Confusion Spreads Across Web

Misleading headlines and stories about potential sale spread like wildfire. is for sale. That much we know. But it’s not only the domain that’s for sale. It’s a business that’s been around for over 7 years. Its 2007 EBITDA was about $15M according to a Wall Street Journal online article. That article also says some people expect it to sell for $350M at auction, but that hasn’t occurred yet.

So why are we seeing headlines like this, from respected publications such as ZDNet?

What’s in a domain? $400 million if you’re

If you just read that headline you’d assume the domain name sold for $400M. In fact, if you read the first half of the ZDNet story, you’d still think it was only the domain name for sale.

But it’s not. It’s the business. Not just the domain. End of story.

Yes, the domain is worth a lot and has helped become what it is. Even without an attached site I’d say it’s worth about $5M-$10M based on recent big ticket domain sales.

And no, the domain didn’t really sell for $7.5M in 1999. It sold for $7.5M in illiquid stock. The company ended up paying seller Marc Ostrofsky $2.0M to redeem the stock in 2004. There’s a big difference between $7.5M in stock and $7.5M in cash. (I mean no disrespect to Ostrofsky. It was still a landmark sale that helped propel the domain name business. Marc had the guts to buy the domain for a six figure sum, and has since accumulated one of the best generic .com portfolios round.)

The story of shows how a good domain name can be the foundation for a business. But it doesn’t guarantee success. has had its share of ups and downs. It moved to a direct pay-per-click model a few years ago. Then it abandoned it in favor of third party ads. Now it’s back to a direct model. Many people probably left the business for dead, but it has perservered.

I wish Jake Winebaum and Sky Dayton best of luck with the sale. But let’s stick to the facts and control the nonsense spreading across the web.

UPDATE 6-26-07:

Here’s another misleading piece, this time from Red Herring:

And it appears a new record may be in the works., which sold for a then-unprecedented $7.5 million in 1999, could sell again soon for as much as $400 million, according to The Wall Street Journal.


  1. says

    the domain is worth 2-300 million by itself. Do you think the buyers are interested in its current market situation or are considering what if? or maybe thinking we want to get our foot in the door and what is the best way to do it. The site is a cpc mill. Adsense anyone can replicate.
    Imagine where would be if it was called, or, or, or, or, or or, or These companies better get a name ASAP or get caught up in a rip tide called cyberblah. Big question is how much of a role did the domain have in its success.

  2. Editor says

    I think MySpace would have done just as well with any simple and easy domain. It’s not like got type-in traffic before it was used. is a different story, since it did get type-in traffic before being created. And yes, you could recreate (the site) fairly easily, but the site has massive repeat traffic and good search engine saturation, not to mention a laundry list of marquee advertisers.

  3. says

    The domain is incredible. I think it is worth up to $100 million by itself, but with the company it’s definitely around $400. I was also originally given the impression the domain was up for $400 million by itself from the first article I read about it.

  4. Editor says

    So if you think is worth $100M-$300M by itself, do you think recent sales like and were underpriced by about 10x-30x?

  5. says

    hi greetings ,
    if any1 b2[be-to] buy that business o'[of] ,
    then out
    there’r just 2[too] many better or more profittable relevant business sites
    competing 2b[to-be] chosen
    that business o'[of] is relativly easily duplicable ,
    cheaper in case o'[of] outsourcing 2[to] Indians e.t.c.
    so ,
    if there b[be] any1 really 2buy[to-buy] ,
    they may b[be] purly[purely] concerned by this domain name itself ,
    anything else may b[be] simply taken as the extra bonus
    but ,
    n’o[no] matter what ever ,
    there’s just only 1 amongst ‘the cloud ,
    that’s4ever ,

  6. Trapper says

    Investment is always about potential and is not going away. In my opinion it certainly has more potential than which brought 9.5 million in cash. As far as 300 to 400 mil. based on 15 mil in revenue. It could be a bubble waiting to bust without the right investment strategy.

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