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GoDaddy Auctions is pulling back some expired domains that were at Endurance

by — Expired Domains 3 Comments

Domains from partner registrar were mistakenly sent to GoDaddy for auctioning.

Over the weekend, a Domain Name Wire reader noticed that expired domain names from some domain name registrars had been pulled from GoDaddy Auctions. This included domain names that already had bids. When I looked the domains up, it seemed that some of them had previously been renewed by their owners.

All four of the registrars that this reader noticed–BigRock, Domain, FastDomain and Public Domain Registry–are owned by Endurance International Group.

Now at least one GoDaddy Auctions customer has received an email explaining that some of the domains they won are going to be pulled back due to a mistake. The domains should not have been sent to GoDaddy auctions from the partner registrar.

While it doesn’t name names, all of the domains I’ve seen are at Endurance registrars.

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Competition in the domain industry

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Some parts of the domain name business lack competition.

Let’s talk about competition.

Competition and choice are good for consumers.

An example of a competitive market is that of domain name registration. There are hundreds of domain registrars competing for your business. That’s why domain registration prices remain fairly low, registrars create new products and services, and the cost of value-added services remain low (or even free).

A great example of a non-competitive market is for internet service. In the U.S., most people have a choice between just two wired broadband companies. It’s usually a cable company and a telco.

You don’t hear many people say they love their internet service provider. These companies have little incentive to compete on price and service since the alternative is just as bad.

We have some non-competitive markets in the domain name business, and we have seen the effects of this first hand.

There were a lot of reasons that revenue from domain parking plummeted. One of these is because there were really one two companies providing ads for parked pages.

Yes, there were lots of parking companies. They competed intensely for your business. But these were middlemen.

At the wholesale level, it was always just Yahoo! and Google. Much like internet providers, this duopoly was able to start turning the screws. Then, when Yahoo basically disappeared from the scene, Google was able to do whatever it wanted: change policies, reduce payouts…you name it.

While we have lots of competition with domain registrars, we are still quite limited when it comes to domain investor service providers. Thankfully, it’s not the internet provider situation in which they are taking full advantage of their situation. But it could become that way.

Earlier this week Payoneer announced it was leaving the escrow business. I doubt Payoneer ever ran huge volumes of domain escrow transactions, but it played a key role in keeping Escrow.com on its toes. Domain traders had a viable alternative for escrow with a big brand.

I don’t think Payoneer’s exit will have a huge impact on escrow. After all, Escrow.com has been doing whatever it can to try to win customers who had issues with its know-your-customer procedures. Even before Payoneer came on the scene, it kept prices in check. There are always alternatives like lawyers to handle escrow.

But look at some other types of services.

One that concerns me greatly is the domain aftermarket. There are basically two big marketplaces: Sedo and Afternic. Marketplaces are difficult to create, and it will be hard for anyone to challenge these companies.

Each of the companies has its own strengths and weaknesses. But it’s important that both remain strong. If one flounders, the other could easily raise its commissions. For that reason, I hope that registrars partner with both Sedo and Afternic, not just one of them.

Although they aren’t marketplaces, I’m also excited to see services like Efty and Uniregistry out there that can at least compete on generating leads from landing pages.

The expired domain market also concerns me. Generally speaking, there have always just been two players for the direct-transfer expiry market. Right now those two players are GoDaddy and NameJet.

GoDaddy has innovated a lot in this area. As a result, it has won over a lot of the business that used to go to NameJet. GoDaddy deserves to get this business based on its innovation. Let’s face it, NameJet hasn’t done much to invest in its platform and compete.

But if all registrars decide to send their expired inventory to GoDaddy, then NameJet will die and Godaddy will get to dictate the terms to play in the market. This includes the terms for domain registrar partners as well as bidders.

There are always winners and losers, and the best companies should win the business. As consumers, though, we need to encourage healthy competition.

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June’s top DNW stories

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Here’s a rundown of the top stories and podcasts on DNW from last month:

1. Timing is everything: why .XXX dwarfs other adult top level domain names – The .XXX namespace and others recently sold by ICM Registry paint a picture of how difficult it is to market a new TLD in a crowded environment.

2. Yes, your domain name registrar has made it impossible for people to contact you – The general internet public is just learning about the Whois ramifications of GDPR.

3. Man gets 20 years in prison for trying to steal a domain name – A man is headed to prison after an unusual physical attempt to steal a domain name.

