ICANN Meetings in Lisbon Portugal
Transcript - Tutorial - Domain Name Secondary Market: What makes a name worth thousands of dollars and how does this market work?
25 March 2007
Note: Although transcript output is largely accurate, in some cases it is incomplete or inaccurate due to inaudible passages or transcription errors. It is posted as an aid to understanding the proceedings at the session, but should not be treated as an authoritative record.
>>TIM COLE: Ladies and gentlemen, we're going to get started so can you take your seats. I'm Tim Cole, the chief registrar liaison with ICANN, and it's my pleasure to work with the numerous registrars that we have and with the various policies that ICANN has related to those registrars. And we determined we thought it would be really valuable for the community to learn a little bit more about some of the aspects of the domain marketplace. And we have been conducting workshops at the last couple ICANN meetings. This time, we decided to take a little different course and conduct tutorials that would be more of an opportunity to share information with the audience as an educational tool rather than just a debating workshop.
So we've already had one very interesting session, and this session promises to be equally as interesting. And I'd like to introduce Jothan Frakes who is going to moderate this session. He is with domain sponsor. And Jothan, I will let you introduce yourself and the panel.
>>JOTHAN FRAKES: Thank you very much, Tim. And a special thank you to ICANN for having the vision to start incorporating the marketplace into their meetings. It's very good thinking. I would also like to thank the people in this room, also the remote participants as well as those who later review this transcription.
And I think that covers everyone.
Thank you also to my mother.
[ Laughter ]
>>JOTHAN FRAKES: A brief -- just a summary of what we'll be covering today as a discussion of what's called the secondary marketplace, which is the buying and selling of domain names after registration, at amounts larger than the typical fee that a registrar would charge to an individual registrant.
We'll be covering discussions on the secondary marketplace. Some of the topic will be on valuation and appraisal of the domain names or how people come to the figures that these names change hands at. And then there will be a domain marketplace analysis of some of the sales that have occurred based off of third-party review.
My name is Jothan Frakes, I work for a company called Domain Sponsor.
On the secondary marketplace we will hear from Mason Cole from Snapnames. Domain name valuation and appraisal will be Tim Schumacher of SEDO.com. The registrar marketplace will be discussed by Tom Murphy of Name Media. And we will hear an analysis from Emiliano Pasqualetti of Domains Bot.
This has been a diagram. It's been presented at each of the ICANN workshops. And it basically outlines the various stages in the life cycle of a gTLD domain name. And what we are going to be discussing today is highlighted in the circle.
What I'd like to do is each of the speakers will be taking and making a presentation. There will be a brief opportunity for questions and answers on what had been discussed by that presenter. And then we will have some time towards the end for a full question and answer session to ask people some specific or general questions about this.
Our first speaker is going to be Mason Cole. Oh, excuse me.
Let's see here.
Here we are.
And Mason Cole is with SnapNames. Mason, thank you.
>>MASON COLE: Thank you.
Well, good afternoon, everyone. Thanks for joining us today.
I want to also add my thanks to ICANN for putting on this event, this tutorial. It's a good opportunity to learn more about what we have called now the secondary market and what, I have to agree with our industry colleague Rob Hall who said that in reality the secondary market is become becoming a primary market, the primary method of buying and selling domain names at increased values.
I would like to talk about an overview of the market and how it evolved and how it operates.
My presentation is very brief in deference to my colleagues on the panel so let me just begin here.
Let's talk about why we are all here. This is directly from the ICANN site about this tutorial. The domain market has evolved quite a lot in recent years, demand is enormous and is still growing and in fact the secondary market is rapidly becoming the primary marketplace and it's a driving force now in the industry.
So -- and here is who should attend. This is all of us here in the room. So anyone who is interested in a better understanding of this aspect of the domain name marketplace, I'm glad you are here.
What exactly is the secondary market? Generally, as Jothan eluded to just a moment ago -- sorry, Tim is asking me to slow down so the everyone, the translators especially, can keep up. I apologize.
Generally, the secondary domain name market is the buying and selling of domain names after they have been registered at least one time.
Now, the buying and selling of those names can happen either during a period of active registration or, as Rob alluded to a moment ago, can be done during a period after expiration but before they are deleted back into availability.
Now, who are secondary market buyers?
Well, the fact of the matter is they are everyone who has a use for a domain name. And today, that's a pretty wide audience.
That can be domain investors, people who buy and sell domain names for a living. Small to medium enterprise managers who would like to buy a domain name to launch a new product or a new company. Large companies buy domain names for the same reason or to buy or launch a new brand, for example.
Or really, anyone else just looking for a quality domain names. There are a lot of reasons why people seek out a presence on the Internet and domain names are still the crux of that presence on the Internet.
So who is involved in making this marketplace happen? Well, there are lots of people. There are service providers, companies like SnapNames or pool.com or eNOM or others who provide secondary market sales services. The registrars themselves, as we now learned, are becoming more involved in this market.
Believe it or not, the investment community is very interested in this marketplace now. Banks, institutions, institutional investors themselves as Rob alluded to a little while ago. A public traded company in Seattle called Marchex entered the industry with quite a loud splash a while back by purchasing a large domain portfolio. So institutions are interested in domain names as assets.
Marketers are interested in secondary market names for promoting ideas or publishing their advertising.
Companies that buy names of their own for various reasons, either to promote products or services or for investment value. And I'm sure you have noticed now the media, the press has started to pay attention to domain names and the domain name marketplace.
Search providers are in the game. And that's just a few.
This marketplace is rapidly growing, and as it grows and evolves and more opportunity is made available, there are other providers who are rushing in to take advantage.
Why does the secondary market Quist exist. Domain names are highly unique. So there's nothing else like them, at least not yet.
They are unique by their very nature. There can be only one in every TLD. And that which is unique is more likely to become valuable over time.
So take a name, a word, a concept, an acronym, anything. You type that into the address bar and that can be the funnel point for a lot of human behavior. And it can be anything. It's an opportunity to read news, to learn about the city of Lisbon which we are all now visiting, see a photo of someone's grandchild. There are lots of things that a domain name is the entry point to. And as more and more human behavior get pushed into the domain name by navigation through search of the browser bar, those domain names become more and more valuable over time. I liken this to a traffic intersection. If you think of a busy intersection, the more cars that go through that intersection over time, the more valuable that land becomes because business owners can buy property adjacent to the streets to that intersection and they can put up advertising or establish a storefront and as more traffic goes by that, then those properties become more and more valuable. The analogy applies!
also to domain names.
So domain names are put to use in the same way. By advertising, by selling products, publishing content that's interesting to people.
So businesses and individuals want to pursue that value for their own innovative reasons.
So how have domain names become valuable? There are several ways. First, let's talk about this. They have proven their value with revenue production.
So you may have heard about some of these methods. There's PPC, the pay-per-click market, the ability to buy a name and park it with a provider and have advertising syndicated onto that site in a way that produces advertising revenue to the domain owner. A domain owner can sell advertising direct, they can put up a storefront to sell goods and services.
Revenue production has moved easily well outside of almost any border that you can think of, and businesses around the world now are using domain names for revenue production.
I also use an analogy, we have heard about the real estate analogy in domain names, but I also talk about the idea that domain names sort of resemble a bond portfolio. So if you invest in a bond you get an asset with a certain amount of value to it. Over time it produces income and over time it increases in value so you can sell it alt a profit or you can keep it in your portfolio in perpetuity and let it become sort of a steady income-producing asset for you.
