Hear the author out; he has a valid point.
The headline is inflammatory, but they aren’t my words. They’re those of Matthew Mayer. And before you call him an idot, you should understand the context.
Mayer wrote an excellent piece about what ails Live Current Media (see previous article). In it he writes:
[Live Current] owns a bunch of domain names. That’s it. They sell product through one of them, and have been trying to develop others. Unfortunately, it’s a flawed business model. Domain names have no intrinsic value. They only have value if they are developed and monetized, which is a lot harder than it sounds.
Of you and I know that domain names have intrinsic value. But in Live Current’s case, it’s not earning much from domain parking any more. It has tried for several years to make the leap to domain development, and that’s where the trouble started. Live Current has had a devil of a time trying to develop.
It entered into an agreement to pay $60,000 per month plus a profit share to develop web sites that look like this.
It struggles to scratch a few dollars from its developed Perfume.com each month.
It developed (and now parks) Body.com.
It entered into an agreement to pay $50 million over ten years to DLF Indian Premier cricket League, and has no way to pay it.
Although domain names do have intrinsic value, that doesn’t mean someone who owns good domain names can develop them. The CEO of Live Current confesses he doesn’t no squat about cricket. My guess is few people at the company know anything about cricket. How can you bet multiple times your market cap on something you aren’t passionate about? Oh yeah, it’s because the company happened to own Cricket.com. (Which, by the way, is not part of the $50 million agreement).
There’s a lesson in this for all domainers. Developing web sites is like developing businesses. It’s hard. Most will fail. And great domains don’t guarantee success.
Great points, Andrew. Thanks for pointing out brazil.com
You need a development partner with with the right talents to get the job done. You need programming, design, SEO and project management to hold it all together. A web developer or wordpress pro are simply not enough.
– Richard
“Developing web sites is like developing businesses. It’s hard. Most will fail. And great domains don’t guarantee success.”
Agree. This is not a “build it and they will come” principle.
That only happens in the movies.
And if you are Kevin Costner.
oh yeah finally the truth about the real value of domains is revealed.
$3000 dollar domainer makes $3000 dollars a month, so i spent my lifesavings to buy his $3000 book to teach me how to make money with domains, and bought very valuable com domains, and now no one wants to buy them and they get no traffic?I make $1 a month, i thought they are worth millions, i am so confused. With tools like compete and quantcast I checked the traffic numbers of famous domains, and these generic domains receive very little traffic. On the other side people with crappy domains like for example outblush.com get more traffic than most of the generic domain pumpers.
Please help explain. My heart goes out to those poor people who keep on getting scammed with false hope and laughable traffic statistics.
What Matthew Mayer said is 100% true, except, of course, his line about domain names having no intrinsic value.
We will soon be developing our Rate.com. Rate.com earns about $1500-$2000 a month parked with HitFarm. Does Rate.com have intrinsic value? You betcha.
However, our PalmSprings.com generates over $100,000 a month as a developed site. Does the name PalmSprings.com have intrinsic value? Yes, because I know for a fact that the name itself played a big part in attracting advertisers from Day 1.
I don’t know Live Current’s business model, but I would bet dollars to donuts they don’t have a sales team out there drumming up static advertisers. It appears that most of their revenue comes from e-commerce. And, as most developers know, 99% of e-commerce sites don’t generate fabulous amounts of money no matter how great the domain name appears to be.
One may own a Ferrari, but one must know how to drive (it) and take it to where you want to go. Value lies in the nurturing.
David,
Thanks for throwing out some numbers about some of your sites. I always appreciate knowing a little about how much any given site is making and so many people that are “successful” don’t say a word.
Thanks!
…meaning, I suppose, that they’d have failed even if they’d targeted “Cricket.com” to exterminating the little buggers. 😉
I guess waterfront land doesn’t have any value unless you build a house on it then?
I’ll bet an empty lot next door to Matthew has some intrinsic value. Why then wouldn’t an undeveloped domain not have any intrinsic value?
just goes to show u that even if u have all those killer domain names, but no real business plans / experience in running an e-business online u can and will fail big time over and over again and disappoint many ppl involved (investors, employees, partners, etc) and ruin ur image and credbility and everything else
terrible mismanagement… they are hopeless
what were they thinking trying to put together a multi-million dollar deal with the cricket league…
the guys are good at FAILING over and over again for years now
when is this company going to go under?
i give them by the end of the year
more like 6 more month’s though… will be a miracle if they can survive
Mike
http://www.wannadevelop.com
A great domain will get you free traffic. Compared to an equivalent site that has to pay Google and others to get traffic, you can either offer the same services at a lower cost while achieving the same level of profit, or you can just make more money.
