DomainTools Blog

Chinese.com just sold for $1,103,788 Million. If you take the population of China that is only fraction of a penny per citizen. China has a population of around 1.3 Billion. So what is $1 Million for a domain that is so targeted? A travel portal for China Travel would be awesome on that name.

If we look at it on the other side, how many rice bowls would you need to sell to get a good return on investment. For most of us in the West when we hear Chinese we think food. I am curious to see what happens with the website at Chinese.com after the transaction is finalized. It is an excellent brand and a bargain if the right company bought it. A domain’s value is all about how it will be used. The bigger the company the more value in the name. Congratulations to the new owners.

I can confirm Apple has bought IPhone.com from Michael Kovatch. Michael would not disclose the sale prices but he said it was well worth it to sell. I know this was at least a million dollar sale. Michael said this last week was a very busy one inside of Apple. He was holding out because he truly wanted to use the domain. Michael had his business partner (and lawyer) handled the negotiation. He considered not selling at the very end, he had registered the domain back in 1995 and was building a company on the domain. The Traffic on the domain had begun to skyrocket in the last 6 months and it showed good signs of potential. Michael settled for a huge check instead of trying to realizing the potential of the domain. It turned out that domain was so valuable that Apple just had to own it. I pointed a few days ago that 4,000 IPhone domains have been bought this year and that another 4,000 will be bought before the year is done. It is extremely critical that Apple own the domain. The headaches would have just compounded had they not owned the domain. I advise clients to own the domain BEFORE they announce a new brand. Apple spend far more money buying the domain 6 months after the announcement. Michael had to turn on Proxy Whois because he was receiving so many phone calls. After the proxy whois was turned on it helped shield 99.9% of the phone calls.

Upon closing the deal, Michael changed the name servers over to Apple.com and now Apple controls the DNS. The domain is still in Michael’s account under Domains by Proxy but Apple plans to transfer the domain in the next week. We used our Historic Whois records to go back in time and get Michael’s home phone number. I asked him what other domains he owned and he said he had some good ones. Soccer Shop.com, Wine.net, Golf.net, Noc.net, Wine Online.com, Kovo.com, Tee Shirt.com, and Cyber Wine.com. Michael started an ISP in 1993 and was in the right place at the right time. He knew the Internet would allow telephone calls one day and that is why he registered IPhone.com. Little did he know the 12 years later the Internet would be one his cell phones and Apple would reveal a product with his name and all this would make him an instant Millionaire.

His seven digit sale goes down in History as one of the biggest sales for a domain name.

The value of a good name is everything. When I first met Galen Ward he told me he had started a small web 2.0 startup called Shack Prices.com. My first thought was, “What an Odd name, Does his company give prices for run down houses?”. I think I was rather blunt when I suggested he think up a better domain. His complaint was that there were no good names still available. I responded, “Over course not, if they were good why would they be available.” The trouble with starting a Web 2.0 startup is that the technology should come first but when it comes to a name or brand they should not settle for whatever is left unregistered.

I reviewed ShackPrices and I saw that the interface and functionality was very impressive. Clearly this will be a good company but it is suffering from what us domainers call “Web 2.0 Naming Disease”. A Web 2.0 company just finds any $7 domain name and makes a brand on top of it. Domainers that own generic domains end up making millions on the Web 2.0 guy. Look at the case of Flickr.com. They choose a name that had a missing “E” and the owner of Flicker.com is now reporting that they receive 150K visitors a month now and they just turning down an offer for $700,000. Had Flickr been smart they could have bought the generic Flicker.com domain name for $15,000 to $25,000 a few years ago and now there is a auction that is exceeding $700,000.

Anyway, back to Shack Prices. I think Galen had defended his name to so many people that he became entrenched in the name. It is hard to give up an existing brand and switch over, but after talking with enough people he determined it would be in the best interest of his company and so he started looking around at names. He wanted something really powerful, he contact the owner of a dream name and was told by the owner the domain would cost him $200K. For a two man team with no funding he quickly passed and kept looking. After four or five more attempts he found a name that was reasonably priced. He asked me for some advice on the purchase, he said, “Does it always feel like you are negotiating in a Mexican outdoor flee market when talking to a domain owner.” I explained, “Yes, generally that back and forth negotiation is normal. Just remember the owner can only sell it once.” The negotiation process is generally pretty easy. But the owner always wants the seller to name the first price. If the buyer says, $200, then the owner may not respond because they hear that line all the time on their generic domain name. The better the domain the more fair an offer should be. $200 will insult generic domain owners. I have a friend that will not even respond if the initial offer is lower then $10,000. If a domain is worth $500,000 without even thinking. Don’t even start an offer below $50,000. It is not worth the owners time to halt his life and educate the person making the offer.