Another trend that's making domain names more and more valuable over time is the rising population of Internet users all over the world. And I know we all know about this in this room but nations like China, India, other developing nations are coming on rapidly and the Internet is the crux of a great deal of economic development activity in those countries.
So over time, we are going to see those domain names also become more important and more valuable.
There is increased spending on online advertising via search key words. We all know this. There is a great deal of bidding going on in companies who want a dominant presence on search engines, and those are the same key words that make up many of the domain names that are valuable now in the marketplace.
There is a growing awareness of domain name trends. So as Rob alluded to, it's very hard to find and register an available name in the primary market. You might be able to find my17thchoiceforadomainname.com. But it's very hard to find a very good, what in the industry jargon is a brandable, generic name in a popular top-level domain.
So as people become aware of the scarce at this of domains in the primary registration method, they become more aware of the availability of names in what we're calling the secondary market.
There's also a greater understanding of the intrinsic value of names over time.
So people understand that domain names are maintaining their value and in fact increasing their value over time.
So I found this quote in time magazine in last week's issue. I won't read the whole thing but the author is making an analogy of shelf space, companies that try to distribute products and services do so by trying to dominate shelf space. If you think of a department store, for example, if you have in the U.S., if you really want a presence in the market, you try to do a deal with Wal-Mart or Target or another sort of dominant market presence.
On the Internet the shelves aren't limited to physical presences. They go on and on and on. And the more activity you funnel onto those shelves, the more valuable those things become. Eventually, those shelves are going to lead to domain names, and if you own those shelves, then you always have a valuable property. As more and more activity floods into that area, the value of that property goes up.
So what goes on those shelves, why does that drive domain name value? More companies are trying to show more people goods and services. This is a developing economy on the Internet. I found these statistics from an investment company in the U.S., Piper Jaffray, who documented total spending on online advertising just two years ago, 12.5 billion. A significant enough amount. But a few years after 2005, it's projected to be triple that amount.
It's just almost an exponential rate of growth in online advertising.
So let me talk a bit about how service providers in this area actually work. There are, as you know, there are several periods of domain name -- in a domain name life cycle. There's the active registration period, there's the period that Rob talked about a little while ago where it has expired but hasn't entered RGP or pending delete. There's the pending delete period and then there's the moment that a domain name becomes available.
Now, companies operate in different areas of this -- of a domain name life cycle. You see companies like SEDO or After NIC, BuyDomains, Moniker, others like that, who tend to deal in domain names during the time that they are actively registered, before they expire. So a motivated buyer lists a name with one of these services -- I'm sorry, a motivated seller lists a name and a motivated buyer will come and find that exchange marketplace and buy a name and it's arbitrage in that way.
Companies like SnapNames and Go Daddy and Tucows and others deal in the period after expiration but before the name enters the period of time right before it would be deleted. And we make those names available when they are not renewed by the current registrant or by the previous registrant, we make them available for sale at that time.
And then the way the industry -- the secondary market industry sort of started, back in 2000 when SnapNames developed the first technology on this was going after the names at the modem they become available again when they are deleted by the registry. And that's still a highly competitive marketplace. SnapNames and eNOM and pool.com, Go Daddy are all still intense competitors at that moment.
So just to give you an idea about how our service works, through relationships we have with registrars, we list tens of thousands of expired and deleted names that are available every month on our platform.
What a user does is come to our Web site and enter a statement of interest for a domain name that he or she sees listed on our site.
And it doesn't cost anything, but it's a statement of intent to bid on that name when it becomes available.
So when it does become available, everybody who has put their statement of interest in with us is invited to bid. Bidding starts at $60. The winning bidder is awarded the name. If there's only one bidder, then that bidder is awarded the name at the $60 initial bid price.
The winner is notified and provided account information then for the registrar where that name going to be located. It's a very clean, efficient system.
Now, as Rob alluded a little while ago, this marketplace, the secondary marketplace really has only been in existence for really six years, in reality. And there are -- it's a highly competitive marketplace, but what we've learned from our buyers is there are several characteristics that are critical for a secondary market provider to be trusted, because there's so much intensive competition and sort of competition with the technology, it's very important that providers exhibit certain characteristics. The first is stability.
And this is something that I know SnapNames really puts an emphasis on, but it's important to us that the method of operation we use to make names available in the secondary market provides predictability for the end users who are bidding on those names.
So what we offer to the marketplace and what I would probably guess other providers would agree is that you have to provide value over the previous situation. You have to -- Before, if you wanted a domain name at the moment it was deleted, Good Luck. It was very difficult.
And a commercial service like SnapNames came into being because we could offer predictability and stability in the capability to get a name.
Second characteristic is transparency. We think it's very important that buyers and sellers understand exactly how our system works, see that our interests are not in conflict with theirs.
And the third is reliability. We have to be able to respond to any questions or concerns and make sure that our systems are highly dependable.
Now, is all this good for the Internet? This is part of the reason we're here, because we want to learn about all of this and see how it applies to the common work that we do in the ICANN community.
The fact of the matter is, there's really little to be feared. It's like any other operation that you provide on the Internet. You have to be -- a buyer has to be careful, but if a provider is stable and trusted, then there's really no reason not to continue.
What absolutely does exist certainly is a great deal of opportunity, probably more in this marketplace as it grows over time than we anticipate here siting in this room.
Fact of the matter is the market has grown very quickly. Businesses will continue to adapt very nimbly to this marketplace. I think back to 2004 when Snapnames changed its service from a fixed fee service to the auction model. And the amount of change that's gone on in the industry in just less than three years, it's nearly mind-boggling. So if you project that out over time, it's certain to be even more growth and opportunity. So there's innovation, capability, opportunity that's going to come around in the next five or ten years than, again, I think any of us here can imagine.
Some ideas about what certainly are going to come next. The growth of online marketing trends are going to continue to drive domain name values upward. So you'll see more and more domain names sold for more and more money.
Infrastructure providers may change their methods. There is talk by Google about changing their method from pay-per-click to pay for action. Instead of getting paid for pay-per-click, you get paid for sale. That will change the marketplace.
The community, meaning online buyers, will continue to refine buyers' ability, like Snapnames and others, to perform, and anyone who is bad actor will be weeded out. So this community is very sharp and discerning about how they do their business. People who don't do business correctly are fairly aggressively identified and they're identified.
And then also we should look for growth in the investment community as more institutional interest continues to come into the marketplace. I think that's fairly certain. We've seen that happen already. Thank you for your time. This is my contact information. Jothan, I'll be glad to an a couple questions here.
>>JOTHAN FRAKES: If there are any questions at this time, you're welcome to come up to the mike and ask specific questions of the Snapnames process, or if you'd like, you can hold your questions until the final session, after everyone has spoken.
I would ask if you do, in the interest of this as a tutorial session, you're welcome to express opinion. However, we'd request that you do productive questions as part of the process here.
Seeing no questions, what I might do is go on to introduce the next speaker with their presentation.
It's my pleasure to introduce Tim Schumacher, who is the CEO of SEDO.com, a very large marketplace on the Internet. And he's here to talk about the process of domain valuation and appraisal.
And, Tim, thank you very much.
