Domain Name Wire

Domain Name Wire

  • Why domain marketplaces deserve 20% (and if you disagree, no one forces you to use them)

    1. BY - Dec 13, 2012
    2. Domain Sales
    3. 37 Comments

    If you don’t think domain marketplaces deserve their commission, you’re welcome to move your business elsewhere.

    Whenever I write about the two big domain marketplaces, Afternic and Sedo, someone inevitably gripes about the 15% to 20% commissions they charge.

    Let me paraphrase the common complaint:

    “All they do is list all of these domains, and transactions just happen. They don’t deserve 20%.”

    It’s true that the incremental cost and effort to a marketplace of selling another domain is basically nil.*

    But that’s because they’ve created an active marketplace. Let me make a couple points.

    1. It’s really hard to create a marketplace.

    Afternic and Sedo didn’t just magically get an active marketplace with buyers and sellers overnight.

    Think of all the other companies that have tried and failed to create a marketplace. If it was so easy to create an active market, then many of these new marketplaces would be successful and would have pushed down commissions overall.

    Sometimes a new market comes online and one of its big selling points is supposedly commissions.

    But until you have an active market of buyers and sellers, it doesn’t really matter that you have low commissions. ‘Cause you have no sales.

    This isn’t limited to the domain industry. Created a marketplace anywhere is difficult. Think of all of those eBay wannabes from the early 2000’s. Sellers stuck with eBay because they had a bigger marketplace.

    2. No one is forcing you to use one of the big marketplaces. If you think their fees are too steep, you’re welcome to stop using them. That might be more worthwhile than griping about it.

    By and large, I’d say domain investors are capitalists to the core. So the complaints about commissions baffle me.

    (* as marketplaces move to distributed models, they have to pay their partners a large portion of their commissions. But my arguments are the same whether a purchase happens on one of the marketplaces or at a partner site.)

37 Comments
  • They robs domainers’ money like nuts.

  • I have never complained about them. If not for those platforms I would of not sold what I did.

    Though I have moved everything to dns. 10% or less and payout is higher. Plus you know exactly who you are dealing with. I really don’t think the others will be around in 3 years or they will be a non-factor.

    What Dns has created is just incredible.

    • @ Don – If you use InternetTraffic then DNS is a good complement. But it doesn’t have the distribution you get with Afternic or Sedo. The nice thing is you can use all of them (and even Go Daddy for that matter) and pay only the ones that make it happen for you.

  • If you buy some domain name for $10k and year leter you want to sell it and make 20% on it, then you need to sell it for $15k, as $3k is the commission. So to make 20%, you need to sell it for 50% more. If we have such strong market, then great, if not, then seller needs to lower profit or sell it directly to avoid commission…

  • @Andrew – which means it is always a good idea to contact seller directly and shave 10% from the marketplace price tag and make it win-win for buyer and seller, leaving marketplace empty-handed :)

  • When these marketplace companies become large enough they begin to forget that their market only exists as long as people submit items for sale into it. The marketplace begins to think that the sellers need it and start to lose the understanding that in fact, they really need the sellers more. Without the sellers there is no marketplace, without the marketplace the sellers do have other options online.

    I think a 20% commission is ridiculous when all they are doing is allow you to list it on their platform. Yes, they did hard work to grow their marketplace, but every seller contributed to that marketplace growing. Increasing fees is biting the hand that feeds them. Think about that.

  • It’s more the domainer’s fault to have it parked with Sedo imo (or any brokerage for that matter) You are limitting yourself to that one auctionhouse and you really are not making much money parking anyway. You may be able to save yourself the 20% by having your contact info on your page. Sure you may lose some pennies in per click but that tripping over pennies on your way to dollars, and money saved is money earned. Not to mention you may very well be giving commission that wasnt earned since they wound up finding you at your site and not from the efforts of a listing house at all. Rather instead your page gave (i.g.) Sedo the deal they would never have had.
    If a broker does proactive service they then deserve the comp of x%, again in my opinion.

  • @Jay I totally agree with your mind.It’s meant that the domain marketplace is walking into a hell because of the unfair commissions.

  • Sedo was strong because they had a sales platform with nameservers pointed at them.

    IT and DP took that awawy, I deleted 5000 names from my Sedo portfolio after getting lowball offers via new godaddy connection.

    Have been on IT for a bit now, it is a solid platform. Sedo is good for transacting European sales, but I have sold subpar names directly for 5 figures, last one was 10k first offer, guy even offered to split escrow fees. So instead of paying $2k, I paid $1xx.

    The statements above are naive and so a lack of respect for money. People already know the domain they want, not a used car here. If you want to throw 20 percent away go ahead. Exchanges need domainers domains, be fair.

  • @Andrew – yes, I do list my domains on Sedo, but I do not park them with Sedo. If someone finds my domains through the Sedo platform then so be it, it would be foolish not to be out there, but my asking price through Sedo is bumped up in order to offset their commission. So Sedo’s fees are passed along to the potential buyer when I’m dealing through the Sedo platform.

