As the executive producer of the 2007 Domain Roundtable Conference in Seattle, I was involved in creating their online live auction system and was positioned to also see who was in the room, which domains were up for auction, and all those who logged in to watch and bid. The auction sold $4 million in domains.

Let me tell you this much about an auction that I learned: If you don’t have people in the room who WANT what’s being auctioned, your theory is dead in the water.

Here’s why: Having a “zero” reserve on a domain (or any item) then allows valuable domains, or the Faberge egg, to be sold for $3 IF THERE WEREN’T EDUCATED AND INFORMED BIDDERS IN THE ROOM. You didn’t say in your answer that the Sotheby’s auctioneers started the auction for the Faberge Egg out at $1. Of course they start out with a “reserve” price in order to get the minimum estimated value out of the auction item. I don’t understand how you don’t see this.

So your theory of “if it has a reserve, it’s not an auction item”‘ is wrong. Sotheby’s would NEVER start an auction based on “let’s start from 1 penny and go forward”. The auctioneer gets a starting”reserve” price, and then moves up from there if there are bidders. If nobody bids on the reserve, then the auction house tucks the item away and waits for another day. They surely don’t let the million dollar item hover around a room of 7/11 coffee drinkers to bid.

What you’re essentially doing is answering my question with ANOTHER question: “Do you really think it would sell for $3 at a Sotheby’s auction?” No, it won’t, because Sotheby’s would never start the auction AT THAT PRICE.

Which then negates your theory or postulation that anything with a reserve “isn’t an auction”. All auction items of determined value have a “minimum bidding price”, or what I understand to be called “the reserve price”.

If the bidders can’t reach the reserve price to start the auction, then there are the wrong bidders involved, or weak promotion was used and the right buyers were not contacted, or the item just isn’t worth the reserve, RIGHT OR WRONG, by theh bidders that did show up at the auction.

I’m really confused at your stance regarding this, Rob. Even though I have limited “professional” experience regarding auctions, I do know that nothing with a determined “minimum value” will be offered at a price below that value at an auction. You seem to think that every auction item should start at a penny, if you take your statements from a logical viewpoint.

I’m intrigued in finding out how I’m wrong, and invite anyone to set me straight. There’s nothing better in my understanding of anything than having someone show me the error in my thinking. It helps me grow.

cheers!

So long as you have an audience that is qualified, educated and motivated, yes, start the bidding at $0.

All TRAFFIC auctions certainly have a qualified, educated and motivated audience.

If a domain sells for a “good deal” then why did everyone else in the room not bid higher?

Because the domain was only worth the highest bid. That’s it.

The owner and the auctioneer may not be happy with the price but the high bid IS the market price for that item at the time.

Regarding the Faberge egg… Do you really think it would sell for $3 at a Sotheby’s auction? No. It will sell for current market price.

If they have a $1m reserve, they are simply offering the egg for sale, not for auction.

Regarding incremental pricing, yes, the auctioneer will set the justified increments to move the auction along.

So, again, a reserve auction item is not an auction itme. It is an offering of an item for sale, just to a different audience.

Interesting interpretation of the auction process using “reserve” pricing. Would you say that a real “auction” then is just the process of saying “Here’s an item for sale. Can we start the bidding at the lowest possible pricing – do I hear a penny?”

How do you find the reasonable starting point for bids, and why do we even use the term “Reserve” in the auction process?

Would your theory cause a problem at Sotheby’s for a Fabergé egg when the auctioneer says “what do I hear for the starting bid on this $2 million dollar item?” and then somebody yells out “I’ll bid $3.00!” ?

If 100 people at the auction all starting waving their paddles when the auctioneer raised the pricing at certain levels, what levels of pricing would be proper? If they started out at $3, would it be $10 increments? Paddles flying at “$10!” and “$20!”, is this what would be expected to be called a “proper auction”?

So if you don’t set a “reserve” price, bidders won’t know what price would be accepted as “reasonable”. And do you have issues with incremental accepted bidding after each monetary level is met?

Reserve items are simply items for sale at a set price. IF someone wants to pay more than the reserve THEN the item becomes an auction item.

Imagine if an auction had nothing but reserve price items. How many would turn into an auction item, very few depending on the reserve of course.

Hi Rob, just wondering what you meant by:

“Doesn’t matter what the inventory is, an item with a reserve is not an auction item.

It is an item for sale with the opportunity for more than one buyer to have a chance at owning the item.”

What is the difference of an auction on an item without a reserve and with a reserve other than the seller has set a limit in which the item is set for open sale?

1. Reserves.

2. Crap inventory.

I have been going to antique auctions since I was a teenager and started selling on ebay in January 1997 so I know about audience participation in auctions.

Doesn’t matter what the inventory is, an item with a reserve is not an auction item.

It is an item for sale with the opportunity for more than one buyer to have a chance at owning the item.

Crap inventory put in front of a qualified, educated and motivated audience is insulting to the audience.

Either reserves or crap inventory will kill the sell through rate every time.

I am writing a comprehensive blog about Snapnames/Moniker’s once supreme control over online domain auctions, and how they simply let it slip away… stay tuned. Such an easy solution too…