>>TIM SCHUMACHER: Welcome, everybody.
Thank you for attending that session. And, again, I would like to say the same thing to ICANN, thank you to making this session available.
It's something which we've waited for for years. We started the company about six years ago, when there was really no talk of the secondary market. And it's good to see that there's more and more interest in this market. And I fully agree that this secondary market will become the new primary market.
We've heard a lot about what the domain secondary market is. It's pretty much about the -- everything else but names which are available.
And I would like to put this a little bit into perspective in, like, a more historical scheme maybe.
We call this the evolutionary theory of domains. And it's similar, if you look at the bottom, there is an evolutionary theory of company growth or society growth. And it's usually foundation growth, you have a takeoff, and you have a landing.
And the landing doesn't need to be a crash, but it's somewhat a softening.
And we believe that the primary market is really just about the registrations, and this is the foundation of the Web. It's kind of like the gold rush, the land-picking.
And then everything else moves into the secondary phase. As the other speakers have said, the secondary phase is expiring, secondary acquisitions, and profile consolidation, which is pretty much just like large volumes of secondary acquisitions, but it's something I wanted to mention specifically, because it has just pretty much started this year.
And out of the secondary market, I believe, and it might be a bold statement, but I truly believe that in five years, the expiring domain market is going to be dead.
The reason for that is that, I mean, we've seen from the other speakers, and I fully agree, that all the good names are auctioned off before the expiring. They are going into either those registrar silos, like this -- like this example, or they're going into big portfolio holders, the Marchex of this world and the others. And they know what the value of the names are. So while we see a lot of movement now, five years from now, the secondary market is going to be all secondary acquisitions and portfolio consultation, the trading market.
Of course, there's always going to be a little bit of registration, just like the example that there's always going to be some new houses built, and there's always going to be expiring domains. But other than that, I really believe that we move onto the right side of this picture.
We see this -- and I'm going to run quickly through a couple of numbers.
We see this as well in the sales volumes. Those are analysis taken from either SEDO itself or from DNJournal.com, who does a great job of tracking the industry of the secondary market.
And one thing we see is, clearly, a massive increase in volume. Sales volume is just going up and up and up.
At the same time, price ranges do go up, they have gone up considerably between 2004 and 2005. The 2006 numbers are just partly compiled. I think we are going to announce them together with DN Journal next week. But other than that, this is a very good slide to summarize the state of the industry.
The number of sales is growing really fast. So we are seeing a lot of the secondary market going into the long tail, a lot of small sales happening. So at SEDO, for example, to give you an example, we have an average price of about $2,000. And we have a median price of about $600. That means more than half of the names sell for less than 600. So there are just a couple of high-ticket sales, like vodka.com, which we sold a couple of months ago for 3 million. And those, of course, take the average price up.
But if you then look at the average price here in the slide, the average price really isn't moving. And that's also my prediction for the future, that the volume growth is going to be really, really enormous. But the average price, despite what other people in the industry sometimes say, the average price is not skyrocketing.
The same metrics are still used -- and I'm going to come to the metrics next. But it's not that there is -- there are really no domain names left. There are always alternatives, there are always second-best alternatives.
So we believe that although there is going to be a good trend in some domains, in some TLDs, you can't say prices will just go up and up and up. It just doesn't happen. But the number of sales, they're going to go up and up just pretty much until we have an amount which is the amount of primary registration now. And that's millions of domains registered every year.
Those are reported sales over $5,000. We see that a lot of it is coming from drop-catching, a lot of it coming from the marketplace. But there are also a lot of private sales going on. And this private sales slide probably underrepresents the amount of the private sale market. Currently, it's -- the secondary market is a pretty unorganized market. We try to organize it a bit. AfterNIC is doing a good job organizing it, and others.
But the largest volume pretty much is still in this private sector. Those are numbers from DN Journal, so the private sector doesn't report that was, so it's certainly underrepresented.
If you look at, then, the actual players, also, like, sales of $5,000 and up, we do a lot of sales in that. And then you have players like AfterNIC, Greatdomains, Domain Systems, and Pool and eNOM, Namewinner and SnapNames, who do more smaller sales and more volume.
Some examples for ccTLD sales that have also been going up in terms of prices in the last couple of years.
And then, after that, I'd like to just briefly say something about domain parking. Going into that, I didn't really know how much is known. I think a lot of people here are very sophisticated about domain parking. But let me just briefly introduce the concept again.
Domain parking is having -- beforehand having a domain which doesn't resolve, you see that on the left side by the "not found, "it could be a 404 error, it could be an "under construction" page, and then afterwards, it's monetized by pretty much a template-generated page with pay-per-click advertising.
So monetized could be newly registered domains, expiring domains, or domains without any hosting packages, and in some instances, other things, like ISP errors, 404 errors. It's constantly broadened and broadened.
When doing that parking, companies usually look at different analytics, so analyzing the stats of names and then trying to find out, as Rob, for example, said earlier, what the amount of money earned is. And the better you analyze a name, for example, where the traffic comes from, what people search on that, what traffic patterns are over the days, the more, of course, you can get out of the name. And that's -- and I fully agree with that. That's why this threshold is moving down to, as you said, from $6 to, like, $4 or even below, because if you can analyze it better, you can optimize it after the 30 days, and you can increase the initial payout rates.
The thing we really see is that primary and secondary market are merging. So for registrars, it can mean ancillary registrations and hosting. People want a specific name, and the primary market really can't get this name for the customer. So it's also something about improving customer experience. If somebody is looking for a name and there is a possibility at the registrar to show that the name is available and the name -- is available on the secondary market and there is a price tag on it, and the price tag might be higher, but this is still from a customer service experience is much better than saying, "You can't get the name."
And once the registrar -- and that's, like, one of the big benefits for the registrar -- once the domain customer has actually bought the domain and then paid for it, then he's going to transfer it over to the registrar, so the registrar, of course, also profits from an additional registration and a loyal customer.
There are also some registry benefits. And I see that registries are slowly seeing that the secondary market -- speaking of the trading market -- is nothing bad, but it's a piece of their industry. Domain investing benefits registrars. First of all, there is a fee. And for the registry, it's much better if there are millions of domain names registered. And I also agree with the stats previously mentioned, that more than 50% of all registrations in the world are for investment or speculative purposes.
So the registries, they get a lot of additional scale and simply they get a lot of additional fees and either it makes them more profitable or it makes them get more money to actually decrease prices, which, from my point of view, is the better structure. I mean, for example, if I look at the German DENIC, with really efficient management in the last years and a lot of growth, they have brought the price down to about two Euros or less per domain. And that's, I think, really the way it should go, not the other way, not up. Because you have economies of scale, and it's pretty much an infrastructure, a registry provides an infrastructure. And it provides a common good. And that's what I believe the registry should be for.
So other than the benefit of the profitability and the fees, I think it's also, for the registry, a benefit to ensuring the success of the TLD end to secure market efficiency. Because what we have seen is that registries who are really strict on those policies, dot fr, for example, was one, dot eu started good, but then had -- kind of made some little mistakes on the secondary market side.
We see that those TLDs are rather punished for their behavior by investors, but also for end users. So if a registry can make sure that there is a good market efficiency and that there's a fair trading market in the name, because trading ultimately means that somebody gets the name who wants it the most and who can make the most of it. Then the registry, in the end, can benefit as well.
