

I Buy and Sell Domain Names AMA - ohashi
http://www.reddit.com/r/IAmA/comments/dwuhu/iama_domain_name_buyerseller_ama/

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thenbrent
My understanding of the domain market is this.

Regulators realised the best way to provide domains was to let the market
determine their value and allow them to be traded at will (with respect for
IP). So they wholesale at dirt cheap prices on a first-come first-served basis
and people can then buy and sell them based on market value. Works for real
estate so why not domains?

The problem derives from the initial price and the expectations that implants.
Many expect a domain to cost $10. So when they are offered a price more than
that, they are pissed off and blame the person selling it to them.

Nobody walks past a vacant block in a prime real estate location and goes
"bastards, if they weren't squatting that land, I could snap it up". They know
the land costs $x million and don't assume it should cost $10. However,
because domains are a new real estate market and not every possible domain is
out of wholesale, people base their expectation of price on the wholesale
price.

Now, let's think of the alternative. Anyone who has tried to buy a top level
domain for a country that heavily regulates the names would understand the
pain of the alternative. It can cost hundreds or thousands for the wholesale
price. You're required to own the trademark already (which adds additional
cost for a new project) as well as have a registered company etc. I can think
of dozens of my favourite projects/blogs which I'm sure don't have a company
or trademark registered under that name. This system would not only be a pain
for small business, it would stifle innovation on the web.

I'm not a domainer (I do own about a dozen though) and I get just as annoyed
as the next guy when I come up with a name for a project and find some punk
wants $15k for the domain. But then I think of the alternative.

~~~
davidw
> Nobody walks past a vacant block in a prime real estate location

Vacant blocks in prime real estate locations are taxed at their market value
though, no? So if you've got that land sitting idle, and you're not collecting
income from rent, nor using it yourself, you're going to lose money on it.
This is an incentive to sell it to someone who will make money, or otherwise
find a way to employ it more productively.

That said, I don't think I'd really like to see property taxes on domain
names.

~~~
thenbrent
At first I liked the idea of market value based taxes and clearly a bunch of
HN readers agree with the idea.

The biggest issue I see though is the implication for small projects.

For example, maybe in 1994 you snapped up _pizza.com_. You could have been
using it ever since for a pizza price search engine which gets 100,000 unique
visitors per month and earns you $5,000 per month. That's decent income,
except the taxes on the domain's market value of $2.6 million[1] would be
crippling. So despite using the domain in what most would think of as good
way, you couldn't afford to have such a good domain. Now extrapolate this
example for the thousands of sites that have a good domain name for a small
project.

[1] <http://news.cnet.com/8301-10784_3-9912380-7.html>

~~~
davidw
Yeah, like I said, I ultimately don't think it's a good idea: it would add too
much friction for the benefits.

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dotBen
Thanks Ohashi for posting this (I can see from the Reddit thread you are the
OP/subject of the thread).

However on a meta point to everyone: I don't see what value there is in
starting another, semantically forked, conversation about a reddit thread over
here on HN. Wouldn't it be best to keep the conversation over there for the
benefit of everyone, including those Reddit'rs who don't read HN?

~~~
tlrobinson
1) not everyone on HN reads Reddit

2) the discussion on HN tends to be higher quality than other sites, even
Reddit

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staunch
If domains were $100/yr each would you give up? Do you think it would kill
other domainers?

~~~
ohashi
i might be pickier, but I would also charge you 10x more on sales to cover
costs.

~~~
DeusExMachina
Do you think you would still find buyers for a 10x price? Or maybe you would
only go out of business because costs would not be covered or revenue would
not be enough?

~~~
ohashi
If everyone charged 10x the price (and they rationally would), then I think
most businesses would have to accommodate. Some would go under, sure. You
would probably see less liquidity and more sales force focus.

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dennisgorelik
I think the solution to limit domain squatting is to set domain taxes in the
same manner real estate taxes work. Charge 0.1%/year of the domain price. So
if somebody wants to buy your domain for $10000 and you don't want to sell it,
then the tax would be $10/year. That would make squatting domains without
generating any income from them not profitable.

~~~
ohashi
People generally the income generating type of domain names (those investing
in a lot of them). If it took a 10k offer to make me pay 10$ more, i'd sell my
whole portfolio at 10k each and retire. it would be kind of awesome. :)

~~~
dennisgorelik
1) It's $10/year vs $10K once. 2) If you prefer to sell your domain for the
price buyer is looking for -- that's win-win situation. On the other hand if
you want to keep that domain to yourself without using it -- then the tax
($10/year in that case) would help you to reconsider that. 3) If 0.1%/year tax
is not enough -- it can be increased a little. E.g.: 0.2%/year.

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jonpaul
Can you give us a sense on the amount of revenue you make per year?

~~~
ohashi
xx,xxx, it's more than enough to live on as a single person, not enough to
support a family probably (in a developed country)

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vinhboy
First off, I am dismayed at all the people on reddit who are condemning you.
Some people talk like they have some sort of God given right to the domain
name they want. It also amazes that people believe a successful business
starts with a domain name =|, but that's another argument.

