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  #1  
Old 01-08-2002, 09:37 AM
Scott Scott is offline
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state of the Domain


I keep hearing from the news media about the "shrinking" internet and the "drop off" of domain name sales; if the domain name market is slowing what is happening to the resellers of domains? Is the hey day for becoming a domain reseller over?

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  #2  
Old 01-08-2002, 11:20 AM
thewitt thewitt is offline
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I think you can look at the changing practices of the domain reseller to answer this in part.

Many of the "sell at a loss - make it up in volume" resellers are now charging for other services like transfering your domain, or DNS parking, or even changing your nameserver information.

A couple of popular resellers have raised their prices in recent months, and are offering deals for multi-year registrations; robbing from next year's cash flow to inflate this year's numbers. Even Network Solutions is sending out two year renewal notices rather than one year notices now.

A few have gone out of business completely. I have several transfers just this morning from an OpenSRS reseller who disappeared late last fall.

Many domain resellers are getting into the hosting business to try to bring in more coin.

The domain speculation market is certainly drying up, and there is a move afoot from VeriSign to capture the expired domain market via an exclusive partner ship with SnapNames that guarantees them $40 for any domain that sells between the time it expires and the time it drops.

So I would say yes, the heyday of domain sales is over. Normal, solid business practices will rule the day from here forward.

-t

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  #3  
Old 01-08-2002, 12:11 PM
JayC JayC is offline
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Quote:
Originally posted by thewitt

Many of the "sell at a loss - make it up in volume" resellers
If you sell at a loss, doesn't more volume mean more losses? What do you make up in volume if you're selling at a loss?

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Old 01-08-2002, 12:55 PM
thewitt thewitt is offline
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Quote:
Originally posted by JayC
If you sell at a loss, doesn't more volume mean more losses? What do you make up in volume if you're selling at a loss?
Customer base. That's the whole point for selling at a loss or a very limited profit; to build your customer base, and charge them more later.

Some of the most interesting business plans ever written were developed in the dot-com boom. Some of these companies are still losing money, and when the venture capital runs out, they will close their doors because they were not able to turn the cash flow problem around. Their "jack it up later" plans did not pan out and they and their investors lost the bet.

I know of one domain registration service who loses $1 a domain, for every domain registered. They are prepared to lose $100,000 this year in domain sales losses. Their plan? Raise prices next year. They already charge for transfering out of their system, so most people don't transfer out. They plan to double their rates next year. They call their existing rates "Special pricing" and don't tell anyone they are going to be jacking up prices in a year, however their TOS states that they can raise prices at any time and existing customers are not grandfathered into the old prices. How do I know this? I was approached to invest in the company when they started. I still have a copy of their prospectus.

Would I want to position myself like that? Absolutely not. I would not even associate myself with these guys. I did not invest.

Will they be successful? Yes - for the short term.

Will they be around in two years? I highly doubt it. The owners don't care however - they believe they will have moved on to the next project by then, and plan to sell the company at the end of their second year. They will sell a profitable company, probably get a bundle for it, likely selling the customer base to NetSol or someone else with deep pockets.

Sorry. That's not how I work, even if there is more money in it that way.

-t

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  #5  
Old 01-08-2002, 01:11 PM
JayC JayC is offline
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Quote:
Originally posted by thewitt

Customer base. That's the whole point for selling at a loss or a very limited profit; to build your customer base, and charge them more later.
OK. Personally I'd refer to that as "sell at a loss to build a customer base," not "sell at a loss - make it up in volume." But that's just me.

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