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Domain Distribution Vacuum

Domain Distribution Vacuum

Greetings from France.  I’m a US centric guy so I never thought I’d be writing from France, let alone gushing about how enjoyable it is to be among the French people in the summer.  They really have a great panache and a style and it’s neat to hang out where everyone tries hard to be a bit of a character or individual.  There is a lot of passion and pride here. I’m actually liking it and plan to return.

Today I was in the pool at the Hotel du Cap.  What a place.   I haven’t been this relaxed since I left Cayman. Some guy pulled his yacht up at the Hotel (a daily occurrence) and took a $2000 a night room at mid-day just so that he could enjoy lunch at the restaurant while swimming in the hotel pool. He then strolled back to the dock, climbed on his yacht and sailed away.  Serious ballers here.  The smell of helicopter fuel hangs thick in the air as choppers dart like insects between boats.  Crazy wealth. It’s hard to see the recession we’re all living through from this vantage point.

Later in the afternoon my family and I drove through the area surrounding the hotel and we noticed how the real estate system in France is not as sophisticated or developed as it is in the US or Canada.  Many properties are listed exclusively with one agent (no MLS) and information about the complete range of listings available is only known to those with boots on the ground and a knowledge of the local language. I could not locate many of the properties on the local sales sites I was browsing with my iPhone. It reminded me of an old episode of Melrose Place, pre Internet, pre real estate bubble; where Kyle buys some dream lot on the bluff in Malibu from some older wealthy guy (who’s owned it forever), who cuts Kyle a deal because he has a soft spot in his heart for Kyle’s tale of wishing to build a dream home for he and Amanda.  Very whimsical, romantic and nostalgic, but there is no way that old guy would be turning over the deed on a heartstring if he could have gone to Zillow on his iPhone and found said lot to have a zestimate of 10 million dollars.

More than low interest rates, you could say much of the real estate bubble we had was fueled by the technology advances which ran parallel to Greenspan’s lowering of interest rates. Technology.  People becoming appraisers, and having access to information about every listing, then participating with cheap and easy credit.

Later I recalled a comment Owen Frager made after the re-launch of my blog last month:  “The problem with your domain (name) assumption is what can anyone sell when people have no means to buy. More than the domain you need strategy like Apple that fills the store in the midst of a recession and with every phone is a case, car charger etc.”

What Apple has really done is to sell a cheap but capable computer with a phone app, while its competitors try and fail to create phones which act like computers. Their strategy is winning. Google recently gave up on its droid nexus-one. A just end to a lousy product (I owned two of them).

Owen is right.  What Apple has done is to create the store and “show” around their product which is innovative, but which has been here all along.  They made the phone sexy and created a delivery system with their marketing and stores to make acquisition of the product easy.  Their history designing GUI’s gave them that extra push to win and sealed their fate as master of the space.

Those of you hoping to see the domain nexus in this back-story will have to wait a few moments longer as I provide the another prolog – and a stock tip. One company ripping a page right out of Apple’s playbook is Nestle.  They have opened a bunch of polished shops in the big cities of Europe to sell their Nespresso Coffee makers and capsules.  You buy the coffee maker for a few hundred bucks and then pay through the nose for the capsules for an eternity.  They are big here in France, London, Switzerland and I expect them to go to the States with this marketing method in a bigger way (lots of shops) soon.  My wife and I love Nespresso. I thought they were to eurotrashy at first, then I had one. Nespresso is coffee “crack”.  It’s so good, I’m saying load up on Nestle stock. Nestle has created the “Strategy which fills the store in a recession”, which Owen wisely spoke of.

Compare Apple’s phone marketing or Nestle’s coffee marketing to the domain name business and you will see a glaring dichotomy. I recently sold a valuable name and had to hold the seller’s hand as they created an escrow transaction, worked through a contract, requested an invoice, and worked through a cumbersome registrar transfer - all before they ever even turned on a website. Still the buyer saw the potential of their purchase as prolific, and worked hard to muddle through the steps to an end.  There was no system. Much like the real estate system in France, this insider still received a great tactical advantage because of a lack of organized information in regard to the value of the name.