The real skill comes in to what you do with that traffic. If your site is crap (and let’s face it, for a tier 1 domain, brazil.com *is* crap), all a great domain means is that more people will decide your site is crap than would have had the opportunity to do so on “visit-our-brazil-please.com”
Interesting that David C. notes that the domain palmsprings.com attracts advertisers, rather than referring to traffic.
That is correct, let’s say I have visitpalmsprings.com and it is a better site, better optmized, and has more visitors than palmsprings.com it will still be easier for David C. to convert advertisers because of the branding cache of the name.
The best model is to invest in the best domain and build the best site in that segment – you can fail on either of the two ingredients and still succeed, but if you have both of the ingredients then nobody can beat you, and that’s the intrinsic value i see in the vital ingredient – the domain name.
David, thank you for sharing real numbers.
But let’s be ultra-specific. Some may see it as splitting hairs, but I don’t want to mislead people.
The question should be whether domain names have objective intrinsic value.
The answer is no.
Neither do diamonds.
However, some domain names may have subjective intrinsic value. I may not see value in a certain domain name, but you might. If you have money and want to be a sucker, you can purchase it. If you decide to buy into the diamond myth, you do the same.
If generic names were a “license to print money”, then Live Current Media would be making quite a bit more money with their names than they have — which so far has been zero, save perfume.com and the sale of Malaysia.com.
If generic names were a “license to print money”, then a stable and lucrative market would exist for them. It doesn’t. Never has. It’s like the Pet Rock fad.
A diamond is precious because 1) A marketing company said so, and 2) Supply is restricted. Hence, subjective value.
Fly.com is not intrinsically valuable. It requires development. That takes money. Travelzoo already has a brand name associated with itself. Therefore, the development associated with Fly.com may be less expensive if they can attach it to the Travelzoo brand name.
I will say that you guys know more than I do about generating PPC income. While I’m sure that David is happy about generating $1500-2000 monthly (if true), and that’s a lovely bit of passive income, it is not what I consider a fully fledged business.
Matthew – I think your last paragraph sums up David’s point. A diamond doesn’t earn income. A domain name, when parked, earns income. So it does have value. It’s not a full fledged business, but it clearly has value.
Great, great post, Andrew, and great follow-up comments from Matthew. It would be great if this keeps someone from making a big mistake, but many (like me) actually have to make the mistake in order to believe it 🙂
Hi Folks,
I an the senior editor for Blogger News, the spot where this whole debacle started. I am oh so curious about this statement:
However, our PalmSprings.com generates over $100,000 a month as a developed site. Does the name PalmSprings.com have intrinsic value? Yes, because I know for a fact that the name itself played a big part in attracting advertisers from Day 1.
A simple Alexa search shows this site with a rating in the 180,000 range, in other words your grandmothers blog is going to have more traffic than this. At a 180k, maybe it is getting 100 hits a day (though I doubt it). How can it possibly be generating $100k per month?
As the senior editor for BNN I would invite Mr. ‘Rich’ to contact me, clearly his is a story that is newsworthy.
Simon Barrett [email protected]
@ Simon-
I’m sure David would be happy to talk to you about it. But here are two points:
1. The site doesn’t sell advertising on the unproductive CPM basis.
2. You need to stop looking at Alexa. It’s essentially worthless. Compete.com shows 39,000 uniques and a rank of 51,000. Assuming that’s right, I suspect that means the site gets nearly 3,000 page views a day.
Dub-A, this guy’s comments are spot on, but literally set on a “railroad track” type of marketing expectation.
There are so many ways to develop a domain, monetize it, build its value, sell it, use it for promoting your own company, etc, I don’t want to list them all here because I get paid for showing companies how to take their domains and get the best value that meets their expectations and needs.
Just speaking as a rep for WhyPark, for less than a dollar, every domainer can get content on their domain to AT LEAST ATTEMPT TO GET IT INDEXED. This is the first value that all domain owners should attempt to achieve. Parking a domain may get good (or bad) revenue, but it will DEFINITELY NOT get your domain indexed by the search engines.
Each domain in a portfolio must be evaluated in order to determine if they are domains that should be developed, parked, sold in the aftermarket (and how that sale should proceed), built into a directory, or simply just indexed with relevant content cheaply to build organic traffic.
Matthew makes valid points, but those points, if they are well-taken, just direct domain owners with questions to domain consultants like Adam Strong, Brian Benko, Rob Sequin, yourself and maybe myself – along with others (sorry I didn’t mention you here). All of us have made good money from utilizing domains with their “intrinsic value”. The value can only be determined by expert evaluation first.. but even longtails have value, as seen in some of the Moniker auction sales at Domainfest09. I sold three domains for a total of $4000 that I only had about $200 invested. That’s a nice return…
Domains have intrinsic value once you understand the many paths to that value.