Yeah, I'd be happy to take questions at this point, or also, like mason, just wait until the end.
Then I guess I'll do that.
>>JOTHAN FRAKES: Thank you very much, Tim. And we will have a session for questions at the end of the panel.
And I hope that, as people are hearing from each of the providers, there's certainly a large, robust industry in the secondary marketplace. I would be astonished if a person walked away from this tutorial without that realization.
And the next person who will be speaking can also talk towards that effect. I'm pleased to introduce Mr. Tom Murphy from Name Media.
Thank you, Tom.
>>TOM MURPHY: So I'd like to echo the previous speaker's comments about thanking ICANN for having this session. And I'd also like to thank Jothan. He grabbed me about an hour and a half ago and asked me to be on this panel.
So this presentation is not exactly what I would have offered up if I'd had more time. But I would like to talk about it. And some people may know about buydomains and AfterNIC or they may not. This is just an overview. To the extent anyone is interested more, just give me your contact information. Mine will be at the end of the presentation. And I'll be happy to send you a more in-depth PowerPoint.
Just to sort of start off, I'd echo a lot of the comments that Rob Hall said in the previous presentation. I know we all hear about the real estate analogy quite a bit. But one of the things Rob said in the previous presentation was about the new versus the old. And I think Tim mentioned that as well.
And I think mason as well.
So, you know, we're really coming into this, the secondary market, we agree, is becoming even more and more important, especially to registrars and anyone else who has a business anything similar to this on the Internet.
So the name of my company is Name Media. We have a couple of different divisions. I'm with the BuyDomains division. And I'll mostly talk about that. And as I say, to the extent that somebody is interested in the parking side, which I really don't have that much to do with, I'd be happy to get you some information.
But Name Media owns a couple of different companies. Anyone who has had traffic a couple weeks ago probably heard we bought smart name, we bought AfterNIC back in November.
BuyDomains is actually about a nine-year-old company. And they were purchased by what is currently Name Media roughly two years ago.
So that's sort of an overview of the company. And as I say, I'll be happy to get you more information.
One of the things we've really concentrated on is this secondary market is becoming the primary market, the real estate phenomenon, basically, that if you were interested in a house and the real estate agent was only willing to show you a new house, well, that would take out most of the good houses. It would take out most of the inventory there. And so, again, I hate to really compare it too much to real estate, but in this particular case, it really does illustrate the point I'm trying to make.
And, you know, this is definitely, this presentation is focused on our registrar partners. And we have relationships with seven out of the ten top registrar partners in the United States, and we're continuing to work with other people internationally and also people who aren't necessarily registrars, but they're interested in offering to their customers, to their constituency, the after market, and also, you know, being able to give their customers some value and also to make a profit from that.
And this is BuyDomains. Again, some of the numbers here are slightly wrong. We are the world's largest owner of the after-market portfolio. This number is wrong. It's almost 800,000 now. I've been with the company almost a year. And when I started, it was 425,000. So a lot of people say BuyDomains, are you buying domains or selling domains? Well, the answer is both. You know, as I say, we were 425,000 privately owned domains about a year ago, now we're almost 800,000, and, obviously, we are continuing to grow.
As I said, AfterNIC was purchased by us in November of last year. And we're quite happy with that. We think that AfterNIC is a great acquisition, sort of a little bit of more history on BuyDomains. About two years ago, we made the decision to focus more on SMBs. Domainers are very important to us on the parking side. And people who are domainers absolutely buy from us.
But one of the decisions that we made was a little bit different, was, we said we're looking for people who are interested in brandable Web sites, as I think both Tim and mason and JOTHAN have mentioned, you can go to a registrar, but if they don't have exactly the name you're looking for, are you settling for the 17th, you know, alternative? Or are you going to go out and look for it someplace else?
So that was sort of the history of BuyDomains. About 82% of the domains we sell a month are SMB customers, someone who really wants to start a business on the Internet, whether it's ultimate tan or Waltham landscaping. We sell about 1500 domains per month through BuyDomains. And we wait six months and then we go back and look at every single domain we sold for the month and we try to figure out how many are parked and how many actually have a business started on them. And as I say, that number is 82%. And it's something, you know, we're quite proud of. And, you know, it shows that people really are out there and they're looking to buy a domain.
I'd also agree with Tim's comments about the average selling price and where we think the market is going. We think that roughly $2,000 is roughly the ASP of the current market. And we don't think it's going to go up that much. There is always going to be vodka.coms, et cetera. But, in general, we think that it -- it really is people who are out there looking for a domain.
AfterNIC is sort of something that we decided would be a good fit for our portfolio. AfterNIC is a great brokerage site, and people can come and list their domains. And so it added another facet to our business. And they are more focused on domainers and people who want to buy and sell their domain privately, as Tim was talking about, versus someone who wants to come to BuyDomains and buy a domain from us at one of the -- you know, one of the 800,000 that we currently own.
Again, we think that BuyDomains, one of the things that really sets BuyDomains apart is that we have the world's best sales team. As I mentioned, BuyDomains has been around for about nine years. We purchased them roughly two years ago. We have 17 dedicated salespeople, and I think six of those people are from the original BuyDomains.
When we bought BuyDomains two years ago, it was basically an 11-person shop. Six people were in sales, and we still have them today. And we think that this is one of the things that really differentiates BuyDomains. When we get into a partnership with a registrar or anyone else, we handle all of the sales activity. So, you know, it's very little heavy lifting from the registrar or whoever our partner is. All they have to do is call our API and integrate our names into their names, and I think you'll see an example of that later on in this presentation. But I can give you some examples privately as well.
But, basically, they call our API and we handle everything else. And as I said, this is a value add to their customers, their constituency, because we all know that if they can't get the name they're looking for, they're going to go somewhere else and they're going to go looking for it. So this is a chance that registrars have to offer their customers something.
We're also quite creative with all of our partners in terms of offering monthly promotions. We give 5 or 10% back to the end users on a regular basis through monthly promotions.
We also have unique promotions that we do with the registrars on a monthly basis. And as I say, you know, we think that AfterNIC is the world's leading domain marketplace in terms of percentages. So these are the two main pieces of the selling of domains from BuyDomains.
Some other people have mentioned DN Journal. We think this is an excellent way of getting information. We actually just started reporting our domain sales to DN Journal I think it was November. But, roughly, we've -- we only reported to them for about two months last year. And, you know, there's quite a bit of some information that we pulled from them. You know, one of the things that Ron Jackson, of BuyDomains [sic], said was, we've always known BuyDomains was a major force in the marketplace, but we didn't realize how well they are performing until they joined our elite list. This is something new for us. And I encourage you to go to DN Journal and look at some of the archives and see some of the sales. I do have a few more blurbs here. This was from the 3rd of October. This might have been the first time we reported.
But, you know, we're definitely in the $2,000 range. We do sell some at 10, 20. We had a domain that sold through one of our partners last month at 39,000. But that's definitely the oddity for us.
We're all about domains in the $2,000 average selling price. It's someone who really wants to start a business, and if they're investing $40,000 in either tanning equipment or landscaping equipment or whatever it is, you know, to spend an extra $2,000 to have the domain that really speaks to who they are is not a significant investment.
And, again, I won't take you through this, you know, just obviously, DN Journal has said some very nice things about us since we've started reporting our sales to them in October.
