Acquisition will make it easier for customers to buy domain names that are already registered.
The acquisition also includes NameMedia’s domain name parking platform SmartName. The BuyDomains.com site and NameMedia’s domain name portfolio are not part of the acquisition.
A simpler domain name purchase experience
GoDaddy’s acquisition should create a better experience for customers who want to buy a domain name that is already registered by someone else.
“We’re making [it] really, really simple for anyone who wants to find a great domain associated with their venture, regardless of whether it’s in the aftermarket or something that’s never been claimed before,” said GoDaddy CEO Blake Irving.
Many people complain that “all the good domains are registered already” when they search for a domain. This frustration is exacerbated by a complicated process for purchasing an existing domain name from its owner.
By integrating domain name aftermarket Afternic, millions of already registered domain names will be available for GoDaddy customers to purchase much the same way they register an unclaimed domain name today.
Big strides in the domain aftermarket
In recent years, Afternic and competitor Sedo have made the process of buying an existing domain name easier than in the past. In addition to aggregating listings of domains for sale, they’ve also struck partnerships with domain registrars so that customers can instantly buy these domains.
GoDaddy already has partnerships with Afternic and Sedo to show domain names that are available for sale, but customers cannot purchase them without jumping through a couple hoops. The partnerships with GoDaddy, unlike with some other registrars, do not enable the instant transfer of domain names.
GoDaddy has its own competing service, called Premium Listings, that allows for the instant purchase and transfer of already registered domain names, but it is limited to a small subset of domains registered at GoDaddy.
With the acquisition, the volume of names available for instant purchase and transfer at GoDaddy and other domain registrars in the Afternic network will increase. Afternic has nearly six million domains listed for sale, and about half of them are available for instant purchase and transfer. GoDaddy has a further one million domains in its Premium Listings program, which will be rolled into Afternic.
The Afternic platform sells about $1 million of domains in a typical week, with many of them sold to end users looking to acquire a name for their new business or upgrade to a better domain.
Benefits for domainers
The acquisition will provide advantages to aftermarket domain name sellers.
With GoDaddy’s Premium Listings rolled into Afternic, there will now be one common platform for listing domains for sale on GoDaddy and the more than 100 partner sites in Afternic’s Premium distribution network.
“The concept of Afternic has been ‘list once, sell everywhere’,” said GoDaddy Director of Product Development Paul Nicks. “That’s really going to come to fruition now. You don’t have to list your domains on GoDaddy Premium listings, Afternic, and all these various spots. You’ll have one control panel you go to and manage all your listings.”
This also means that domain name owners no longer need to choose between registering their domains at GoDaddy to take advantage of Premium Listings or at another registrar to list them on Afternic.
With Afternic’s “fast transfer” system for instant domain transfer fully integrated, and customers able to purchase existing domain names the same way they register an available domain name today, there should be more sales compared to GoDaddy’s existing partnership integration with Afternic.
“We see a significant increase in sales velocity with fast transfer,” said Bob Mountain, SVP of Business Development at NameMedia, who will now be Chief Revenue Officer at Afternic.
Compared to the existing Afternic implementation with GoDaddy, Mountain believes there will be “a good double digit increase” in sales velocity.
Mountain also expects a significant increase in the number of domains listed for sale through the platform. In the future, domain owners will be able to list and manage their domains for sale directly through their registrar interface rather than logging in to Afternic.com. This should result in more people listing their domains for sale.
The acquisition will mean domain sellers pay lower commissions, too. Afternic’s commission is 20%, which is lower than the 30% GoDaddy charges for Premium Listings. Irving said it’s not the company’s intention to change commission rates from the current 20%.
GoDaddy will continue to operate the GoDaddy Auctions site for expired domain name inventory, as Afternic does not have real-time bidding capabilities. Afternic will be a separate brand.
In addition to the aftermarket ramifications of the deal, the acquisition of SmartName means that GoDaddy now has a domainer-focused parking platform. Its own parking program, CashParking, has mostly been targeted to small domain name owners.
Of course, the acquisition also removes one key domain aftermarket competitor from the business. When it comes to selling aftermarket domains through domain registrars, it’s now just a GoDaddy and Sedo world.
Domainers who list their domains for sale with Afternic are sure to keep a close eye on commissions.
The deal will also put pressure on publicly traded Sedo, which is already reeling from a declining domain parking business.
Sedo’s existing partnership to list domains at GoDaddy will continue, although Sedo’s domain listings will only show up when the same domain isn’t also listed with Afternic. Sedo has about 17 million domains listed for sale and generally sells between $1 million and $1.5 million of domains each week across its marketplace.
Sedo continues to dominate the market for country code and non-English domain names, although Afternic is working to add more ccTLD options and build its registrar partnerships in Asia and Europe.
Adding GoDaddy’s reach to Afternic will additionally put competitive pressure on Sedo’s new TLD offerings, which Sedo is counting on as a revenue source in the face of market pressures elsewhere.
New TLDs also play a role
The timing of the acquisition is convenient for the coming introduction of new top level domain names.
Afternic has been working with new top level domain applicants to identify their “premium” domain names. It will then list them for sale on its network once the TLDs launch.
That means that new TLD operators who partner with Afternic will have greater reach for their reserved domain names now that GoDaddy owns the company.
Afternic’s new TLD partnership with auction platform NameJet to offer sunrise and landrush auction services remains intact.
NameMedia investors get an exit
The sale is an exit of sorts for private equity-backed NameMedia. The company filed to go public in 2008, but later withdrew its S-1.
Originally created by the acquisition of Mike Mann’s BuyDomains (RareNames) for $72.5 million plus stock, the company went on to acquire a number of domain name businesses.
It bought domain parking company GoldKey for $3.0 million and SmartName for $16.5 million in 2006.
Also in 2006, NameMedia paid just $4.4 million to acquire Afternic — but the domain sales platform back then was very different from what it is now. One of the oldest domain marketplaces, Afternic at the time was primarily a place where domain name professionals transacted. The typical end user domain buyer was not aware of its existence.
That changed when the company started distributing its listings to more websites and registrar partners. More importantly, Afternic began integrating its fast transfer service with domain name registrars so they could sell aftermarket domain names in much the same way that customers register an available domain name. Weekly sales have doubled since 2009.
Much of the growth in registrar partners and fast transfer was spearheaded by Bob Mountain, who joined the company in 2009. 18 of the top 20 domain registrars have inked deals with Afternic, some on an exclusive basis.
24 Afternic employees will move to GoDaddy with the transaction, remaining in Boston.
NameMedia’s large domain name portfolio and consumer sales site BuyDomains are not part of the sale. By selling off its domainer-focused assets, the company is now basically a large domain portfolio holder.
Financial terms for the deal were not disclosed.