Domain names are critical to the Internet economy and to all web marketing efforts. They are bought, sold, leased and fought for each day – yet there is just a small patchwork of IP management companies which hold the hands of IP interests looking to acquire names. There are less than 10 domain name specialized attorneys in the world (with 5 of those being great). There are just 10 major registrars such as Godaddy, NetSol, Tucows and eNom who have risen to dominate the mass registration market, yet there are countless registrants like you and I who own many of the best names which people repeatedly wish to acquire. Unfortunately I think prices will stay low for registrants until an organized system for marketing our product materializes. Everyone may need domain names (as surely as we all need water and oxygen), but there is no Nespresso or Apple store to market to the masses and fill the store during a recession.

Some of the present situation results from the respective competitive stance we all find ourselves in.  eNom would rather sell the .me of your coveted .com name because it serves them and they get no benefit from promoting your .com. Facebook would rather get you off domains and into their walled garden.  And Google doesn’t care where the information is, they just want to organize it. The domain industry – The entire Internet for that matter is less than 20 years old. There have been no Steve Jobs or Howard Schultz (Starbucks) or Nespresso Mastermind to blaze the trail yet.  Bob Parsons may be the closest with his brilliant move of selling business incorporations and domain names together. Still I have a hunch Bob is more interested in enjoying the fruits from the great machine he’s already built, than he is in becoming the next Nespresso.  Still you never know.  Maybe he’ll get his second wind.  Or maybe you will get your second – or maybe I’ll get mine.

I picture that Godaddy store, like a Starbucks inside an OfficeDepot, one which looks much like an apple store, which allows a consumer to buy a premium name for their business, a rep who explains the value proposition of a better quality name on a series of large screen walls, and then prints a certificate for the purchaser’s records after checkout.

You could say domain names today are like the cheap real estate in that Melrose Place episode.  A technology product which has not benefited from advances in technology. Those consumer friendly advances have happened in email such as (Hotmail, Gmail and Yahoomail).  They have happened in the platforms such as Facebook and Twitter.  They have even happened in phones and coffee, yet domain names; which everyone needs and continues to buy, have been left behind to market and sell themselves.  All things considered, even the most recalcitrant pessimist would have to concede that our disorganized patchwork of an industry hasn’t done too badly for itself.

These are still the early days of the Internet folks, like the real estate industry before the iPhone, before the MLS. There is no uniform or organized or credible marketing platform to serve the masses.  Godaddy would be the closest but they can only do so much.  While I predict many great returns for those who buy Nestle (Nespresso) stock, I predict untold riches for the mastermind who helps the consumer understand the lifetime value of domains – and to ease delivery of same.

Until then, there will still be a haphazard system of transfers and sales and closings and the artificially muted values we have today, as an unfortunate result.
Au Revoir from the Cote d’ Azur

This entry was posted by frankschilling on Thursday, July 22nd, 2010 at 2:51 PM and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.


32 Comments

  1. fizz says:

    All was going well with my reading of the Appleisation of domain sales, until I lost my concentration with that last photo ;-)

  2. Peer says:

    Hi Frank,
    Interesting Post! There is no one more qualified than you to be the “steve Jobs” of Domain Names! I did like the last Picture ;)

  3. Arbel Arif says:

    I been in the retail business for the last 6 years…

    I had many locations in small kiosks all over the U.S (Shopping Malls) , selling beauty products and small products in an active sale. (Promotion)

    I had an idea to sell pepole their name or other names they want to own in an active sale when they came to the mall for shopping using savvy sales pepole.

    It could be great Christmas gift when you give them certificate that they own the domain.

    Unfortunately, it was only an idea but your post gave me flashbacks of that.

    Great Post… Thanks.

  4. adinfinite says:

    I would have thought that big brokerages like Sedo etc would have shown more urgency with regards to regularising and streamlining end user sales. One has to wonder if it serves some entities narrow interest to maintain the satus quo.

  5. DomainShane says:

    I was taking in the great story and information and then you throw in that picture of the girl on the boat at the end. Now I can’t even remember what you wrote. Was it just me or did anyone else try and click on it?

  6. Okan says:

    Hi Frank,

    Just wanted to say welcome back. We missed your posts.

  7. Hey! Who gave you permission to snap my GF all exposed like that??!

    I am sending a C&D ;)

    Nice post… As always, giving us something to talk about for weeks and month’s to come. Hopefully we can get some serious dialogue going…

  8. Morgan says:

    Great post and so interesting to hear your outlook Frank! Glad the blog is back – I’m really enjoying this.

    So true about Apple and a point I had made to friends early-on about the iPhone. I used to always tell people my iPhone had a great browser, was quick with email, had every app I could want, oh, and it was an okay phone. The same is true today!

