DomainTools Blog

One of the things that has always bugged me about Marchex is that they try and hide what domains they own. It is not hard to figure out Marchex owns something. They have subsidiary called MDNH, Inc. If you notice the copyright in the bottom of one of their parking pages cites this company as the copyright owner of the parking page. MDNH is really a subsidiary of Marchex. Marchex has purchased a lot of companies and all of them seem to show the real whois. For the SEO company they own, TrafficLeader.com they show their real address: “Marchex Domain Admin, 413 Pine, Suite 500, Seattle, WA, 98101, US. Phone: +1.2063313300″. However on all the parking domains they own they hide who they are. For example they own MotherBoard.com, but they list their registrar’s proxy service: “Moniker Privacy Services, 20 SW 27 Ave, Suite 201,Pompano Beach, FL, 33069, US”. Marchex owns a lot of domains, why would a public company hide the fact they own over 100,000 domains. They mention it all the time in Press Releases however the whois is always hidden on those domains. Who or what do they think they are hiding?

Do they think they will rank better in Google.com’s search engine if they are not listed on the whois record? The answer is no but I think they internally believe yes. It is creepy that a public company wants to play shell games. It almost seems certain they must have skeletons in their domain name closet when they try to conceal the identity of almost every parking domain they own.

Marchex, I suggest if you really want to hide domain names, don’t resolve to IP addresses that have been allocated to you by ARIN. It is a dead give away.

Second, we know you always use the same set of name servers.

Name Server: A.NS.ULTSEARCH.COM
Name Server: B.NS.ULTSEARCH.COM

Third, there is whois history on every valuable domain you own. We know you own it. Stop trying to hide. It is like hiding an elephant behind a toothpick. Why bother? It just makes your company look shady.

Forth, the attempt to hide your identity by using multiple registrars and different proxy services at each registrar is just plain obvious. Is that suppose to be clever?

When people question if Marchex is engaged in Search Engine Arbitrage. You can’t put it past them, they seem like they are on the shady side of things. Does Marchex use arbitrage to pump up quarterly results and show more revenue? Marchex doesn’t disclose a lot of things but one can only wonder.

We have officially moved from our Bellevue office space to our new world headquarters in downtown Seattle. We are now at 5th Avenue and Blanchard Street a few blocks away from Marchex. The move will allow us to expand and hire more employees. It was not long ago that I worked out of my parents house and our first servers were in my parent’s garage on a DSL line. From there we moved into a house I purchased and we grew to 8 employees. That was until the City found out I was running a business out of my home and they gave me a month to find a new location for my business.

We were happy in our first commercial space for a number of years. It was so large and fit everyone but we kept growing and had to lease an additional space next door and double the office. The Bellevue office space had looked so large when we first began but when we passed 30 employees and there was no more office spaces to lease out we had to convert the conference room into a work space for the overflowing employees. I could not be happier that we are now in a new Seattle office space that looks large again. We only have 12 parking spots at the new office so we are providing bus passes to all the employees.

The building that we are in is the old Jones Radio building where Delilah had her studio for a number of years. We converted her studio “B” into a network operations room where we run our internal corporate servers. The few hundred servers that we have accumulated over the years have always been in the Westin Building (not to be confused with the Westin Hotel chain). So with this move we are now only 2 blocks a way from our servers. If we ever need to visit them it is just a short walk rather than a long car ride.

And the best part, we now have a donut shop across the street and about 50 other restaurants in a four block range. We moved in over the weekend so as you can imagine we are still catching up on email and support tickets from this weekend and today. So please excuse any tardiness in our responses as we get settled in.

If you ever stop by Seattle and want a tour of the office space let me know. Domainers are always welcome.

A new domain media company seems to have emerged out of Vancouver Canada. They just launched their website and their is a lot of interesting information on it. After reading through the website, it is clear that this new media company has been in stealth mode for a while and that they are on the same scale as other Industry Giants. They own some killer domain names like Attorney.com, Cheap Travel.com, Laptop.com, Digital Camera.com, Hot Springs.com, HD TV.com, Cellular Phones.com, Religion.com, Beat.com, and Venture.com. The company does not list all their domain names they own, but we assume they have other great names as well.