    But I’d say I get about 50 inquiries through someone landing on my URL for every 1 inquiry I get through someone navigating the Sedo platform and finding my domain listed. Which goes to show that the Sedo platform doesn’t offer much value in terms of inquiries. For people who are parking their domains with Sedo they are hurting themselves because their domain homepage is driving the inquiries. Why do the heavy lifting and let someone take a big cut off the top?

  • Their customers will decide whether they deserve those commissions or not and the large exodus to InternetTraffic speaks to the fact that many people feel that the value in Sedo is diminishing.

    Your suggestion in point number 2 is a very viable option and one that I see many domain owners acting on.

    A 20% commission to have my domains lost in a sea of other domains and have potential buyers clouded in secrecy, by hiding their identity and moderating our communication doesn’t equal great value in my books.

    Buyers still type in my names to see what’s there and they understand the big yellow banner.

  • Speaking for Afternic, when we sell one of your domains there’s a very good chance it wasn’t on Afternic.com but rather on one of over 100 participating registrars and hosting companies that are part of our direct reseller network – the largest in the industry by far. Your commission is shared between us and the reseller. This audience has taken many years and millions of dollars to build. Your choice whether to take advantage it or not but we sell thousands of domains every month for domain investors. It works.

  • Its ridiculous that people complain about domain commissions. If these marketplaces didn’t exist most people would not know where to begin to sell their names. Over 300 people work for Sedo and their brands, add in advertising, rent, servers, security and a thousand other things and you can see where your commission goes. Nothings for free in this world so stop complaining. If you want to start a conversation it should be about Godaddys 30% premium listing commission. Thats a joke!!

  • @Andrew

    Your right on they do have the best exposure bar none.

    But here is where I have lost income during the past 5 years. Not knowing who the buyer was on the other end.

    This is where DNS is changing the game. If the buyer is a big company you will jam the price higher. Does not mean you will get it but you will know that they want it and you can charge higher. Imagine Rick S not knowing who wanted to buy ireport.com.

    Knowing who the buyer is and where they come from is the number 1 for me.

    I would rather give my commission to a format that is going to change everything and increase the average sales of domain names for the future.

    Sedo for me had done great in the past but now for me dns is the choice. Not banging on Sedo they have been great in the past but DNS is going to scream by them.

    I get to pick my broker or do it myself. Or become my own broker. Just my thoughts everyone has a different strategy and no one strategy is the best for everyone.

    Donny M

  • Not knowing the buyer is huge, I think sedo should have an ebay style 3 offers, and you can’t make another offer for 30 days approach, or have to choose buy it now.

    I just sold a $5k domain on GD Prem Listing last week, just a heads up, money was in my account in 2 days. This buyer had made an offer at sedo, starting at $60, and screwing around in the low $xxx range. When I deleted all my sedo names, and closed all transactions, he made an $800 offer via the lander. Domain was worth about $2,500 in my guestimate, but as we all know it is worth as much as someone is willing to pay for it. I basically told them it will cost me $70 to renew it for a decade, and I will use that time to wait out a better offer, and stated they should find another name. A few hours later, I got an email from Godaddy saying a Prem Listing had sold. Well the end user decided to bite the bullet and pony up $5k for the name. I got about $3600 after commissions, so about $1000 was left on the table in terms of closing directly via escrow. Name was not significant to me, and payment was quick, so I was happy.

    Domaining is very time consuming, so every domainers worst fear is leaving money on the table. I feel about 2 years ago, Sedo lost touch with the domaining community, and it has been all downhill since then.

    I thought I needed Sedo, I sold 75% of my domains through them up until 18 months ago, as soon as I switched, I saw some nice big dollar sales. Anonymous buyers hiding behind a make an offer page, tend to lowball, rather than someone who has all their cards on the table. Do not be afraid to show the brokerage houses you do not need them. If an end user needs your name, they will find you, someway, somehow… Time to end the madness guys.

    Andrew I see you are sponsored by some of these guys, so maybe you should disclose in your article.

  • I’m not too worried about the commission, though they could be more dependable.

    How does someone bid $10k on a domain and then back out without some financial blowback?

    When the transaction would happen in any case, the marketplaces are great, but you’d be better of just using a direct contact system, the first thing the buyer would do is visit the site.

  • I pulled 100% of my domains from both Afternic and Sedo two months ago and inquiries have gone up as well as closed sales and higher prices.

    At the end of the day your Whois and a placeholder page is more than enough for buyers to find and get in touch with you, especially if you have quality domains.

    eBay charges 8% for most items if you have an eBay store, and 12% for auto and electronics. They have massive product scale, but then again they have massive infrastructure costs.

    So far, it’s looking like I will never go back and it’s not just the rates. It’s what others have mentioned about not knowing your buyers.

