Domain-Guides

Everyone is Doing It

http://www.elliotsblog.com/index.php/2007/12/07/everybodys-doing-it/

***FS*** Investing in domain names that is

Domain Valuations : Chris Stewart

Domain Value (DV)=Traffic Value (TV)+Brand Value
(BV)+Utility Value (UV)+Discretionary Value (DiV) : Part 1
http://marketforlemons.com/?p=5

Via.com sells for 157,000.

(scroll down.) http://www.domainstate.com/showthread.php3?s=bf857a50211d7889c72645f54b38beb6&threadid=84867  Great name to build on.  Good price for buyer (fully valued for name-investor), esp if they are going to develop.  Via would be a good name  for a search engine or some kind of portal.  Lot of other possibilities.  Has meaning in multiple languages.

 From Danno:

AfternicDLS Member Sells UI.com for $275K (nice story)

http://afternicdlsblog.com/2007/12/07/afternic-success-story-uicom-sells-for-275k/

 ***FS***  Still sooo much untapped opportunity in the name business for those who care to try. 

iREIT leaves the ICA

(Scroll down at the link.)
http://dnjournal.com/newsletters/2007/november.htm

***FS***  It was really more Bob Martin who was behind iReit’s participation in the ICA..  with Bob gone it’s no surprise the group dropped out.

Sedo.com now shows that invest.com sold for $ 1,015,000.

http://www.greatdomains.com/auction/auction_history.php?language=us&auction_id=21998&tracked=&partnerid=32392  Josh says :  I think the buyer got a good deal. You can buy a parking spot in Central London for  $50,000 - $90,000 and in some cases you’ll pay considerable monthly fees on it.  And to go with your parking space, you can buy this 3 bedroom, 3 bedroom flat for $13,000,000. http://www.findaproperty.com/displayprop.aspx?edid=00&salerent=0&pid=059058&agentid=07711
Renewal fee each year on invest.com: $ 7.50 . Taxes and maintenance costs on your $13,000,000 flat in London: Priceless.

***FS***  Agree with J’man’s logic but as a wildcat investor (me) who has to front the 1mm,  the carrying charge is about 70k a year.. so I’d say the name’s fully valued from an invetor’s perspective.

Considerable controversy around the sale of Music.mobi.

Excerpt: “Constantine Giorgio Roussos thought he was the winner of Music.mobi in yesterday’s.mobi auction at Sedo. He bid $66,000. The auction ended and he received an automated invoice from Sedo. He then received a  “personal” e-mail from a Sedo employee (which also may have been automated). But then something happened. Sedo extended the auction due to a server slowdown in the final minutes of the auction.” The name was then sold to someone else who bid $616,000.  http://domainnamewire.com/2007/12/07/musicmobi-winner-vows-lawsuit-against-sedo/

***FS*** This is the classic fight over nothing.  Wouldn’t be surprised if it’s a publicity stunt.

Opportunity Cost of Lost Opportunities.

Interesting article by Elliot Silver.  Sometimes you “overpay” now, and benefit later.  Perhaps you never overpaid in the first place. http://www.elliotsblog.com/index.php/2007/12/07/opportunity-cost-of-lost-opportunities/

***FS***  Historically speaking, if the name was generic and got type-in-traffic, it was very hard to loose money in the domain biz..  the market has consistently caught up to your overpayment..  That won’t go on forever tho.

Light of Logic Creeping Through

New York Times David Pogue blasts companies that have chosen wierd and hard to remember company names.He points out plenty of hard to remember names. Trulia and Zillow are two better examples than “Fark” which is witty enough.

http://www.nytimes.com/2007/12/06/technology/personaltech/06pogue-email.html?ex=1354683600&en=e08b6ea2e4dad1dd&ei=5124&partner=permalink&exprod=permalink

Danno Sends Related

Seussical-Sounding Web Site Names

http://pogue.blogs.nytimes.com/2007/12/06/the-dr-seuss-jumble-naming-web-sites/?hp 

***FS*** Nice to see people having that..  “hayyy… waita minute.  “  moment of logic setting in.  Most Web2 names are awful.