This is another example of an integration. So, basically, any registrar who's interested can talk to us about integrating our names into their purchase process, and the names would show up. And, you know, we're very agnostic as far as who collects the money, as anyone who's interested afterwards, some people link right over to BuyDomains and we do all -- we facilitate everything, we collect all the money, we do the customer service. Other people would rather not have the customer leave their purchase path and go to another site, and so they collect all the money.
So this is just an example of how it works. You could have a make offer there on the domain that we own, AZauto. And as I said, you know, this is something that I was just asked to do an hour and a half ago. But, you know, I'd be happy to have in-depth conversations with anybody here about the domain marketplace. And thank you very much for your time.
[ Applause ]
>>JOTHAN FRAKES: Thank you very much, Tom.
[ Applause ]
>>JOTHAN FRAKES: You know, what we're hearing about is, you know, a lot of different people who provide the services in the secondary market. We've heard from Snapnames, we've heard from SEDO, we've heard now from Name Media, which are significant players in the marketplace.
You know, I do want to comment that the secondary market is also a large area of opportunity for new technologies and innovation. There's many companies that have started anew providing different services. I can think of one, you know, providing data research for previous registrants. You know, there's companies like domaintools.com that provide registrant lookup information. There's companies that provide escrow services that happen between the transaction, between buyer and seller. There are financial institutions that will loan money for domain purchases and also loan money based off of domain names as assets.
There are a variety of different appraisal companies that will actually help calculate the value of a domain name.
So there's a variety of different companies far outside of a registrar or registry that are new services that are built on -- upon the secondary market. And one of the companies that was invited to come speak today, the next speaker, Emiliano Pasqualetti, is from a company called Domains Bot. Emiliano now has done research on different segments of market sales. We introduced -- I invited him here for this panel because of some analytics that he's done on some sales that I saw him present the Domain Pulse in Switzerland that I think Wolfgang mentioned earlier.
So our next speaker, Emiliano Pasqualetti, will talk a little bit on some analytics of domain sales from 2004, 2005, and 2006.
>>EMILIANO PASQUALETTI: Hello, everybody, and thank you, Jothan, for having me here today.
I have to say that I'm very honored to be here on this side, even if I should be there, learning from people inside the market. But I will try to give my two cents, presenting you third-party point of view.
I want to present some analytics that may differ slightly from the numbers we heard from Mr. Schumacher and Mr. COLE and Mr. Tom Murphy, just because I have been focusing on a different segment of the market that is the segment of top sales.
So domain names that have been sold in the last few years, 2004 to 2006, for more than $10,000.
So, first of all, I would like to thank Mr. Ron Jackson, DN Journal. It's pretty popular. It's evident that they are doing a great job.
I want to thank him because he provided me the data to have these stats done. And I think this is important, because these data are available. I just want to say in advance that this data may not be completely reliable and they are definitely not official. For instance, Mr. Tom Murphy just informed us that the data related to BuyDomains, for instance, may not be accurate, because they have not been tracking. And the same can be said for Pool, for instance.
So the present goals of my study. I wanted basically to answer two basic questions, like, is this market growing, the secondary market growing? And if so, how fast? How much it is growing? And what are the main features that make domain names worth thousands of dollars, even millions of dollars?
Obviously, I've been focusing on simple features, just because I want to give the opportunity to people to keep track of my results.
So we've been -- we will be talking about features like TLD, language of the domain name, number of key words, and basic, really basic traffic estimation based on the number of inbound links calculated on MSN.com and the key word popularity, things the average tool.
Then we're going to see how are these best-seller domain names used right now. We'll find out that the 50% of these domain names are actually parked, so using for traffic monetization purposes.
And at the end, I will -- I apologize in advance. I will be slightly repetitive because my conclusion will be that I really hope the primary and secondary market will work together in the future to provide the final user a better experience, trying to avoiding this frustrating experience of sorry, this domain name is not available to you.
Let's take a look at this. The best domains of the best domains. These are the top ten sales reported by DN Journal from 2004-2006.
It's interesting to see there are five seven-figures domain names, and the best thing for the industry, I think, is that three of those have actually been sold in 2006.
You can see diamond.com, $7.5 million; vodka.com, $3 million; cameras.com, $1.5 million.
Let's see some numbers on the growth of this market. Once again, please consider that these are only domain names sold for more than $10,000. So they are not so much, but as we will see, there is a lot of value also in this little segment of the market.
So we can see that this market is growing at a steady pace, for what concern numbers. So the total amount of domain names sold.
We can see 300 domain names sold in 2004, 600 in the 2005, more than 900 in the 2006.
So it seems 300 names more every year.
What is much more interesting is the value of this market. So the sum of the prices of these domain names. Here there is something even more interesting. The growth seems not to be linear but exponential.
We can see that the value of this segment of the market double every year from 12 million of 2004 to 25, 2005, to almost 50 in the 2006.
If this trend will be confirmed in 2007, only this segment of the market will be around $100 million.
Let's have a look, let's say a breakdown of the TLDs.
So we can see how dot com, once again, not surprised, seems to be the king of this market. The 86% of the total value exchanged for these domain names is related to dot com domain names. But I want to highlight the incredible performance of other group of domain names.
First of all, with the other group, obviously I mean all the other I could not mention, but I would like to mention dot EU and dot mobi, especially, because since they are driving up the value of this group with an incredible growth rate of more than 300% in the last two years, so a growth rate that confirms during the time, I want to mention domain names like hotels.eu sold for $130,000, flowers.mobi for $200,000. I would also like to highlight the good performances of domain names like dot net and dot org that are confirming very interesting growth rate.
Let's see what's happening in the average value domain name.
I can see that these numbers confirm the theory of an average value that is not increasing so much. The only exception may be the other group that obviously contains different TLDs that are very proper in this moment. Like I said, dot EU and dot mobi. These are really increasing the average value. But we can see that average value are not growing so much.
Obviously, these levels of average value are very high, just because the segment, the cheapest domain in the segment is worth $10,000, of course.
Let's have an overview of what happens by language.
So first of all, I have to say that the second group, the one named "other" contains domain names that actually are acronyms, numbers, and related to languages that are not listed here, like Chinese, Japanese, also Swedish.
Once again, we can see that there's another line in this analysis which is English.89% of the total domains sold in the last three years was related to English domain names. But it's also interesting how other languages are growing.
We can see, for instance, the average volume of Spanish domain names are very interesting. I would like to mention a domain name like amistad.com, which means friendship.
Once again, we can see the average value even for the languages are not growing so much. They are obviously slightly increasement because of the size of the sample. Of course, seven figures domain names can really increase the average value for one of the category.
One of the most important feature of a domain name seems to be its length and the number of component key words. It is obvious that in this market, domain names that are descriptive and especially short domain names made of one or two key words are definitely the biggest part of this segment.
We can see in this graph where we put -- we count the number of domains sold. We can also see it here, it's even better. This graph shows the value.
So the sum of the prices of each group. Domain names made of one key word definitely has the biggest value, in absolute, let's say.
This graph is one of those graphs that we need to consider not super reliable, of course. It's just a simple count of inbound links from MSN.com.
Obviously, it would be extremely not accurate to consider these as one of the most important drivers of the traffic of domain names that is obviously one of the absolute driver of the value, because this doesn't consider the quality of back link, of course.
