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operators
This page considers questions about domain name portfolios
and the portfolio sector.
It covers -
portfolio operators
Intelligent rulemaking in Australia means that local portfolio
specialists have not achieved the scale and public profile
of some of those overseas companies, which emphasise aggregation
of large number of domains (particularly in the dot-com
space) but promote themselves as having different business
models.
Demand Media, for example, accounts for some 200,000 domain
names and results from three acquisitions. One executive
proclaimed that
We're
really a media company. We're not going to build out
all of the domains, but we'll use tools and technologies
to create a better consumer experience on all our domains.
Cynics,
fairly or otherwise, might question the uniqueness of
that "better consumer experience".
Competitor NameMedia (formerly YesDirect and BuyDomains.com)
similarly said that
The
analogy we use is real estate. Our objective is to build
the largest portfolio of undeveloped real estate on
the Internet. Some of the sites we have will be held
for resale. The best ones, the waterfront properties,
we'll build businesses around. It's a content-light,
user-friendly way for people to find what they want.
Marchex explains that
our direct navigation business is focused on building
and monetizing a large network of vertical and local
Web sites that are used by tens of millions of unique
visitors each month. ... Marchex offers advertisers
the ability to place paid search listings, graphical
ad units, product feeds and branded content on its Direct
Navigation Web sites, which can be targeted by category,
subcategory, keyword, or domain.
Internet
REIT (iREIT)
- "veteran domainers, seasoned entrepreneurs and
other industry experts" "leading the industry's
transition from domain properties to media properties"
- commented that
iREIT is in the business of acquiring "virtual
real estate" - portfolios of Internet domain names.
Our primary interest in purchasing domain names that
generate natural traffic and current revenue (through
parking, affiliate programs, PPC, CPM, or a combination
of internet advertising sources). We are very selective
about purchasing speculative domains (those requiring
development to justify their price).
Demand
Media, founded by former Intermix Media (MySpace) ceo
Richard Rosenblatt, announced in 2007 that it had raised
a further US$100 million, for an aggregate U$320 million
to be invested in domain names, registrars and enterprises
that publish or distribute user-produced content for "passionate
verticals".
issues
The 'direct search' and domain name profile industry poses
a number of issues, including -
- viability
- innovation
- typosquatting
- demographics
- values
- cost
effectiveness
As
with the dot-com bubble, a number of portfolios (and portfolio
builders) appear to have been established on the basis
that they will be acquired before it becomes clear that
the developer will never recover the costs through monetisation
or will run out of money to exploit those names.
More broadly, there is uncertainty about the business
models used by some portfolio czars.
In 2004 Marchex quoted estimates that the size of the
global search market was approximately US$4.5 billion,
forecast to grow to $13.1 billion by 2008, with a claim
that 'direct navigation' ("defined as typing a URL
into a browser address bar or using a bookmark")
"may represent 10% or more of this market".
In 2006 RBC Capital estimated that direct navigation in
the US would generate US$650 million in sales, "about
7.5 percent of all search revenue". Much of that
figure was, however, attributed to revenue sharing with
search engines such as Google for paid placement.
It is unclear whether consumers will continue to rely
on direct navigation and thereby power growth of the industry.
Several of the studies cited in our discussion of search
engines, directories and search behaviour strongly indicate
that web savvy (or merely experienced) users avoid direct
navigation.
Proponents of direct navigation argue that online 'real
estate' can be converted into "media properties".
That argument is deeply problematical, given past difficulties
faced by site owners who have sought to attract recurrent
visits on the basis of a site's content. Becoming a 'media
property' requires more than a name (or harvesting of
traffic from other sites). That is presumably why some
portfolio builders are seeking alliances with media organisations,
alliances that are likely to benefit those organisations
more than the builders.
The industry has proclaimed that it is experienced, innovative
and professional. Claims of innovation are dubious, given
that traffic harvesting appears to have been pioneered
by the adult content sector. Portfolio builders are not
alone in trying to add content/services (and thus a reason
for a second visit) to domains that essentially consist
only of a name. The vicissitudes of sites that have sought
to become major B2C or B2B portals might lead to caution
about hype from particular businesses, particularly when
that hype centres on buzzwords such as Web
2.0.
landmarks
1999 NameMedia formed in Washington as YesDirect
2000 Oversee.net founded in San Francisco
2003 Marchex founded in Seattle
2003 acquires Enhance Interactive (formerly ah-ha.com)
2003 Marchex acquires SiteWise Marketing (TrafficLeader)
2004 Marchex acquires Name Development Ltd for US$164.2m
2004 Marchex acquires goClick.com for US$12.5m
2004 Marchex IPO
2005 Marchex acquires IndustryBrains (industrybrains.com)
for US$30.6m
2005 Marchex acquires Pike Street Industries for US$16.5m
2005 NameMedia acquired by venture capital firms Highland
Capital Partners and Summit Partners
2006 Demand Media founded with US$120m investment by Oak
Investment Partners and Spectrum Equity Partners
2006 Marchex acquires Open List Inc (openlist.com) for
US$13m
2006 Internet REIT buys Netster.com
2006 Demand Media acquires travel and sports niche site
operator Hillclimb Media
2006 Demand Media gains US$100m investment led by 3i
2006 Demand Media buys domain registrar eNom
2006 Marchex acquires AreaConnect LLC for US$16m
2006 Demand Media acquires eHow Inc
2006 Internet Business Group hypes £1.1m acquisition
of 'cheap' names
2006 NameMedia gains equity financing from Highland Capital
Partners and Summit Partners venture capital groups and
US$100m debt financing from Goldman Sachs
2007 Demand Media acquires video host ExpertVillage.com
2007 Demand Media announces that it has raised US$320m
investment in preceding 16 months.
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