To replace ShackPrices, one of Galen’s choices was Estately.com. The owner of the name only wanted a few thousand for the domain and I told Galen that he was actually getting a steal. A one word domain name that is short and sweet are a total steal if you can get them for under $10,000. Upon announcing the name change this two man company has gotten calls from three VC firms. The brand is everything, as ShackPrices they had great technology but their name held them back. Galen pointed out, real estate professionals are hyper focused on reputation and he was getting mixed reviews with the old name. The offline feedback that he was getting suggested people were either negatively polarized with the ShackPrices name or thought the name was fine. Now the feedback is overwhelmingly positive. Great Brand plus Great Technology and I predict this will be a  good thing.

Galen is lucky, Aussie.com, recently completed the acquisition of the domain name Hot Property.com for $120,000. I think the the Estately.com domain is a great brand.

Well not exactly. Work.com is for sale, but it is part of the Business.com Inc. company which currently makes $15,000,000 a year (EBITDA). Business.com the domain has a long history. Marc Ostrofsky purchased the domain for $150,000 in the late 90′s, then shortly after that in 1999, he sold it to eCompanies, Inc. for $7,500,000 in stock. In 2004, they did their refinancing and the $7.5M in stock was valued at $2M which was then paid out to Marc Ostrofsky according to an interview by Newsweek. At this point it looks like Marc was fully paid and has no remaining stock in the company as of 2004. UPDATE: Marc indicated he has stock remaining according to a Paul Sloan interview from today. I will have to ask Marc and clear this up.

According to the Wall Street Journal, the traffic at Business.com and Work.com has risen 50% in the first quarter of 2007 compared to the first quarter of 2006. Jake Winebaum and Sky Dayton look really good in the Wall Street Journal article because it makes them look like they are having the last laugh for purchasing the domain and now flipping it again, but the article doesn’t go into all the details. It looks like people are flipping domain names for huge multiplies but that is not what is happening. The domain was the foundation for the company, the rest was hard work and a lot of sweat. Don’t get me wrong, I think the reason the company did so well was because of the press and branding it got when they bought the domain for $7.5 Million in Stock. It turns out to be $2 Million and if the company sells for $350 Million it would mean that buying the Brand cost the company less then 1% of its final sale price. So in perspective, the domain was cheap at $2M.

This is the reason I like to buy brandable domain names. A lot of credibility is given to a good brand and I don’t think these founders of Business.com would have had that creditability without their good brand. Why do kids of famous actors have such an easy time becoming successful? It is because of their parent’s branded last name, not because they are better actors than kids their age.

Doors open for famous people and good dotcom brandables. You don’t need to have a famous father any more. Just a good domain name.

MXN Limited acquires Porn.com for $9 Million. Terms of the transaction were not fully disclosed, but this is the second largest adult domain transaction behind sex.com. It was not more than two months ago when I saw this domain at auction for 7 .5 Million and thought it was a bargain. It failed to sell because it was in a wholesale environment with mostly domainers. Domain auctions need to do a better job at getting the different industries bidding. If only professional domainers attend domain auctions, then sellers will only get the a multiple of PPC revenue for their domains. Great brand names will fail to sell at the level where they should be trading at.

The new owner is going to take their time to consider what long-term project plans they will take with Porn.com. They said, “It does not need to transform overnight. In the meantime, we will keep it parked with PremiumTraffic.com, a leading domain name monetization company”.

Attracting millions of monthly unique visitors, Porn.com is one of the top type-in traffic adult entertainment destinations. Porn.com plans to leverage this traffic by offering a multiplicity of premium products and services that will solidify Porn.com as the web’s leading adult portal.

“The possibilities with PORN.COM are limitless,” says MXN Limited. “To rush its development just to get something brand new ‘live’ would be foolish. We will carefully evaluate our options before we decide the direction we wish to take it”.