  • 30% is why i left godaddy. It took me a while but as of last month moved on.. so long GD

  • Andrew,

    This is the second remark you’ve made in less than a week, where you seem to be taking a bizarre, or absurd position, against your own self interest. In the other post you were defending Google for arbitrary acts. See http://www.thedomains.com/2012/12/08/google-blacklists-mike-manns-makemillions-com-site-forcing-him-to-abandon-10k-domain/#comment-118074

    Here you are defending exorbitant commissions by domain market houses.

    Your logic is tantamount to saying to a victim of auto accident in the hands of a drunk driver “if you don’t want to die on the freeway, don’t use the road, stay home”! Now does that make sense to you? How about crusading to lower drunk-driving? In this case, help persuade these market-houses to charge reasonable fees.

    • @ Uzoma – you misread my comment on the thread about Google. I was saying that Mike’s site being banned had nothing to do with being a “make money” site, as Google doesn’t ban sites for content like that. It was clearly banned for some other reason. I assume it wasn’t arbitrary, and it seems that some people on that comment thread think it might have to do with SEO on the site.

  • @Andrew – I use DNS and their landers and do the self-brokerage option. I still get my PPC income (significantly more than Sedo pays on PPC). I pay no commission on sales. And I can say whatever I want in my messages and don’t need to wait a day for someone to approve my message to the potential buyer before it gets communicated.

    If someone is going to actively be a broker and go out there contacting people and finding bids for me then I agree they deserve a commission for that work. But the platforms are not doing that. Their costs in regards to us listing domains there are fixed… but instead of passing back something to the domain owners they push to increase their bottom line. I get that they are a business but they are using my product to generate their revenue so ultimately it will reach a tipping point where people take their products elsewhere. We’ve seen a noticeable change here with DNS. DNS makes their money by taking a share of the PPC (which I am fine with) but they aren’t greedy and let us get full dollar when we sell a product. Economies of scale. By not being greedy they will grow the volume of PPC income as people migrate there so they win, and people get 100% of their sale price so sellers win. Not sure if anyone can argue why listing at Sedo today makes sense to a domainer.

    • @ Anticareer –

      I see your points about self-brokerage on inquiries. A number of parking companies have let you put whatever “for sale” message you want for a long time, although those don’t link into a self management system like DNS (it just sends you an email).

  • All the added profits I have made from IT, I have just reinvested back into domaining. Buying domains from aftermarkets, and forums, adding some liquidity into this industry.

    We are helping help ourselves, instead of spending it into corporate overheads.

  • If you’re interested in top prices for your domains, you need to be selling to end-users, not other domain investors. With this sales philosophy there is no need for the middle-man; the end-user WILL come directly to you, always.

    • @ Together –

      “the end-user WILL come directly to you”

      They’ll come to you, but they may not do it if it means tracking you down.

      Many end users wants a simple process. They often want a fixed price and don’t want to negotiate. They often want to buy it today without any hassle, just like they can register a domain.

  • Yes, they do deserves 15%-25%. But they should NOT charge to list a domain. For example Sedo. They charge you $49 to list a domain then a perscentage if they sell it. So, if your domain does NOT sell, you are out $49. RIPOFF!!!!!

  • i haven’t read through all the comments so don’t know if this has been covered.

    if you park with eg sedo then the potential buyer types in your domain and is directed by YOU to sedo where they then take 20%. to me that seems steep. unless the buyer searches specifically for your domain then it is effectively lost within sedo. my point is that the buyer will find your “good” domain regardless of whether it is listed there or not, their searches offer little to no additional exposure or publicity for your domain IMO.

    you can set up a hosting service with unlimited add on domains for under $10/mnth. stuff the pathetic parking revenue from them, put up your contact details and let the buyer come direct to you. easier sale and/or more money.

  • my point. If you don’t list it in the feature area, it will NOT be seen. I think if it dosent sell, you should get the $49 back.

  • This is a marketplace (buying/selling online in general) thaty will continue to be disrupted. You state: “This isn’t limited to the domain industry. Created a marketplace anywhere is difficult. Think of all of those eBay wannabes from the early 2000′s. Sellers stuck with eBay because they had a bigger marketplace.”
    I can think of one that on a daily basis is probably one of the largest marketplaces on the planet where almost of of it is free to list: Craigslist. The free part & ease of use is what has and does make it so powerful at the end of the day. The domain industry is too small for 20% commissions to list names unless buyers are being found for those names.

  • The commission percentage is only Part of the equation.

    IF an auction marketplace were Actively, Aggressively Marketing and Promoting your domain to End Users …I suspect the commission percentage would not be as much of a problem most domainers.

    But, how could they do that with so many domains in their marketplace? The good, the bad and the ugly, all needles in the haystack.

    When a marketplace increasingly gravitates more and more towards Domainer-to-Domainer (churning) sales, lowballers and non-payers become all too common. These conditions cause Many domainers to question or resent high commission rates.

  • @andrew Alleman, so you would not mind paying a 20% commission to a real estate agent to sell your house? They certainly do a lot more work than these companies do to sell a domain name.

Leave a Reply