But it's interesting to see that there is a relationship between the number of inbound links and average value of a domain name.
Same for -- same happen for the key word popularity.
We use the overture tool to try to understand how popular maybe a key word or set of key word, to try to understand what we calm the typing potentiality. In this graph, we cannot see a very clear trend, but this is because obviously there are some domain names that are very popular, but they are in, let's say, different extension but TLD and this may lower down the price. I might have some example, like roommates.US, idea dot net, theater UK or wellness.org have been sold for $10,000 only.
So let's try to regroup considering dot com name only. This is much more clear.
Obviously, under that extension, the popularity much the component key words seems really to be an important driver of the value.
So let's try to recap this basic analysis.
I hope the numbers and trend may add some value to this conversation because the best seller identikit, seems to be pretty obvious. This means that best seller domain names are dot com domain names made of one or two key words, especially if English key words, and that have kind of a popularity, they are meaningful and that people may look for this key word on the search engine and hopefully type in the navigation bar. And of course try to have a large amount of inbound links that may be an important driver of traffic.
Let's have a quick overview of the secondary market from the vendor side.
Please, once again, consider that these are not visual numbers at all. But we can see how SEDO and the private sales are the most efficient drivers of sales in this market. Probably this data is affected by a systematic error. Of course DN Journal keeps track of the biggest sale. That's probably why private sale was not so important in Mr. Schumacher's presentation because they do not track sales that are lower than $10,000. But in the segment, private sales seem to be pretty interesting.
Also, for the value of the domain name exchange. Once again, it seems that from this data, that please consider is not super accurate, SEDO and the private sales are almost half of the market in value, let's say.
>>JOTHAN FRAKES: Emiliano, can I ask a point of clarification?
So I noticed on these slides, you are saying the data source is from dnjournal.com for sales over $10,000 U.S.
>>EMILIANO PASQUALETTI: Yes.
>>JOTHAN FRAKES: So does it factor in, like pool.com and some of the others probably don't provide their market data. Would that be -- because I think pool is probably about the same size as, say, SnapNames and SEDO.
So would you say it's possible that some large sales are not reflected in this, is what you are saying as you make those comments?
>>EMILIANO PASQUALETTI: Totally, of course. I just wanted to use these data because they are available to the public and pretty reliable, but this is not official data, so I apologize for any inconvenience.
So this is a very interesting of what happens of these best seller domain names after they are changed. I have to say I was impressed that almost half of these domain names actually are not developed. They are used for traffic monetization purposes and they are actually being parking on the most important parking providing system. We are going to see a quick breakdown later.
Only one third, less than one third of these domain names have actually been developed on a real -- let's say on classic Web site, let's say.
And there are also other form of traffic monetization, like the redirection and the affiliate marketing and advertising that is basically a kind of attempt of using (inaudible) to monetize traffic.
I wanted just to add two cents on the redirection. An example is vodka.com that has been bought for $3 million on SEDO, and that actually redirects to another Web site that is Russianstandard.com.
So let's have a quick overview of the parking companies and their market share.
Once again, it's important to understand that these are not official data, but we can see how this market is composed right now. We can see that SEDO, traffic lab, hit farm, domain sponsor are important player in this market.
Let's go to the conclusion.
So my goal, my aim was to demonstrate that what are the factors, the drivers that makes domain names worth so much. And my consideration is that all of the driver we share, the factor -- the features we shared are features that indicate that the primary market is actually running out of resources of primary resources.
The problem of the scarcity of valuable domain names is a systematic problem that affects primary market and that go to the benefit to the secondary market.
So I see a systematic exchange of value from the primary to the secondary market.
But talking on a user point of view, end-user point of view, I really hope that these two markets will work together in the future. We already heard this concept before, but I really think that this is a great opportunity for the primary market, so for the registrar, to keep on pushing, driving the effort to gather the most amount, the largest amount of end user while I see great efforts on the secondary market side, great efforts of consolidation and increasement of efficiency.
So I think 2007 may really be the year where the end user will be presented not only with, okay, this name is available or, sorry, most the domain you are looking for are not available, but I think we are ready to provide the end user with the largest amount of choice because probably the best domain names are not taken. Are just available on a different market.
And I see a great opportunity of these two markets to work together, triggering a lot of business opportunities, especially for other players in the market that Jothan, before, mentioned.
So thank you very much. I think we'll have all the question together in the panel.
[ Applause ]
>>JOTHAN FRAKES: Thank you very much, Emiliano. And it was very interesting it hear some of the top-line that came up with the research.
And I think that some of these presentations will be made available on the public Web site.
I'd like to open up the microphone to questions and answers at this point, if there's anybody from the audience who has a question.
We do have some questions that have been -- that I'll ask of the panel as well, if we don't see any questions from the audience.
If you would, come up to the microphone and introduce yourself, please.
It looks like Jude Augusta from the Internet Commerce Association is approaching.
>>JUDE AUGUSTA: Thank you gentlemen. Excellent work.
>>JOTHAN FRAKES: Just a second. Is the mike working for the audience?
>>JUDE AUGUSTA: Thank you, gentlemen. Excellent work up there. It was very informative. We're glad than ICANN has taken notice of this -- I was going to say sleeping giant, but it's no longer sleeping with all the revenue that's flowing.
As many of you are aware and as Jothan indicated, I am with the Internet Commerce Association. We are a heavily backed internationally sponsored organization representing the domain name after market as well as the domain owners.
We have been in business -- well, as a non-profit organization for a couple of months now, and fortunately can show up at these ICANN meetings so that we can help participate in domain governance whereas you guys have been doing this a lot longer.
With a couple of debacles now -- Emiliano, let me give you some background. I apologize.
To lend some credibility to the organization, Oversee and Domainsponsor sit on our board. Tim and SEDO sit on our board. The well-liked Ron Jackson of DN Journal that I don't think anybody has alluded to mention is a member of our board. Tim Cole and SnapNames and Tom Murphy, not yet. We're working on it.
This industry is blossoming at an alarming rate, and it's very complicated, being international in scope. Things like the RegisterFly.com debacle, 75,000 domains were unfortunately lost. We are all trying to figure out what to do there.
Registry increases, as well as new registries, the dot XXX registry, these are all things being deliberated right now. And fortunately, we in this organization and you in your organization have the funds to come and represent your interests.
The interest of your domainers, however, we are wondering if those are paralleled and how much of your input is sought by ICANN. What are you doing or what has been solicited by ICANN from you to work with you, to represent the ten-plus million domain owners so that their interests are represented in all of these decisions being deliberated?
>>JOTHAN FRAKES: So, you know, I heard that the rights of domain owners sounds like something that the Internet Commerce Association is about, and I think that's -- this is my opinion. I think that that's a good thing.
Could I maybe revise the question to say is the secondary marketplace, perhaps, capable of self-regulation. Could I maybe pass that along here for each of you to answer.
Starting with you, Mason, maybe.
>>MASON COLE: Is it capable of self-regulation? Sure, yeah. It's been around for six years. The secondary market does fine.
To combine Jude's question and Jothan's question, the question might be where does ICANN fit into all this? And right now what we're doing here is a great example of exactly where ICANN can fit in.
Within the scope of ICANN's duties, technical coordination, stability of the Internet, of the domain name system is it's perfectly legitimate that we all operate under those constraints.
