Frager Factor

Sunday, January 13, 2013

Frank Schilling Gems: Why Do “Good” Domains Cost So Much?


"I have watched these expiring name lists every day, for the better part of a decade. These lists are a virtual “boulevard of broken dreams” ..  names which people bought with great hope, only to allow them to slip away after they had some emotional change of heart or after they forgot to renew them. 90-95% of these expiring names are complete and total crap. You could make-up better names in the unregistered available pool."

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Why Do “Good” Domains Cost So Much?

Tia Wood asks:
“”Frank, after looking at a thread at DNF titled “Why Domains cost what they do…Your Reasoning?”, I don’t feel anyone has hit the nail on the head. To me, why domains cost the what they do has largely to do with reverse branding: the ability to reverse brand a word for a company instead of a company for a word. The same goes for branding words for individuals or organizations, etc. But the value lies within reverse brandability, correct? Which brings in a higher quality of consistent and valuable traffic. What’s your take on it?”"
***FS*** I often hear secondary-market domain sales and names referred to as “powerful” or “expensive”. Not all domains are powerful of course.. And why exactly are the powerful ones considered powerful? Well.. As I’ve explained previously if you buy a good, meaningful, generic domain which garners some measure of organic type-in traffic for nothing more than the keyword weight of the name itself; you essentially have a storefront with guaranteed visitors coming into your door and strolling past the merchandise. Typing in a domain isn’t necessarily like a good storefront in a high traffic location, it’s more like the gift shop at the end of a theme park ride that you have to pass through to leave the ride. Only these visitors aren’t looking for the street.. they have self qualified the topic they seek by typing that particular domain name. In the real world you have to pay to lease the space, put in lease-hold improvements, etc, etc. On the Internet, window-dressing is cheap.. the storefront and improvements which bring the visitors in “are the name”.
People often tell me domains are “”soooo expensive”"… They ask: ”Why would I pay $10,000 or $20,000 or $50,000 for a great name when I can make up another name for less?!?”
Well if you buy a name like the one described above with organic, generic-intent type-in type-in traffic; 10, 20 or 50 thousand dollars is not a lot of money. Years ago I worked in marketing consumer electronics and we purchased full page magazine ad-space in “gamer” magazines for $15,000 for the month.. That’s one side of one page, for one-month… and that didn’t include artwork. It was just to build nebulous concepts like “mind-share” with the gaming public. You can’t put mindshare in the bank folks. Had we bought a great domain for $15,000 (and we could have gotten gaming.com or games.com for $15000 back then) we would have gotten millions of yearly visitors forever; for nothing more than the price of the renewal fees.
 The other dynamic at-play is scarcity. With 100 million domain names registered how can they be seen as scarce? Well most registered domain-names are either “terrible” in quality or are specific to a certain branded product or service. On any given day, a random slice of the name-space expires for non-payment. 15,000, 20,000, 25000 names expire each day. I have watched these expiring name lists every day, for the better part of a decade. These lists are a virtual “boulevard of broken dreams” .. names which people bought with great hope, only to allow them to slip away after they had some emotional change of heart or after they forgot to renew them. 90-95% of these expiring names are complete and total crap. You could make-up better names in the unregistered available pool.

The remaining 5-10% are names which could have some traffic or some value to more than one person. Names which could be called meaningful, powerful or generic. That’s 5-10 million domain names globally. It doesn’t take a mathematician to determine that there are just not enough great names to go around. It’s not possible for every person or company to have even one “good” registration. That shortage of supply and global demand keeps prices high… and will for years to come. In fact if the examples above show anything, it’s that great domain names are “still” cheap.

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This entry was posted by frankschilling on Friday, November 30th, 2007 at 5:33 PM


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About The Author: Owen Frager is an Internet marketing expert ready to help take your company to the next level.

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