Eric Litman becomes Managing Director of WashingtonVC.

http://www.domainnews.com/general/2007120709/eric-litman-becomes-managing-director-of-washingtonvc/#more-1890

***FS***  Congrats Eric.

Where’s the money?

Excerpt: “”The venture (capital) industry is headed into a wall. All the best companies are being sold,” Deninger said. “For seven straight years, the number of companies going public has declined. That means the number of (prospective) buyers is also declining. Eventually, the VCs will have fewer companies that they can sell their companies to.”"  http://www.news.com/8301-10784_3-9830529-7.html?tag=nefd.blgs

***FS*** Blame SarbOx man ..  People are getting sloppy overpaying for nothing and the good stuff never sees the light of day..  Irony: Rules meant to protect investors only serve to make the rich richer and give said investors fewer opportunities.

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http://marketforlemons.com/?p=4 

Domainer Chris Stewart runs through the numbers for us and explains why Name Media’s leveraging up is a “good thing”. Chris is a very bright guy and this is an excellent post and argument. Posted in it’s entirity with permission:

Why Companies Borrow, and Why I Think NameMedia Borrowed Smart

This is the first post on our blog so I thought I would start off with something that is both timely and controversial: DEBT. Timely because of last week’s announcement that NameMedia had completed a deal to establish a $125 million credit facility; and controversial because of the topsy-turvy ride we have taken in the global equity markets this past month mostly attributed to the spillover from credit concerns in the US. Therefore, I believe that speaking to the topic of debt is a great starting point.

Before I go into some financial analysis let me first state that, admittedly, debt is an uncomfortable topic for me. I am not fond of debt, personally. As a business manager, however, debt can and often is the best friend to a growing company. It is cheap – let’s come to this a little later, and it is often easy to acquire. Quite simply, debt shouldn’t be a dirty word. And using debt to finance acquisitions or new capital projects should not be frowned upon.

Debt is cheap. What do I mean by this? Well, I should be more specific and say that debt is almost always relatively cheaper than other financing sources. It is cheaper than other financing sources because the interest payment on debt is also a tax deductible expense. The impact of this on the cost of debt can be significant. In financial terms, the amount of “benefit” you receive from being able to deduct your interest payments on your income statements is equal to your marginal tax rate multiplied by your borrowing rate. Wow, that was a lot to say. So, instead of trying to explain this let me illustrate this for you.
 Let’s imagine a scenario where you are seeking $100,000 to finance new projects. You are given two choices. Your first choice is to use debt financing at a borrowing rate of 15% p.a. and your second choice is to sell shares of your company to an investor who demands a 12% p.a. return on his/her investment achieved through an annual dividend payment. And, let’s further imagine that you already have an opportunity to invest the funds into a new domain acquisition, which will cost $100,000 and yield $20,000 in annual gross cash flow. We will assume you are a profitable company with a 35% marginal tax rate. Which method of financing would you choose based solely on the “numbers”? Let’s take a look…

From this over-simplified analysis above you may be surprised to see that, despite having a higher borrowing rate it is the debt financing choice providing the most benefit to your company. This isn’t always the case because we could fiddle with the borrowing rate, the required rate of return from the investor, or the tax rate to achieve numerous different results. But what I wanted to show you here is that even when things appear to be cheaper (such as the investor who only wants a 12% dividend) they may not always be.

One of the quick and dirty ways to figure out your effective borrowing rate on debt is to do this quick calculation. Multiply your corporate tax rate by the rate quoted to you by the debt financier. If you are borrowing at 18% and your tax rate is 25% then your benefit is 25%*18%=4.5%. Then reduce your borrowing rate by the benefit you just calculated, or 18%-4.5%=13.5%, which is your effective borrowing rate. Recall, this benefit is attributed to your ability (in most cases) to deduct interest expense on the income statement.