This sort of forum where maybe market developments are new to some folks in the ICANN community, this is an opportunity to exchange information on those developments and help us all learn and exchange ideas and look for places where we can collaborate.
That, in my mind, is probably the best way right now that the ICANN community can contribute to this process.
So I think I'll just leave it at that.
>>TIM SCHUMACHER: Yeah, I would agree with Mason. I think the dialogue is very important.
I do think that the market is, despite sometimes being viewed as a wild west market, it's doing well. And I think the market itself will lead to that credible companies, like real offices, track record, history, they will survive while other companies will probably not be accepted by the customer.
So I think as long as we all make sure that we maintain a positive attitude and abide by the general business laws, that there are no other regulations needed.
Maybe not a regulation, but something where I think a process could help is in regards to domain transfers on the secondary market. From my opinion, the -- it's the hardest -- once a name has been told, to actually transfer a name, even if there has been agreement on a marketplace like SEDO. And that's a problem which every marketplace has.
So if there was something like an ICANN accreditation for secondary marketplaces with the ability to really make instant transfers, I think that would be something which would add a very positive regulation to the industry and a lot more transparency and benefit the users, ultimately.
>>TOM MURPHY: I would agree with Mason and Tim that the secondary market is fine.
I think that the hardest thing for people to -- well, first of all, I guess, this is a first step, a positive first step, this panel here.
But I think that the hardest thing for people to understand is it's an educational process.
I think people are used to $6.95 domains and now all of a sudden they are being faced with $500 domains or more. And that is a little bit of a shock.
So I think that anything that ICANN can do in the educational process so that people understand what the secondary market is, and, you know, how it works, it will be something very good.
And then finally, I couldn't agree with Tim more. Absolutely the transfer process where someone is selling it could be vastly improved.
And so the -- to the extent that ICANN can assist us with some sort of instantaneous transfer process or just improved as we're selling it to somebody, especially where there's an escrow agent involved or other parties, I think that would be something that would be great.
>>JOTHAN FRAKES: And Emiliano? And I'm not sure if that directly affects domains bot in any way. Do you want to comment on this?
>>EMILIANO PASQUALETTI: No, I don't think this affects my company so much, but I definitely think that this self-regulation would be an important process to have this market working together. And I just want to thank name media and SEDO for their work in consolidating this market that definitely to me seems an important step towards better regulation and handling of this market.
>>JOTHAN FRAKES: Thank you, Emiliano.
And we have a question from the audience.
Thank you for your patience as well.
>>HILDE THUNEM: Thank you. I'm Hilde Thunem, from the Norwegian registry. And I'd like to thank you for a couple of very thought-provoking presentations.
I have -- well, I won't say "simple" question, but more factual question.
You're talking about a secondary market that seems to be primarily driven by the fact that there's a lack of attractive domain names at the primary market.
Do you have any guess on when this happens in a TLD, at 50,000 domain names, 500,000 domain names? 2 million domain names?
Because it doesn't seem to have happened in every TLD in the world. When does it start?
>>JOTHAN FRAKES: So if I could summarize a question without butchering it, will you nod if I got it right?
You're asking basically at what threshold does the secondary market really become relevant in a TLD as it grows?
>>HILDE THUNEM: Yes, at what level does the lack of primary Dames start driving the secondary market?
>>JOTHAN FRAKES: So, actually, Tim Schumacher, you have probably the most experience with multi TLDs by working with ccTLDs.
>>TIM SCHUMACHER: It's a tough bit a very good question. And I have to do a little bit of research on that afterwards. Because we don't have a lot of data on that, but, really, it's a good question.
From my gut feeling, I would say that it's not only -- there's not, like, this one threshold, but there are other factors. And the one most important one is the size of the population and the size of the language. And Norwegian is obviously a very small language.
And so that leads to actually being, of course -- of course, the threshold being actually higher. And then the question is, what are the boundaries of the TLD? A dot com -- like, for example, English has a lot of words and has a lot of population, but it's also used internationally. But then you should -- we still have to differentiates, let's say, the dot U.S. TLD has another threshold than the dot com, because the dot com is used internationally, and you have a word which in Norwegian means something, it means something in German, it means something completely different maybe in the Chinese transcribed language or even in an abbreviation of another language. So there the problem multiplies. So it's really hard to say where this threshold starts.
I would say pretty much from day one, when you have 100,000 domains registered or something, it is already an issue, because the amount of really good domains, yeah, I mean, in Sweden, for example, we saw a car, dot SE, also in Norwegian, where it's the same word. I mean, a domain like this only exists a couple of hundred times of that quality. So already if you have 1,000 domains registered, the competition starts. But, of course, is multiples the more domains you have. And I think it's just a question about the volume. It's not about that there is a starting point. It's just -- it's getting more and more intensive and the volume is going to grow.
But the questions for you as the registry are probably the same at this point than they will be if you have maybe one domain name for every Norwegian and you'd have 4 million domain names registered, or 3.
>>HILDE THUNEM: Thank you. Just a small observation. I don't know whether it's because Norwegians are weird or other explanations, but we did some years ago have a change in policy where we allowed a lot of generic domain names being registered, like car .NO in Norwegian and computers.NO. One year later, we went through, as a registry, and looked at the top ten. None of them had changed holders or seemed to have had any activity at all. So at that point, it was more or less hyped up as a very valuable thing that wasn't used afterwards.
Whether that situation has changed today, I don't know, because we don't have the situation releasing of domain names as we did then.
>>JOTHAN FRAKES: Thank you. Good observation.
You know, I think that's a good segue into one of the other questions I was going to pass along to the panel, which, you know, how does introduction of new generic top-level domains or new top-level domains impact the valuation of domains? Does that make the value of a dot com go down or does that make the value of a dot com go up?
>>MASON COLE: I've been assigned a different microphone.
No, not yet, it hasn't made the value of a dot com go down. And I don't know when or if it will.
But there are -- you can see in any new top-level domain that is introduced, and this applies to some degree to ccTLDs as well, there are certain generics or certain key words that are highly valuable, for a number of reasons that you can guess, words like cars or, you know, boat or travel or what have you are all extremely valuable, because it encompasses so much potential for commerce and traffic.
So those are always going to be sought-after names, no matter what TLD they're in.
After that, value tends to be determined by other characteristics, like, you know, how much activity is going on underneath that domain name. Is it in use? And is it -- you know, is it selling product or is it waiting to be put to use?
So we've had several new TLDs introduced in the last couple of years, .EU is in the market now, .MOBI is in the market, .asia is coming soon. Have any of these negatively influenced the value of dot com? No, not at all. I don't think that any of us can see. Does that suggest that those TLDs are less valuable? No. Over time, they may become just as valuable. But this is a very early marketplace, and there's lots yet to happen that could influence the value of those names.
So to make a call about the impact of TLDs on other TLDs or those kinds of things at this point would be probably very premature.
>>TIM SCHUMACHER: Just one short comment. I think I agree with what mason said, but I think it ultimately depends on the consumer and on the consumer behavior.
A domain is something where people have gotten used over the years to just typing this name and to use it and to see that's something credible and that's why a domain name is valuable and that's why we believe that a domain name system cannot be overturned overnight.
So the question is, will consumers change? And do consumers see a new TLD as a substitute?
