The WSJ’s Kevin Delaney writes (sub req’d) about the domain “Hell.com” coming up for sale — a Halloween appropriate story: 🙂
Hell.com is scheduled to be offered in a live auction organizers predict will draw bids of more than $1 million. The hot market for domain names, the addresses people often type in for Web sites, is being fueled by the surge in Internet advertising and the ease with which domain owners can make money from ads brokered by the likes of Google Inc. and Yahoo Inc.
Sex.com sold for about $12 million earlier this year and Diamond.com changed hands for $7.5 million. The big-money domain-name sales echo an earlier boom, when Business.com fetched $7.5 million in 1999. Today’s live auction of 300 names, by Seevast Corp.’s Moniker unit, includes more than a handful it predicts will generate bids of more than $1 million, including Iran.com, Auction.com and Elections.com.
Whether or not those domains justify those kinds of prices depends entirely on execution. Some of the most “intuitive” domains are “also-rans” in their respective spheres. For example, awkwardly named shopping sites “NexTag” and “PriceGrabber” considerably outperform the much stronger “Shop.com.”
There a numerous such examples where the category leader doesn’t have the best URL.
But if you’re building a brand around a URL, then the seven-digit prices may be justified in limited cases. (See my post on the absence of URLs and branding.) In my little local world, AT&T (then SBC) and BellSouth paid a reported $100 million for YellowPages.com and then tossed out almost everything but the URL.
In one view of the world, “it’s the most expensive URL of all time.” In another view, AT&T bought the brand “yellow pages” on the Internet – something that no US publisher can own offline. Through that lens $100 million doesn’t seem like an outrageous sum.
But yellowpages.com, the most “intuitive” brand in the IYP arena is not the traffic leader (per comScore):
- Yahoo! Sites — 23.9%
- Verizon SuperPages — 20.1%
- Google Sites — 12.5%
- Yellowpages.com — 12.0%
- Time Warner Network — 7.7%
- Local.com — 5.9%
- InfoSpace Network — 5.1%
- Dexonline.com — 4.1%
What does Google mean? What about Yahoo!? What about eBay? And “Amazon” is a word but has nothing intrinsic to do with shopping. These top Internet brands executed and the brand followed.
Of course if you’ve got a brand/URL like “Revish,” “Cyn.in,” “Amigilia” or “Pytagor,” you put yourself at an automatic disadvantage because of the convoluted nature of your brand/URL.
____
From the WSJ — Hell.com failed to sell: “Hell.com failed to sell during a live auction of Internet domain names on Friday, as no bidders met the $2.3 million reserve price set by its seller. Monte Cahn, chief executive of Seevast Corp.’s Moniker unit that held the auction, said bidding on Hell.com exceeded $500,000, but that was far short of the minimum $2.3 million required for the online address to sell.”
Screenwerk 
October 27, 2006 at 3:55 pm
I’ve had a fair bit of experience with the ‘domain industry’, and the one thing that most people outside of it do not understand are type-ins.
I still find this mind boggling (along with virtual currency sales) – but there are thousands and thousands of people who, instead of searching on a search engine, prefer to just type in kw1kw2 + .com. Of course kw1 is far more common than kw2, but you get the point.
These domains can generate a lot of money on their own. Eg this guy who owns paydayloans.com mentioned how in the last 4 years it has made him over a million dollars. One of the biggest (if not the biggest) is Frank S, who through his extensive collection of domains is responsible for 1% of Yahoo’s revenue. That is a serious chunk of change. Interestingly he is the same guy who owns factcheck.com – when Dick Cheney incorrectly said factcheck.com instead of factcheck.org during one of the VP debates, it was him who re-directed the domain to Soros’ site.
In regards to YellowPages.com – the beauty of that domain is that it requires a lot less effort to establish mindshare. This is combined with the built-in traffic. Rough estimates is that the domain name itself brings in 100,000 visitors a month. Thats 1.2 million visitors a month just because people type in YellowPages.com (on their own accord).
This is the important part to remember about domains – people are typing in kw1kw2.com on their own – no one is telling them (via advertising or any other method).
Now there are other issues about domaining (tasting, baiting, fake stats, automatic inclusion on them, quality of traffic, etc etc) but I think most of them don’t really apply to YellowPages.com
A friend of mine is a high-ranker up at IAC, and he was telling me how domains like cyn.in or amigilia.com, while cute, would never make the cut there. It is impossible to sell a domain like that on radio or TV – simply too many permutations and misspellings to worry about.
As a slight aside – business.com actually yielded the principal seller 2.5 million (who is now back into acquiring domains, backed by a billionaire family + Starbucks’ Schultz, among others) and sex.com eventually did wind its way to playboy.com
October 27, 2006 at 7:20 pm
http://www.xr.com/auction
$1.5 million for cameras.com 🙂
October 27, 2006 at 11:50 pm
[…] Greg Sterling has some good insights on brand names and the valuation of domains. THe most obvious domain isn’t always the best performing domain. Amazon.com is the Web’s largest shopping not, not Shop.com. Yet, some bread-and-butter domain names have sold for millions. […]
March 7, 2007 at 3:20 pm
Tunica, Mississippi is the third largest gambling resort town in the U.S. More than 10 million people visit annually. There are eight large vegas-owned casinos there now generating more than 2.3 Billion dollars for the local economy. Six more large casinos are coming to Tunica by next year. Tunica is 30 miles south of Memphis.
I’ve owned Tunica.com for more than seven years. The name has been professionally valued at 2.3 million dollars. Branson.com recently sold for 1.6 million and receives far less visitors than Tunica.
My question is this: I receive on average one to two emails per month from people wanting to buy the name. However, when I ask them to make an offer, I receive humiliating offers such as $5000 or less. There was one company that offered $400,000, which I declined.
How can I work with a professional company that auctions valuable domain names?
You may reach me at 301-367-0665 or by email at: cgraziosi1@comcast.net
Thanks.
Cherry Graziosi
March 7, 2007 at 4:24 pm
Professional valuations are complete and utter bull 🙂
Branson.com was valued at the price it was because of various other factors (focused around the audience that does go to it).
November 29, 2007 at 9:34 pm
I would accept $400,000. As the previous posting stated, valuations and appraisals are usually just bull****. Much better names can be bought for 2.3 million. Good luck.