adult connotations, you know.
I don’t know what the hell they’re doing with Beer.com nowadays. It looks like they’re doing a pseudo adult-type of site. There’s another one - FuneralHomes.com; I know the guy that’s actually developing that. They bought it as a domain, they’re developing it out, and then they’re actually bringing in traffic, buying in traffic. They’re turning it into a bit of a business, and this is where the real money is at, I think, in the longer term. Where the money is at today is not trying to buy domains that don’t exist because they do all exist. Where the money is, is going and finding a domain that you really like, building a business around it, and then selling the business.
Dan Skeen: Now in that case, so he’s looking at obviously B2B, some sort of directory in that case with…
Dan Warner: He’s probably going to buy all our funeral home traffic and he’ll arbitrage it better than we will. I think he’s, yeah, he looks like he’s creating a directory on it.
Dan Skeen: I think that maybe I’ve just got one more question for you which may be a little bit vague, but…
Dan Warner: That’s good. I’m good at vague.
Dan Skeen: Oh good. That’s good because I leave a lot of people stuck for a few minutes with the occasional question. In this case though, I thought it would be interesting at some point to do an article on the differences between online real estate versus off line real estate. This is maybe looking at sales and evaluation of properties. Maybe there are more differences than similarities, but do you have comments on that?
Dan Warner: I used to really find myself extremely low line with the real estate analogy because it was an easy way to explain things to people. I think the more the market develops, that there is definitely some major differences between the two models. A domain is an asset, and it’s an asset that produces rent; and the eventual sale of the asset is the easiest way to liquidate that asset at the highest possible value. But a lot of the other things that I talk about and like the paper I have which gives you the eight different volume behaviors of the users and things, it really starts to highlight exactly what the differences are. I’m trying to think off the top of my head the exact specific differences, but I find that there are some elements that are more like selling a high-definition television, like a plasma screen television, than real estate. The combination of those two things is a little bit like the main sales because the value of a piece of real estate is usually over a hundred thousand, but hundreds of thousands of dollars. So, like some domainers say, the commission that I should pay on eBay should be similar to the commission to what I pay on real estate because domains are so much like real estate. So, I should only be paying six percent.
In reality, the amount of effort that it takes and the marketing that it takes to generate a sale on domains, so the value of the actual asset is a lot more in relations. So you really should be wanting to pay 20 or 30 percent of a domain’s value in order to sell it, more like a plasma screen TV because you need to have, you have to generate significant interest to get people to look at it and deal with them, but you’re not selling an asset that’s of an extremely high value that you need a large return on.
People need to know the difference between the two. If I’m selling Fashion.com, then six percent commission is probably adequate. I can go create enough juice in the market and interest in things and promote it heavily enough to get the right price for six percent. You can’t do that when you’re talking about niche domains like ArkansasBoatBass.com or something. You have to know your market; there’s a lot of specificity things in this market. I think if you read the short two-page paper that I did on user behavior, I think you’ll find that and you think very hard about the different segments, then you get a very good idea of why user behavior is what it is.
Dan Skeen: I will definitely check that out.
Dan Warner: They’re not completely divorced from each other, by the way; it’s more like eight different perspectives on the way that users think. Every element adds to the other elements to come up with a blended results of what a domain is really worth; that makes sense. I’ll shoot you off a copy.
Dan Skeen: I think you’ve answered all my questions here, which is great. I really appreciate it, and it’s been very interesting for me too. I will keep you posted about when the article might be online.
Dan Warner: Okay, that works. Cheers.