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05|14|2008 11:10 am EDT

Surviving the ‘Dot-Crunch’

by G Bag in Categories: Featured

Domainers Must Adapt…Again

It’s a funny thing how domainers always expect their stank to rise…and continue rising. Funny because if you’ve been in this business long enough you’ve likely weathered, or not, a few industry tempests and cycles. We’re hardened sailors who have seen tough squalls and lived to tell the tale.

Truth is, over time things have ‘changed’ much more than domainers care for – there is no question. There is nary an old domainer, no matter the age, without a gray hair or two from our career. So part of the expectation may be wishful thinking, part of it denial, part of it realistic business outlooks and goals.

If there is one thing to be said about domainers, besides they like to party and are generally ADD, is that ‘growth’ is always on the brain. Each acquisition is an attempt at growth – we feel if we stop buying, we stop growing. We have ‘fear of non-growth’, thus the long-held belief that domaining is an addiction. I’ll drink to that.

So as we struggle to make our way through floundering economics and currencies, regulation and litigation, registrars and beyond, domainers should look at their past cycle performance and adjust, adapt and grow. The past is prologue.

For example, the current propensity is to pull back on domain purchases – all while it converts to a buyer’s market. A smart domainer looks for the peaks and valleys in the cycle and anticipates each quarter-step forward. After all, we made our sweet creamy butter via ‘anticipation’ and ‘risk’.

But the real question at these moments becomes a matter of faith – if you believe domains (dot coms, in this case) are the future global standard, then now is the time to expand, anticipate, grow baby!

Alternately, if you are skeptical, low on funding or already well seated in the space, then now may be the time to lay low and, if at all possible, not sell. Truth is domainer-to-domainer sales are not the future and never were – too much perpetuating money, too much depreciation as domains go from holder to holder. Eventually, the risk outweighs the return.

The future lies in end-user sales, the Holy Grail of domaining, with the emphasis on ‘quality’ – irreplaceable domains, in other words. Names that have no alternate, no opposite, they are a singular brand or product or service. They are marketing machines by their birthright; they are one of a kind.

In the recourse, there is little individual domainers can do to affect the overall outcome beyond supporting the community, the industry as a whole. No, for holders, it is a matter of fittest-type survival in turbulent terrain.

My advice, far more dependent on your current financial state, it is to reassess, find your bearings – domainers are often brilliantly scattered-brained as they chase one name only to lose an equally good name to lapsed registration. DOH!

For all of us, as a sum of its parts, it is best to pool together – surround the wagons in no uncertain terms. Yet as an ‘individual-based’ industry, that seems less likely as fewer and fewer of its inhabitants attend to its overall health.

If for some reason the industry dies, it is no doubt for a lack of community, of unity and fraternity. It is as if the founding fathers decided they had enough land and wealth and need not go to Philadelphia to declare anything against Britain. In fact, by not going, they reasoned, they were declaring true ‘independence’ – I am my own island. That’s the collective spirit d-town!

So here we sit, between a rock and a really hard place, like a Republican having to vote for Grandpa McCain, waiting for the world to decide if it needs Internet addresses for the long term while the industry splinters and flails at its own lack of commonality.

Sadly, we’re nothing more than street vendors to the larger world – “I got great .com, I got excellent two word .net, I got .mobi – big discount only for you, my friend! You buy!”

In that case, perhaps the best advice is to head out to the countryside, get some friends to hide you in a hole in their yard, put an air tube running up to the surface a la Saddam. And don’t forget, you’re going to need some Grecian Formula for those new grays.

But you better hurry – sky is falling…again!

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6 Comments

Sergio

May 14, 2008 @ 11:41 am EDT

Great article. I agree with you that we need to form a “community of unity and fraternity”. To this end, much is being achieved. New networking community sites are popping up, such as GeoDomainer.com and SynergyDomainClub.com. These entities, along with DNForum and NamePros, are vital to our strength as an industry. I, for one, am optimistic about our ability to emerge better and stronger despite all of these new circumstances that affecting our industry.

Cheers

Damir

May 14, 2008 @ 10:35 pm EDT

Great post

But you better hurry – sky is falling

Antoinette

May 15, 2008 @ 12:42 pm EDT

Thanks for your frankness. I’m new to the domain name business (6 months) and I had such high expectations based on my (limited) research into the field. In my experience, it is lucrative to those who have dynamite names which cost $$$ to purchase in the first place. Most low level domainers are just getting by or, frequently, losing money.

Those are the risks, I understand. What I don’t get are the continuing “rosy” predictions I read about in domain polls and surveys. I don’t know if it is denial as much as the fear that they’ll be a downturn in domain purchasing among domain owners if there’s a feeling that the market is in trouble (fear creating the conditions that we fear). Personally, I don’t feel very optimistic, especially in this economic climate. I see domain names for sale that are clearly being discounted, just so the owner can get some liquidity.

I agree that right now there seem to be more sellers than buyers and it doesn’t serve anyone to view the industry through rose-colored glasses. I imagine things will eventually improve but, for the love of God, please stop with the domain hype. It just brings more newcomers into the field with inflated expectations of making big bucks. I do believe in cycles but end the talk of a gold rush on domain names. JMHO.

Susan

May 15, 2008 @ 12:42 pm EDT

Very well put. Stregthen the industry by working together as a community not in a silo.

Stephen Douglas

May 19, 2008 @ 4:58 am EDT

Well Frank or Adam, (not sure who wrote this fine article), you get kudos for repeating what I stated on my blog and in my comments for over a year: Selling domains to other domainers is incestuous and will make domain values depreciate. End users should be the focus for ALL DOMAINERS.

The domain investors who can make this happen are the big conglomerates (NameMedia, DemandMedia, etc etc). When the domain auctions come up, I always cringe when I read their information because I know nothing will be said about who the buyers will consist of. We all just take it for granted that the buyers will be other domainers. Good/bad, who really knows, but my gut instinct has been that this “circular buying” will hurt domain values.

Advertising agencies do NOT want a powerful premium domain name to steal their hourly invoicing on creating a “new marketing campaign” for their clients. Ad agencies buy lame, long and ridiculous domain names, mainly to match their ad campaign slogans. Whether this benefits their clients remains to be seen. I don’t see it.

So selling the Madison Avenue types on “domain values” is not going to happen. If the ad agencies can’t fit that domain purchase into their own profits, they aren’t going to recommend to their client to buy the domain that will consistently bring them thousands of customers to their website 24/7/365.

I believe right now it is a buyer’s market for domains. There are a lot of reasons for this (recession, high gas prices, companies cutting back…) I see killer naturals going for less and less each week as they try to sell through the various well-known channels.

My stance has been for the last three years — form a coalition of powerful domain owners, their names (Like Ross Perot, Howard Schultz, and others) should be included in press releases promoting DOMAIN VALUES to end users.

All parking sites should include a small banner for free for an organization of domainers trying to achieve this connection, education and implementation of domain sales to the business sector. Whether it’s through ICA or another organization, we’re very late on doing what we should have done years ago…

PROMOTE DOMAIN VALUES TO THE BUSINESS SECTOR

End users are the true benchmark for determining domain values. Let’s bring them home.

Adam Strong

May 20, 2008 @ 10:33 pm EDT

stephen neither of us wrote this. . . but thanks for the added novel :)

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