Clearly, I have ignored all of the “soft” considerations when choosing between debt and equity financing. Some people, like me, don’t particularly like debt. Others prefer the benefit of having the inputs of investors who may be more experienced. No amount of value can be placed on having mentors guide you in the right direction and surely your debt financier won’t be answering the phone at midnight to “discuss the business.”

What’s more, my calculation doesn’t demonstrate when and IF you should choose either form of financing. There is a separate calculation to figure out if you should borrow to finance a new acquisition altogether. I can, however, give you a tip to remember: if the net return on the asset is greater than the effective borrowing rate then you should probably invest. That’s a great topic for my next post so come back to see me massage some numbers to make that one work out for you.

Speaking of debt, most recently we learned that NameMedia has established a new credit facility for $125 million, which will be used to pay down a prior credit facility and for continuing operations and new acquisitions. And while I am not privy to the specifics I can probably estimate that this deal is both positive for NameMedia and the domain industry overall. Having perused some of the other domain blogs I have yet to see anyone come out and give a good/bad opinion on this announcement. I have seen some comments from individual posters who believe that this news had negative implications. I couldn’t disagree more.

As I illustrated above, debt financing is typically cheaper than equity financing. And for a company, such as NameMedia, I would argue that equity financing is significantly costlier to the company than debt. Recall, NameMedia has recently filed for their IPO and I believe that investors would place a discount rate (a.k.a. required rate of return) of anywhere between 15-20% on the firm’s equity value. Such a significant discount rate would lower the equity value of the company, requiring NameMedia to issue a greater number of shares to raise the capital necessary to paydown its previous credit facility. This scenario (on a much larger scale) resembles the average Joe paying one credit card bill with another credit card carrying a higher interest rate. Using new debt, rather than equity, to paydown the previous debt is the better alternative.

I also believe that this new credit facility is positive because it signals to me that the creditors believe NameMedia’s cash flows are both stable and long-term, at least enough to cover the debt going forward.

I would not be surprised if we see NameMedia cancel or reduce the size of its IPO altogether, and here’s why. From my calculations, I believe that NameMedia’s cost of equity financing is north of 15% and as high as 20%. There is no similar tax benefit to equity financing when compared to debt financing. And if you are borrowing at 15-20% from the markets then any and all new capital projects suddenly have this rate of return as the benchmark for new investments,…anyone know someone selling generic domain portfolios at 5x? I didn’t think so. The prior need to “go public” was to paydown the prior expiring credit facility and with this need now answered to by the new credit facility I see no reason for the company to require a significant source of capital at such a high cost at this time. I think it’s also important to note that the planned sale of equity was not an exit strategy for the current shareholders, as stated in the IPO, it was merely an exercise in raising capital”"

***FS*** My personal aversion to debt is several fold.  As the credit markets have shown this year,  you can’t necessarily control when the bank will stop lending ..and for unforseen reasons, or when they’ll call a loan on you..  If everyone levered up and carried debt,  we could get to a precarious place where no company operates to it’s full potential.  There is no such thing as “no strings attached” and when you start taking money from strangers, their covenants on what you can/can’t do with your business often become restrictive and fail to allow the company to take risks and make investments otherwise possible if they were unleveraged.  This can hold the company’s true potentiual back..  lastly..  not everyone operates from a tax jurisdiction..  Drug companies, and other multinationals often use transfer pricing to offset the tax benefit that debt provides..  Ditto with a domain biz which can be run from anywhere..  Even a little island 250 miles south of cuba.

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 http://thesuperficial.com/2007/12/donald_trump_is_a_big_tipper.php

Witty commentary from this blogger …  link courtesy of Adam

***FS*** I left a $15,000 tip at “Light” in Las Vegas once..  but then I called my credit card company and they corrected it back to the $1,500.00 I “actually” left.  I also had a very large charge from a restaurant called the ”Olympic Garden” that night.. But the former CEO of Savis taught me how to explain that one off my expense account 

Related:  Adam points out that cheetahs.com is going to expire for non-payment, likely because of a bad administrative email address.  Many a Las Vegas bound domainer has found himself with Trump-esq. charges at a similarly named establishment.