    Also so true that this is still the early days, still I always wish I was a bit earlier :)

  9. Pat says:

    The Nespresso is to the moka pot as .me is to .com. They’ll be filling up garages, basements and landfills in a couple of years.

    Don’t hold that stock too long.

  10. Dan says:

    personally I’m not blessed with foreseeing the future as you do, but can say on the subject of “who helps the consumer understand the lifetime value of domains”, I believe we can do it collectively.

    Happy to be reading your fresh blog again.. love the pics :-)

  11. Frankie,

    This is by far the most introspective and revealing blog article you’ve ever written. I take away from this article a confirmation of an idea Rick Schwartz and I were discussing back in 2006 – and that’s creating a global non-profit website that would request all parking companies to default a small bottom page link to a site that explains in hundreds of ways the wild world of domain investing, domain selling examples, domain value breakdowns, and providing information for free to the public/business sector to educate them on why good domains are like “paths” leading to internet success.

    One of my ideas – Imagine the top 10 parking services requiring that any free landing page they provide that attaches a “FOR SALE” link feature then include (by default), a small pop-behind on every landing page that directs the user to understand why investing in buying a great generic domain is better than spending that money on a radio ad, or online banner campaign, or any other traditional advertising medium, etc.

    So if 10 parking services, with their millions of landing pages, all implementing pop up windows that lead the user to a website that gives a Master Degree Course in domain value understanding. The website can be non-profit, but also sell spots to aftermarket domain sites.

    It’s what I’ve been asking for since 2004. However, I’m not Frank Schilling, and don’t have the resources (read “funds”) to really put a program like this together. I can provide all the organizational/design skills to appeal to the most droll marketing director.

    If my comment inspired you, feel free to contact me to discuss further.

    Have a safe vacation!

    (and thanks for blogging again. It’s like farmers praying for rain in 1933.)

  12. Yes we need to make the domain research & acquisition process as easy as possible and as pleasurable for end-users as looking at breasts ;)

  13. track says:

    Good post except for the part where you make it sound like google is giving up on Droid itself, rather than nexus.

  14. Emily says:

    Very cool post Frank! More and more of my clients and friends seem to be exploring France these days over the Caribbean destinations. The Hotel du Cap has me sold! I’m intrigued by your real estate findings and how “quaint” their system seems. Hope you guys are having an awesome trip and the blog as always has given great insight to the domain world. Cheers neighbors!

  15. DNabc says:

    We all still struggle to make some people understand the true value of domain names. And I’m not just talking about the so called “end-users”, even some tech savvy people don’t quite get it…

    In fact, some of my family members and closest friends still don’t understand what I do (although sometimes I explained over and over) and think I’m just “spending money”, even if my domains pay for themselves again and again, I don’t have any other job to fund my ventures.

    Domain prices will just go up, even with this recession I never got so many inquiries like now, imagine if everything was ok with the world’s economy…

    We are kind of misunderstood pioneers…

    Nuno Alex Oliveira – DNabc.com

  16. Logan says:

    Ain’t the South of France great? It’s one of my favorite places on Earth. Lovely place, lovely people.

    PS – after a deep analysis, I believe that the last photo actually includes two women, not just the one in front. Look at the legs and feet. Glad I could help.

  17. Your perception is brilliant. I have nothing to add except I will get to work on it right away.
    Best regards,
    Steve Cheatham
    johnscreeksoftware.com
    mediaguys.com

  18. Francois says:

    It’s pleasant having an North American speaking well about France…
    Thanks so much!

    Until now, registrars are the places where people go to register names (and GoDaddy with his 50% share, the leader).
    So if we give registrars the tools (and desire) to also sell aftermarket domains we should significantly increase our sales.

    What has been improved these years it’s that now a lot of registrars also suggest aftermarket domains when someone try to register a name.
    The other thing is it’s now possible to have an automated appreciation of the value of generic domains thanks to Estibot/Valuate.

    What is missing is a MLS for domain names accepted by most.
    Several solutions have emerged from Afternic, from Fabulous and from Sedo I think, others are secretively building (some I know and some I probaby ignore).
    But today there is still no reference, certainly this will happen in the next years.

    Our industry is small and young, but we are growing and things are improving, step by step.

