Communicate.com filed its form 10QSB yesterday and it contains interesting information about parking pages plus the valuation of Call.com.
The company, which owns a number of premium domains and e-commerce web sites, reacquired Call.com last month. It had sold the domain as part of a package including Makeup.com, Automobile.com, and Exercise.com. Part of the sale included lifetime royalties on all earnings for these domains. Communicate.com reacquired Call.com in exchange for eliminating the royalty provision. The company valued this future royalty stream at $250,000. Interestingly, the company recorded the purchase of the domain as non-recurring income by suggesting it was getting all future income upfront. This boosted the company’s earnings. To me, there should be an offsetting expense of $250,000 to accurately reflect the transaction.
But enough about Call.com, let’s talk about something more relevant to the typical domainer: paid parking revenue. Parking revenue is the main source of income for thousands of domainers. Communicate.com saw its domain parking income plummet 68%. Part of this is because the company removed parking pages on Body.com and Brazil.com in order to turn these domains into sites. But the company also blamed search engine changes and consumer savviness for the drop. The SEC filing stated:
…advertising revenue has been adversely affected by changes made by Internet search engines which significantly reduced the volume of Internet traffic directed to Registrant’s network of advertising sites. While there are signs which begin to show traffic improvement, Management expects this line of revenue to remain the same over the next several quarters.
In other words, many of the company’s parking pages were kicked out of search engines. I asked Communicate.com representative Adam Rabiner (via his blog) about this statement. He added:
Our one-word domains still get a lot of type-in traffic. However, I would also add that the average web user has become more savvy, and more of them exit parking pages without clicking through, as they realize it is not a true eCommerce site or portal.
This is somewhat disconcerting. It has always amazed me that people click on certain designs of parking pages because they are obviously ads. Sure, these pages can add value, but won’t the average consumer just return to a search query rather than clicking on a parking page link? This might be happening. Many of communicate.com’s parking pages are rather sophisticated, and if we’re seeing people leave them without clicking then I fear that others are seeing a similar drop. One company’s experience doesn’t represent an industry, but Communicate.com is one of the larger public players in the space.