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Invest.com bid up to 431k at Auction

auction is still live. 4 hours to go, as of 10 a.m. EST. Friday, Dec 6, 07  Reserve is 200,000 - 499,999. http://www.greatdomains.com/auction/auction_detail.php?language=us&auction_id=21998&tracked=&partnerid=32392

***FS***  Great name..  This is fully valued from a wildcat-return investor’s perspective.

Which domain extensions have increased in value the fastest. 

Between 2004 - 2007. http://www.domainbits.com/increase-value All the data:  http://www.domainbits.com/data

***FS***Summary:  Buy .com’s

Whizzbang: Where to buy domains.

http://www.whizzbangsblog.com/content/view/335/86/

***FS*** still find deals on SEDO.com,  Afternic.com and GreatDomains.com

Verisign states that 146 million domain names registered across all TLD’s.

12 million in the last quarter. http://www.dnjournal.com/archive/lowdown/2007/dailyposts/12-05-07.htm Josh

***FS***  Most of the 12mm new names were discovered through tasting ..  and (very very important) only 5-10% of all 146mm names are worth anything whatsoever.. to any more than one distinctive entity.  That means there are just 7 - 14 million investment grade names available to the world.. How many do you own?

Alvaro Albarracin goes on a .mobi speculation shopping spree.

http://www.conceptualist.com/2007/12/06/alvaro-albarracin-breaks-dotmobi-sales-record/

MUSIC.MOBI = USD 616K
GAMES.MOBI = USD 401K
SPORTS.MOBI = USD 101K
MOVIES.MOBI = USD 82K
PHOTOS.MOBI = USD 51K
VIDEOS.MOBI = USD 51K

Alvaro says “I am not planning on developing these names,  I am planing on selling these sometime in the near  future.” .. 

***FS***Sell Alvaro ..  run like the wind and sell.  This man will be joining Dr. Van Neeste in the land of irrelevance shortly

Pubcon coverage.  Domaining.

Effective Domain name strategies  http://www.seroundtable.com/archives/015575.html

***FS***  These are good beginnings..  bet that a handful of folks had the light-bulb domaining moment.. 

Domains and trademarks.

Clark Walton, Esq. - Domain Name Law http://www.seroundtable.com/archives/015574.html

***FS***  Synopsis of presentation provides interesting insight into lawyer’s thinking, tactics.. Most domainers I know don’t run from lawyers.. They have lawyers too  :)  In 7 years I’ve found that you are more likely to be challenged by an over-reaching lawyer on a legitimate registration that you are to be backed into a corner over a name you really shouldn’t own.

Bruce Clay’s take on Richard Rosenblatt’s keynote

http://www.bruceclay.com/blog/archives/2007/12/keynote_address.html

***FS***  I like Richard Rosenblatt..  He’s a one in ten million character..  One of the most charismatic people I have ever drank Patron with / met.

Pubcon coverage links above via Sahar.

http://www.conceptualist.com/2007/12/06/pubcon-coverage-effective-domaining-strategies/

***FS***  Thanks Sahar!

Domain industry events listed.  Til May 2008.

http://www.domainnews.com/industry-events/

***FS***Nice summary to bookmark on DomainNews.com

Domain Truffles.

Josh says: Michael Berkens talks about domains as commodities and collectibles.  As well, he highlights the notion of quality by briefly discussing buying oil paintings at a flea market as compared to going to Art Basel in Miami, where 500 million dollars worth of art is expected to sell in just 4 days. He likes truffles, too.  Btw, Michael, it was a dog and not a pig that found the giant truffle that recently sold at auction in Macau. http://www.thedomains.com/2007/12/05/domain-truffles-2/

***FS***Berkens is an attorney turned domainer..  He has great insight into the value proposition that meaningful generic names represent.  Love the truffle analogy Mike.