    I am really happy to read you again.
    If only I understood spoken english and I was not so timid…

  19. Michael says:

    @ Logan, “after a deep analysis ..” LOL

    @ Stephen, the one problem I foresee with your idea is that, at first thought, it seems to me that parking companies will have a negative stake in facilitating more end-user sales. Every premium domain that gets sold to an end-user equates to a loss in parking revenue they earned from that domain.

    After pondering this post for a bit, my initial thoughts were that a step toward solving this equation would be the development of an appropriate platform to function as a kind of plug-n-play domain sales distribution system. As with the analogy of the Office Depot leasing a corner of their store to a Starbucks, I imagine a site like LinkedIn leasing virtual space on their website to a sort of ‘domain kiosk’.

    I believe this would be something similar to f-commerce, where it is now possible for merchants to sell their wares directly through the facebook platform, rather than just buying banner ad space. The difference is, to go back to the Starbucks analogy, that of going to Office Depot for some office supplies and seeing a display advertisement for a Starbucks coffeehouse, and going to Office Depot for some office supplies and there actually being a Starbucks Coffeehouse in the store.

    so instead of pushing people out into a domain marketplace (like a widget superstore) the alternative here is bringing the domain kiosk into the places end-users already go. the rep in this case could be a 24/7 live chat staffed by domain sales consultants.

    anyway i found this post provocative and it prompted me to spend a little time brainstorming after i read it and those were some thoughts. I think its a wide open area for discussion, and an interesting one to say the least

  20. Jacob says:

    For the record, Keurig already makes coffee makers like that, already very popular here.

  21. Anunt says:

    Nestle…it’s a dog with flees…what else do you have?

  22. the problem as i see it is the belief that there have to be domain names. the domain name is only an artificial piece of real estate. an address in webspace. it could be replaced by a non registered (therefore non realestate) form of tracking pieces of information on the net. what worth a .com or .co when they no longer are required.

  23. RJ says:

    Frank – You are in serious baller company. This guy rang up a $2.6m bar tab!
    http://www.nypost.com/iphone/story.php?feed=gossip.xml&id=4.2.3556603570&pos=gossip_p6stories_09

  24. Nice post, France looks nice at this time of year. Interesting idea on domain marketing, I think we are a ways off from seeing something like that, right now it’s all over the place. You’re right, many end user buyers don’t really know the whole process of how to even acquire and use the domain they want. I have a Nespresso capsule machine at home, they are easy, quick and almost no clean up – Starbucks makes coffee capsules for them too I think. It’s a good formula for them, sell a machine up front and get the backend coffee sales for a long time.

  25. Nice Picture. I right clicked and viewed image for full size viewing. (yes 2 sets of legs)

    It’s funny how a boob can brighten your day.
    Thanks Frank

    Eric McFadden

  26. Sorry Frank

    Just for clarification I meant a “picture of a boob” can brighten your day. lol

    Eric

  27. Rob says:

    hi Frank, great blog

    but if domains are really as valuable as you say

    why dont you buy the top domains of ie rick schwartz?

  28. Rob says:

    Frank

    im not surprized you didn’t post my last post

    but its a real question

    if generic domains are as valuable as you say, why dont you
    buy all of Rick Schwartzs good domains?

  29. Rob says:

    you could answer it with

    he sells pretty high and i like to buy pretty low, fixed

    well sort of, because as you say the internet is only in its first 20 years,
    so a purchase now should be an absolute bargain in 10, 20 years time shouldn’t it?

    of course that depends on the multiple you are paying, and no-one really knows what the multiple is

    so the really expensive domains are highly speculative, sort of crystal ball stuff really

  30. Jim Sickorez says:

    Frank,

    Great article…And welcome back!! I love the photo…It reminds me of Rum Point on a Sunday afternoon…

    p.s. My In-laws have a house in Cayman Kai…My home away from home…

  31. LS Morgan says:

    I just wanted to say thanks for the picture of boobies.
    I had initially typed out a thoughtful response but then realized that ultimately, the boobies were the most important part of that whole post and by concluding with them, everything you said would be accepted as fact.

    So, thanks for the Boobies, sir. Whatever else that may have preceded them, I support.

  32. Hi Frank,

    that’s a brilliant analogy, the no MLS of France RE, only pockets of valuators creating a volatile market place.

    There is a hidden message in there for ultra wealth isn’t there?

    Is it possible for billionaires to have a second wind? Sounds like something out of William Gibson’s novels, 90% of assets owned by the ultra-rich.

    Great Stuff!