On their management page they list two co-founders (Kevin Ham, Colin Yu), and as you would expect from a Media company in the Direct Navigation space, they both own their own their .COM personal names. The two co-founders were high school friends and then later both attended the University of British Columbia. Later, after college, they started this company together.

Reinvent’s mission statement page is littered with awesome domain names that act as the title of each section, Mission Plan.com, Vision Statements.com, The History.com, Great Corp.com, Innovations.com, Team Building Exercises.com, Enjoying.com, Community Outlook.com

Reinvent Technology, Inc. was formally named Host Start, but the Host Start domain still does not redirect to Reinvent yet. Some background information was provided about their stealth mode operations on one of their pages:

Our humble beginnings, in 1999, started much like many internet startups, in the living room, as opposed to the garage. Founded by a family doctor who wanted to base his medical practice on his patients and not on time or money, he started an internet business during his residency in order to build a passive income. By the time his residency was completed, the business was doing so well that he decided to run the business for another year and then go back to medicine. That has yet to happen, seven years after the fact.

He was joined in late 2000 by his long-time high school friend, who had a background in banking. The company continues to grow and all their waking hours were spent building the business, all with specific goals in mind.

With the quantity and quality of domains in their portfolio this has to be considerable and formidable company to Name Media, Demand Media, Marchex, Name Administration Media, and Internet REIT.

Search Engine Arbitrage is defined as buying ads from a search engine and then selling ads at a higher price. For example the arbitrager buys the term “rare dirty coin” at Google and pays $0.05 for the ad because no one else is advertising on that term. Once the user clicks on the arbitrager’s ad he is taken to a page about “gold coins”. Let’s say the term “gold coins” makes $0.70 per click. The Arbitrager would need to convert 1 in 13 people to make a profit or 1 in 14 people to break even. We can think about Arbitrage as a keyword funnel, collect a lot of small terms and lead them into a big term. I think search engine arbitrage is another brilliant way of Mining the Longtail. There are drawbacks to arbitrage though, the market can only support so many of them. Geosign just announced they raised $160 Million from American Capital. With big announcements like this there is a lot of attention being focused on the keyword arbitrage market.

Let’s say there are 50 companies engage in large scale keyword arbitrage right now, they all make a return on their investment of 400%. If the market had 2,000 arbitrage companies I know the return would be much lower for all. I see algorithms getting smarter and machine evaluation processes getting faster, in short, to survive long term companies will need to have smarter machines then the next guy. The beauty of the longtail is that it can support a lot of companies. So it may take 30,000 arbitragers to drive average profit to 5%. The Fat Front of the Longtail will be eaten up very quickly and arbitrages that try to survive there will die, only 10 companies can show up for a term. So if 30 companies rule this industry we can see that there will be a collapse at some point and rest of the companies will fold or be bought out. However, reselling a poorly preforming arbitrage company will be harder then selling sand to an Egyptian.

Frank Schilling has a good perspective on how search engine arbitrage compares to domain arbitrage. He point out that only one company controls a domain, meanwhile anyone can bid on a search engine term. Traffic on a domain will never go away and a competitor will never drive costs up for owning the domain. For the king of domains it is easy, he can focus on domains and weather the arbitrage storm. Even if he enters the arbitrage business he has a safety net of 300,000+ generic domains with tons of type-in traffic. In Franks own words, “Homer Simpson himself could not kill Name Administration“.

My take on all this is that search engine arbitrage is here to stay but the margins will get thinner in the future. We can expect the leaders of today’s pure arbitrage business to get tossed out. Historically, the first to market in a highly competitive environment will lose their lunches to the next smartest company. Mosaic and Netscape are prime examples but I am sure there are more. Margins will compress rather quickly and the smart guys will be left. For the companies that want a re-do, they will need to have a back up plan. Marchex is a good example of a company with backup plan. They have a huge domain portfolio that has natural traffic.

There is a clear evolution for domain owners to play in this space: (Domainer > Registrar > Media Company) Once a domainer has hit the Media Company phase they can start playing in arbitrage. There are more direct routes to becoming an arbitrage company, start as an SEM company. But SEM companies are more pure play and don’t have backup plans, so I predict will be the ones that get squeezed out as margins compress.