4. Web.com to go private in $2 billion acquisition – The final price could be higher if competing offers come in.

5. Namecheap starts sending expired domains to GoDaddy Auctions – Namecheap is the latest domain name registrar to sign up to sell expired domains through GoDaddy.

Podcasts

All About .Me – I chat with .Me registry CMO Natasa Djukanovic about how the .Me domain name came to be.

Three companies using new TLDs – Three individuals who registered new TLDs for their businesses explain why.

The Amazon FBA business model – Learn about FBA, a unique ecommerce opportunity.

John Pollard: How to grow the usage of domain names – Donuts’ EVP of Registry explains how he believes domain names can find new uses.

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A simple way to make GoDaddy Closeout auctions more fair

by — Expired Domains 15 Comments

A win-win for GoDaddy and most bidders.

A lot of people are frustrated with the bidding process at GoDaddy when it comes to closeout auctions.

The idea behind closeout auctions is smart. If no one bids at least $12 for a name during the regular GoDaddy expired domain auction, the domain goes to a Dutch auction where the price starts at $11 and decreases by a dollar a day until it hits $5.

Closeouts allow GoDaddy and its expired domain partners to get something for a domain even if it’s not worth the $12 starting bid price.

But how things work in reality is very different from how they work conceptually.

People don’t want to get into bidding wars in auctions. If no one else has bid on an expired domain as the clock winds down, they (or their computers) stand ready to ping GoDaddy the minute the domain goes into closeouts so they can get it for $11 rather than what is likely hundreds if they place a bid during the regular auction.

Think about what’s happening here. An auction will expire with no bids at even $12, but there are sometimes 5 or more ready buyers who would be willing to spend $100+ on the domain. The point of auctions is to sell things for the market price, but that’s no longer happening in these auctions.

That’s bad for people that don’t have automated means to snipe the closeouts. It’s also bad for GoDaddy and its partners because they are leaving money on the table.

The solution is fairly simple: raise the starting bid for closeout auctions.

Instead of setting a buy now price below $12, set it much higher. I’m not sure what the right number is. Maybe it starts at $75, drops to $50, then $25, then $10 and drops a few bucks after that. I know that I’d be willing to pay $75 or more for many domains that close with no bids.

Raising the price will have two effects.

First, people will be more willing to bid in the regular auctions rather than wait for closeouts. The potential savings of waiting won’t be as great.

Second, GoDaddy and its partners will make more money.

The only people who will lose out are those that have perfected their systems for sniping closeouts.

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GoDaddy is closing an expired domain “loophole”

by — Expired Domains 18 Comments

Last second backorders will no longer circumvent closeout process.

Auctions for expired domain names at GoDaddy can get competitive. With no backorders required, domain names can go from $0 to hundreds of dollars even when no bids are placed until the last few minutes.

This is complicated by the closeout process. If you bid on a domain in the live auction it will likely be bid up to over $100. If you can snag it when it goes into closeouts then it’s only $12 plus the renewal fee.

Unfortunately, there are lots of people with API access and computing power who treat the closeout like a drop. They start sending calls to buy the domain as soon as the regular auction closes.

But there has been a loophole that has helped people like me. If you place a backorder the second an auction closes, you can win the domain for the cost of a backorder before it gets placed in closeouts.

For the past year or so, I will closely watch auctions and be ready to bid if someone jumps in at the last minute. If the auction ends with no bids, I’ll place a backorder at the second the auction ends.

Historically, this has helped me scoop up a lot of domain names. About 95% of the domains that make it through the auction with no bids. But it’s gotten tougher this year.

Starting in January I noticed a lot of people placing backorders with a few minutes left in the auction. I’m not sure why they were doing this because it triggers a $10 bid and then everyone can pile in.

Then a few weeks ago I noticed that many of the domains I was backordering at the last second were getting scooped up by other people. My success rate went from 95% to about 25%. My guess is that they automated the process for backordering to get the timing just right.

While the backorder loophole was nice while it lasted, GoDaddy is about to eliminate it.

Joe Styler explained this change in a post on NamePros this week.

So now the options are either bid regularly and fight with everyone else, or program a system to snipe domains the minute they hit closeouts.

Well, it was fun while it lasted. At least now I won’t log into GoDaddy to place a backorder, only to be frustrated when someone places a last minute bid.

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