And the best observation I see in markets are, like, in closed local markets. So if you could compare, for example, dot US versus dot FR, and both are TLDs which have been around forever, but they have just been lately liberalized, lately being about two or three years ago or one year ago. Dot US is not seen as a substitute in the U.S., at least not that much. And so it hasn't affected the value of dot com. Dot FR on the other side, the liberalization, I think, has done a lot for the value of dot FR. And it might have even diminished a little bit of the French dot com in France. Because consumers really like the FR, and it has been, like, a natural substitute, because a lot of large companies have been using the dot FR for years. So, yes, I think it can -- there can be an effect of a new TLD, but it really depends, ultimately, on the consumer.
>>TOM MURPHY: And once again, I'm going to have to agree with Tim. And just I'll add a little bit on that.
And I think it's -- the behavior of the consumer, but it's also -- there's a tipping point at some point in the market, you know, what is the -- what is the viable inside? And Tim used FR. And I think another great example is dot DE. BuyDomains for the most part has concentrated on com, net, and org of our roughly 800,000. Most of the domains we have are in those three categories. But we are asking ourselves exactly these questions so we can figure out where we should be investing in these different TLDs.
Dot DE is the example I was going to use. You know, people would rather have a dot DE over a dot com in Germany, especially if it's German phrased, German language DE over German language dot com. So I think it does have a lot to do with the consumer and the marketplace itself. These are very good questions. We're doing the analysis right now to try to figure out what is the behavior of the consumer, the marketplace itself, and we're trying to determine where we should be investing our dollars in terms of building our portfolios in these markets so that we can have something to offer these people in these marketplaces as they expand.
>>EMILIANO PASQUALETTI: I just would like to add my two cents.
Doing my statistics, I was curious to see if the domain name that I found that had different TLD but dot com, if there was the availability on the dot com for the same name. And, obviously, the answer was no.
So it seems to me that my personal experience of if you have -- for instance, I'm Italian, I have to suggest one of my friends to buy a dot IT domain name, I strongly recommend to check the availability of the dot com. So I may think that even if new TLDs will be implemented, there will be an increase of the request of dot com names. Probably the idea of people is to try to have them both. And considering there are a lot of, for instance, parking pages, let's say, if I may be interested in having my brand, and I find the dot IT domain name available, I may go and check for the dot com availability, and I may find this domain name is, like, parked. So I may want to try to offer to the domain owner a good -- a fair amount of money to have that domain name.
So to my personal point of view, it fosters the value of dot com names. Still dot com seems to be the (inaudible).
>>JOTHAN FRAKES: Tom, you commented on the ccTLD, like, for example, dot DE being very strong in the German marketplace, as far as the adoption of the domain name. And to maybe go back to the question about the dot NO generic terms that were released, you know, perhaps as people realize what a robust economy Norway has, there might be an entrepreneur who comes in and creates a portal for cars and contacts the registrant to seek that name. That's something that we often see, is that the marketplace comes in and approaches, as Emiliano mentions, to acquire a domain name.
>>TOM MURPHY: Jothan, I would agree with that totally. We think that the good names are gone in dot com, dot net, dot org. We continue to go out and grow out portfolio. As I said earlier, we were 425,000 a year ago. We're 800,000 now. We do do some mining, of course. But for the most part, we do that by buying large portfolios.
So, you know, absolutely, you're correct in dot NO, dot IT. We're taking a look at the behavior of the consumer and the growth of the marketplace and trying to figure out where to make our bets.
>>JOTHAN FRAKES: Thank you.
We did have another question, which is, what are the typical secondary market purchase domains used for after the purchase?
And I think we saw in some of the research from Emiliano that many of them are parked or under construction.
What are you seeing, each of you, I'd pose the question, Tom, Tim, and mason -- thank you -- if you would comment on that? What are the names used for after their purchase?
>>TOM MURPHY: Right. As I mentioned in my presentation earlier, we typically wait six months after we sell a domain. So we sell 1500 domains a month roughly, we wait six months and then we go back and have someone actually go back and figure out where these domains are.
In 82% of the domains that we sell through BuyDomains are actually developed sites six months later. And I think that goes to what we were talking about earlier about, you know, the power of the SMB owner, someone who really wants Waltham Landscaping or Ultimate Tan or whatever it is. They're not buying it for us for PPC value. They are buying this because they want a brandable name, they want to start a business. We arbitrarily pick six months as a time to go back. I think that we're going to play around with that a little bit, go back after four months, go back after eight months, and basically see how that changes. We know for us that 82% of the people who buy the domains do develop the site within six months.
>>JOTHAN FRAKES: Tim.
>>TIM SCHUMACHER: Yeah, I think I sit also geographically in the middle between BuyDomains as mainly, primarily, small business customer-oriented site, and on the other side, Snapnames as a heavily domain investor site. And I think with others, it's kind of half-half. So it's maybe 50% investors, 50% end users.
>>MASON COLE: Yeah, our user base is all over as well. We -- we do have a pretty significant amount of our buyer base buy domains for their investment value. One of the faster-growing segments of our customer base, however, is small to medium business owners and others who are looking for domain names at the moment of their availability for reasons other than domain name investment. They want to establish a business or a storefront or a portal for their family or for some other reason. There's a -- there's all kinds of reasons.
We, interestingly, we have a fairly significant amount of our customer base that is -- uses our service to recover intellectual property.
So we have customers who are protecting the real estate around their trademarks, and they come to us to be able to do that, to recover marked property.
So we have a very diverse customer base as well.
As far as the audit of how those names are put to use, we haven't done that as deeply as I know I would like, but perhaps we can when we invent the new day of the week where we can all get that work done.
>>JOTHAN FRAKES: Well, thank you very much.
We're coming shortly to a close.
I did want to make some summaries here that the secondary marketplace is obviously quite robust, that there is a significant amount of activity.
If you did learn something today in the tutorial I would encourage you to go to -- there are quite a few trade shows that have grown up in this industry. As I was mentioning, different offshoot businesses.
There is the -- I did a little research and found some dates.
There's -- ICANN has their meeting the 25th through 29th in Puerto Rico. Prior to that there is a show called targetedtraffic.com that has a New York show the 19th through the 22nd in New York City.
Excuse me, in June.
And then in October, 8th through 12th in Miami.
Domainfest has a show coming up in Amsterdam in May at domainfest.com. And the domain roundtable conference is a very popular conference where you can learn about the marketplace, will have a show in Seattle August 13th through 15th.
You can try any of these shows. It's great place to learn.
It's also been mentioned, I think, by each of the panelists, the dnjournal.com is a great place to find out more about what's going on in the marketplace itself.
And I think I mentioned a few other tools today. There was a mention of the overture tool for Yahoo! for determining link backs and key word popularity. We mentioned domaintools.com as being a valuable research tool for domain ownership and historical data purposes.
So with that, if I don't see any more questions from the audience, I'd like to thank everyone for participating in this session. Mason, Tim, Tom, Emiliano, thank you very much for participating in this session.
I'd like to once again thank Tim Cole and thank ICANN for again having the vision to put together and introduce some of the things that are happening in the marketplace beyond just the sort of policy type of discussions that happen at the ICANN meetings.
I'd like to thank everyone in the audience who endured this two-hour session. It's quite a long session. And thank you very much to those who participated remotely.
Thank you very much.
[ Applause ]