My question to you is. Why do some squatters stay so anonymous there is NO way
to contact them? Also, it doesn't make sense to squat on a domain name that
does not get any traffic... If a squatter is sitting on a domain name that
does not have any traffic, why won't they sell even to a low offer? Like, a
$20 profit is a $20 profit right?

~~~
aberkowitz
> people believe a successful business starts with a domain name

Domain names don't make or break a business, but they certainly help. Factors
like name relevancy, and catchiness help draw visitors and create brand
recognition.

~~~
user24
Totally agree. If only google had been able to buy searchengine.com they'd
have been much more successful. Or if socialnetwork.com hadn't been taken by
an evil squatter then facebook might have really taken off.

If your business has real value, the domain name is not relevant at all. Look
at the top startups. How many of them have "keyword rich" domains that are
relevant to their business?

Of course you can argue that this is an effect of domain squatters, but I
would argue that the fact they couldn't get their first choice of domain name
has had no discernible impact on these businesses.

~~~
BrandonM
When Facebook started, it was just people, a couple pictures, their contact
info, their classes, and a Wall. There was no messaging or News Feed. It
really wasn't much of a social network at all compared to what it is today.

I would argue that some sites benefit from having a non-specific domain name.
If Google had been searchengine.com, maps.searchengine.com and
mail.searchengine.com seem a bit weird. Having a less specific name allows a
company to pivot without changing its branding.

~~~
user24
yep, totally.

Likewise if amazon had been called books.com they'd have a hard time
diversifying into the huge repertoire they have now. The same's true of just
about any popular site you care to mention. What does flickr mean?
del.icio.us? What does ycombinator have to do with startups? etc etc etc.

~~~
BrandonM
Amazon is a much better example than the one I used.

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njharman
I'm guessing it varies but how much of a domain name's value is in it's name
vs it's history (how much traffic it's getting)?

What advice do you have for someone who is not a domain seller but has
collected a couple domains that they no longer want but would like to sell
them rather than just release them for someone else to profit from?

What is the most expensive domain name you sold? Back in the original .com
bubble someone offered me (and I accepted) $10k for nonames.com. Would that
domain go for that today?

~~~
ohashi
the history part is interesting, that can be one component of value. It's more
SEO guys that look at that stuff - domain age, links, etc. Valuable names will
get type in traffic (if we define value as type in traffic - and many people
doing this do exactly that). That type in traffic is there because the name is
good and doesn't disappear/change because of history. It can only be increased
from that level because of history. In terms of valuation though, we all have
our ways of thinking about it. There is a simple traffic value estimation,
SEOs value certain factors, and many more ways to valuate domains.

as for selling, if you just want to dump there are 2 markets. reseller and end
user. Resellers are domain investors, webmasters, people here at HN probably
fit. People involved with web who will pay a small price. End users, pay a lot
more and are generally companies. You can contact them offering it for sale,
otherwise you just wait until they come to (this is what I do).

A lot of the deals I do are private, so I won't reveal the most expensive one.
NoNames.com... beats me. No Name is a big brand though now right? Not sure if
the domain predates the brand, but I would think they might be interested
among other potential buyers. You would be in the clear had you registered it
prior to their company.

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wtracy
Say someone has a site (blog or whatever) that has traffic, but few/no ads or
other monetization. How do you estimate that site's value for resale purposes?

~~~
ohashi
First I would look at the niche, is it something with a lot of monetization
options and/or high paying opportunities?

If so, I can look at similar sites, I can look at PPC bids, affiliate
programs/conversions. I could see if competitors with ads are selling and see
what sort of price/value they are offering (also checkout their media kits if
they offer to see what people are paying).

It makes a difference if you're selling a website or a domain alone though.
Domain only gets complex because the nature of the traffic matters hugely.
Changing things dramatically will lose search engine traffic if that's the
major source (toys.com is a good example of this).

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hoggle
The problem with domain brokers is trust. I simply don't see myself paying
>1000 eur/usd without ever shaking hands in real life first. All the small
brokers, no well established "brands" (at least for someone outside that line
of business) don't help building the trust needed.

~~~
user24
well, there's sedo.com, buydomains.com, quite a few established middle-men. A
lot of small brokers too admittedly.

~~~
hoggle
True, I once bought from sedo and it was OK at the time (I think it was about
300-400 EUR) but unfortunately not every domain for sale is offered by sedo
(at a comparable price).

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ohashi
I answered a bunch of questions on the IRC channel and thought others here
might be interested as well.

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SkyMarshal
What are your thoughts on the new .co (Columbia) TLD? Valuable (as an
approximation of .com)? Safe (as in not going to cut off companies like Libya
did to bit.ly recently)? Anything else?

~~~
ohashi
The value is in typo squatting co. No doubt about that. Lookup the .cm story
(The Man Who Owns the Internet on Business 2.0 back when it was running -
Kevin Ham). He wildcarded the Cameroonian DNS and caught all the typos. Since
he didn't register them, he wasn't typo squatting either, everything was
wildcarded. Brilliant business move, .co is the same thing in terms of
opportunity. As far as riskiness, you never know.

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evanrmurphy
_I Buy and Sell Domain Names AMA_

What does AMA mean?

~~~
johnthedebs
Ask Me Anything

