End of sales agreement could have broad implications for Australian domain company.
It’s been a rough year for Dark Blue Sea (ASX: DBS), parent company of Fabulous. Its profits are down by three quarters, it has cut half its staff, and one of its biggest shareholders is trying to oust its Chairman. But the news got worse yesterday, as reported by Domain Name News: GoDaddy terminated its sales agreement with the company.
This is a big deal. Dark Blue Sea was counting on GoDaddy to lift its aftermarket domain sales, primarily by selling to customers who were looking to register a domain name but found their ideal one was already registered. The company was also able to bulk list its domains — and customers in the Domain Distribution Network — on Go Daddy Auctions (formerly TDNAM). According to a source familiar with the matter, a significant number of domain names are sold through GoDaddy’s “premium domain” upsell during the registration process.
Dark Blue Sea views its own domain portfolio as a money maker, whereas domain parking and domain registration are low margin service businesses. In fact, it has held discussions with other domain companies about acquiring parts of its service business.
When asked for comment, Go Daddy VP Adam Dicker stated, “We have evaluated our premium domain channel and made a business decision to discontinue our use of the Domain Distribution Network.” (Domain Distribution Network is Dark Blue Sea’s domain sales system.)
That doesn’t say much, but I speculate the deal wasn’t going well for GoDaddy. GoDaddy signed a deal with BuyDomains to sell its domains alongside DBS’ domains. BuyDomains’ inventory sold better, so it gave those domains more exposure. Over time, it wasn’t worth listing DBS’ mostly hand registered domains at all.
Another big factor was the drop in Dark Blue Sea’s stock price. Dark Blue Sea gave millions of options to GoDaddy, exercisable at 65 cents. The thinly traded stock now trades for 15 cents.
What does this mean for Dark Blue Sea? The company released a statement that “the impact of this may have a material adverse affect on future revenue and profit.”
The company has fiercely loyal customers of its Fabulous domain registrar. This may present an opportunity for another registrar to make a value acquisition.
Robert Haastrup-Timmi says
Andrew, this is another indication that not all is very well in the domain business overall.
Following your last article inferring to the recent front page of the Economist, most of the responses blamed the economic down turn. I beg to differ, even though I concede we are only in the early stages of a very long recession, possibly 10 years or more. For me, the recession actually began when the internet was first commercialized back in 1995! Hence today, but that’s another topic.
The problem with domains, is the “system” of how they are currently sold or not branded to the public at large. Most people who are now forced to start a business online due to layoffs, still have no clue what “AFTERMARKET DOMAINS” mean?
Don’t believe me, ask your neighbour…that’s the problem! Until domains are presented to the public like stocks and property, all that will continue to happen, is a few sales here and there, a tiny fraction of what really exists in the entire domain eco-system.
There is however a creative solution, we just need to find it! That solution can start right here on Domain Name Wire.
Johnny says
I hate to see this happen to this nice group of people.
global biz says
I consider GD the same as kmart.
FX says
i feel like all domainers should support Fabulous and DBS in one way or another. They have done a lot for the industry over the years and continue to innovate and push the industry forward. Fabulous is by far the best registrar in this industry. No other registrar even comes close. No other registrar offers a comprehensive set of tools such as Fabulous. If you’ve never used Fabulous, you should check it out. Not to mention parking program at fabulous performs well too.
.. just a satisfied Fabulous client.
D says
Fabulous is just bunch of big-headed individuals who made lots of bad decisions and burned shareholders money
Anthony Mitchell says
Great points above by Robert Haastrup-Timmi, especially on educating the public.
Where does the public have most of its contact with the industry? In the process of attempting to register fresh domains. Are GoDaddy, eNom or BuyDomains doing a good job of educating potential buyers about the benefits of the secondary market?
More to the point, is the happy path between a lookup for a fresh registration and the presentation of options in the secondary market smooth, quick or transparent?
Do interfaces on GD and BuyDomains-partner-registrars have high abandon rates on the path to seeing what domains are available in the secondary market? What are those rates?
How many GD or BD employees does it take to fix a broken UI? How hard is it to create an ecommerce experience that pulls visitors into viewing available domains, then converts them into buyers?