Moniker Pubcon auction results.

Monte continues to move auctions outside of the  domain investment community.  That’s a good thing. http://www.domainstate.com/showthread.php3?s=&threadid=84850
GrandPa.com - $55,000
FamilyServices.com - $45,000
MortgageRates.org — $17,000
BlindDating.com — $14,000
ComputerDiscounts.com - $10,000
More sales results of other names here: http://www.domainnamenews.com/events/moniker-pubcon-2007-auction-results/1328#more-1328

Tips for finding brandable domain names. 

by Bill Eisenmann.
Excerpt: “”Not everyone is looking for keyword rich, generic domain names. Many Internet startups are looking for a simple, catchy name or phrase to build their online identity around. Brandable, web 2.0 style domain names have gained popularity in recent years mostly due to the explosion of social-networking sites. http://availabledomainnames.com/2007/tips-for-finding-brandable-domain-names/

***FS***  Everybody wants traffic..  Everybody..  Whether they say it or not..  whether they know it or not..  nobody wakes up in the morning, says “I want to start a website that nobody will visit”.  Nothing happens on the Internet without traffic.  Generic keyword style domain names get a primer-level of organic type in traffic for nothing more than the keyword weight or gravity of the name itself.  Those are the “catchy”, “brandable” and “cool-sounding” names which constitute the 5-10% of all names registered which are worth anything at all..  Those are the names you want.

Domain Tools Auction

Jay responds to auction criticisms, reduces after auction pricing reduction for names that don’t sell to 10% reduction from previously stated 20% reduction, and drops his commission to 9 % from 10%. http://blog.domaintools.com/2007/12/auction-rules/

Joshsays: Read the post for more details and other info.  One of the things that Jay says is they they will do alot of pre auction promotion, to generate interest.  Thing is, the cut off date for name submissions is Christmas eve, and the auction is on January 3rd.  ?. Jay retains exclusive rights to sell the domain for 60 days after the auction.

***FS***  It’s his sandbox..  and he needs some kind of tool to discourage off-block sales after auction close.  Understand the sellers POV too tho.

Facebook bows to pressure about Beacon Ads.

Allows users to turn them off completely.  How many will turn it off?  Choice. http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9051119&intsrc=hm_ts_head
http://yro.slashdot.org/yro/07/12/05/2114247.shtml

***FS***  Josh Quitner was unfairly silenced on this..  It’s Facebook who deserved the slap-down IMO.  http://valleywag.com/tech/media/facebooks-foolish-foes-330424.php

Nokia to continue to invest in online services

.. to add value to their phones. http://www.news.com/Nokia-sets-eyes-on-Internet-to-support-handsets/2100-1039_3-6221589.html?tag=nefd.top

***FS***  Nokia is in trouble long-term..  They don’t have the software..  Anyone can make hardware.

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http://news.zdnet.co.uk/internet/0,1000000097,39291329,00.htm

This is the kind of direction we need to see more of..  It’s an unhealthy and unsafe dynamic when brand holders can beat you up because you told the world “their brand stinks” via a website which incorporates their brand-name.  Taken to it’s illogical conclusion, we’d have to invent codewords to talk about the products and services we dislike. 

“”There is a certain inevitability” that more and more of the sites will be allowed, according to Wilbers. Companies will have to go along with it, he said, because there are too many sites and alternate sub-domains to police their branding effectively.

“Whether they like it or not, the internet is being used for such purposes,”"

Ya gotta love Free-speech.  Power to the people..  What the Internet is all about.

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  Paul’s still here.. and last night Larry popped onto the island..  He had dinner at my favorite spot (Pappagallo).  The world seems to be decending on the island..  makes me wonder why I’m leaving for Christmas.  .. Rumor Oprah was here too.

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