So you want to be a domainer ? Sounds like easy money, you may have even read that it is easy money. You are going to sell a name for big money right out the gate. NO, 99.9999% of the time those new to domaining waste money on domain registrations that don’t mean anything to anyone on this planet Earth except for themselves.
In this article I am going to try to give those new to domain investing some things to think about and some things to be on the look out for. Domaining can be a fun hobby or even a decent side business, you want to start out with a sound foundation about the business.
It is important to understand or recognize things such as the following:
- What makes a name valuable
- The whole world does not speak the same language
- Having both a buying and selling strategy
- Bankroll management
- How aftermarkets and drop catchers work
- Dealing with endusers
When you start out as a domain investor the most important question to ask yourself is “Why am I doing this, what do I hope to accomplish ?” Getting rich is not the right answer to that question, of course everyone wants to make a lot of money, you can do that in a variety of ways. So why buying and selling domains ?
One plus that many see when coming to domaining is that there is a low barrier to entry, it does not cost a lot to register a domain, $8 to $9 for a .com registration, You need to keep in mind all the best .com domain names are not available to hand register at this price and buying them on the secondary market can cost a great deal more.
Do you have the time to be a successful domain investor ?
The domaining landscape is very competitive today, there are people that employ the use of technology to mine data much faster than you will on a manual basis. Do you like to do research ? Are you creative when it comes to naming choices ? These things take time to learn and to put into action. You need to keep learning as well, things are not static, it would behoove most in 2015 to learn a little something about Chinese, the language, the symbols, the culture. In 2003 no one was focused on that and it was not really necessary, in 2015 I believe it is necessary.
Now do you want to take that time to learn ? Because if you just like domain names and want to participate in the overall growth of the namespace, you can be an investor in public companies such as Verisign (NYSE: VRSN), Tucows (Nasdaq: TCX ), Rightside (Nasdaq: NAME), or Go Daddy (NYSE: GDDY) to name a few. Let me make clear I am not recommending you buy stock, I am pointing out another way to participate.
So you have decided that you want to go ahead and start buying and selling domain names, you want to set a budget that you adhere to for one year. You need to remember you may not sell a name in the first year, the names you want to keep you need to renew. So if you budget $1,000 and you stick to 110 hand registrations at $9 a piece, after one year you need to renew all those domains, so with no sales your budget is spent on retaining old names with no room to add names.
I would say you never have your full budget invested, if you have $1,000 budget, spend $500, keep $500 on the side. You never know when an opportunity comes up, a new niche may start to pick up steam and you want to jump in while prices are low. An example would be 4L.net without aeiouv, three months ago you could pick them up for reg fee or $5 Go Daddy closeouts. Now they are going for a minimum of $25 to $35 with some going for $100 or more. If you were reading the forums and wanted to jump in you would not have the cash in your budget. In year one you want to stick to that budget as to not go overboard. By keeping a safety net you have the cash to jump in and flip or hold for a bigger move.
Read – Read – Read
So you know you want to jump into domaining, you have established how much you can spend in the first year. So now you register names right ? WRONG ! You start reading everything you can on places like Namepros.com, RicksBlog.com, DomainInvesting.com, DN Journal.com, TheDomains.com. There are actually quite a few resources with solid info. You don’t buy any courses, you don’t spend for any information you absorb all the free information that is out there. There is a ton of it out there, use the search function on blogs and forums don’t just look at recent posts or articles.
Ask questions, you should search a forum first to make sure the topic has not been answered a million times, this will save you time. If you can’t find the info then start a thread and ask your question. Someone will answer you quickly 99 out of 100 times.
Get some kind of understanding about intellectual property, you do not want to start out typo squatting and regging names that might get you in hot water. Learn about the UDRP, go to blogs like TheDomains and put UDRP in the search and read about cases and decisions. Check out the WIPO website, this is the website for the World Intellectual Property Organization.
There are no absolutes
One of the things over the years that has been a constant is the proclamation of opinion as fact. A lot of domain investors who either get something or they don’t, come out and call their opinion fact.
The truth is you are going to be hard pressed to find any industry that is more subjective, maybe music or Hollywood. It is a big world, what one person gets, another person will not get. There certainly are naming conventions and extensions that are more popular than others, but the beauty of domaining is that you have so many options to find your way to a profitable transaction.
You can look at domain sales each week and there is no rhyme or reason behind certain names selling above others on the surface. One week you have VN99.com sell for $10,000 and the same week a domain like CRM2.com sell for $4,495, a couple of months earlier RQH.com sold for $2,600. So on the surface the people who for years told new domainers, “Don’t register names with letters and numbers unless it is a three character.com” That advice doesn’t look good to those two sellers, but there are always outliers, there are never any absolutes. Generally the advice of not mixing letters and numbers is sound advice.
Part of your reading should focus on past sales data, but not just the number, look deeper, check the whois, see if there is a website, gain some understanding why someone paid what they paid for a domain name.
When selling don’t spam other domain owners
Do the homework, target end users that can use your domain for their business. Do not email the likes of anyone you see owning 500, 1,000, 10,000 plus names. It makes you look bad and there can be consequences, some domain owners got tired of this and named and shamed people doing it on Namepros.
Everyone that is in the business of domaining wants to sell more names, that’s common sense. There are domainers that have the best of the best domains who just sit back and wait for offers. Others take a more active approach to selling and do it in a professional manner. Then there are some who are just making things look ugly for everyone. Spammers, sometimes scammers who just send email after email, names of varying value, names they might not own.
There was a thread started awhile back on Namepros that is titled, “Emails from domainers selling crap names” The thread started out as a place for those getting some annoying emails to vent, but now as more people have joined the thread, there is a call for such things as, “Its time to strike back, give them a taste of their own medicine” Posting names and tags such as spammer or scammer so this is what will show up on Google when someone does a search for the person,company or email address.
Don’t try to build your portfolio on outliers
As I mentioned anything can and has sold, names registered in tiny country codes you may have never heard of produce sales from time to time. Starting out you should try to focus on names that have a large pool of potential buyers, not a kiddie pool. When you only have one potential buyer, such as an obscure company using OfiscInc.com and you see Ofisc.com on Go Daddy expiring you probably only have once chance to make a sale. It can be tricky approaching the company, maybe they have a TM or TM rights without being registered, they could call you a sleazy cybersquatter and tell you to get lost, or they could file a UDRP.
When you register names that have a large pool of buyers you can feel better about renewing each year until you make a sale. A three or four letter domain may produce several acronyms and businesses using those letters in their name. A solid two word .com that could be used by many businesses is another option.
When you register a Made Up Pronounceable, which I have done many times and sold a few, you need a little luck, you have nothing to go on, you invented it, no company name, no place or thing. Now these names when they sell usually have a healthy ROI, take a look at BrandBucket, they sell plenty of these names.
Don’t Take Legal Advice from a Forum Poster
If the situation arises where you need help with a legal issue, such as a UDRP or cease and desist, it is ok to ask for a recommendation for a domain lawyer but don’t forego contacting the lawyer and just take advice from a forum. I have known people who went on the advice of a non-lawyer that their UDRP was a slam dunk, no need to get a lawyer and then they lost the name in a UDRP. There are some excellent lawyers in this business, John Berryhill, Stevan Lieberman and Zak Muscovitch to name a few.
Understand that if you go to purchase names on the aftermarket sites like Go Daddy and NameJet, you are going to find people with much deeper pockets than you. Some of the biggest players in the world are on there everyday bidding. Don’t get caught up in auction frenzy and go over budget. Go as high as you like if you have the means and want the name, but don’t just keep bidding because you want to show that big fish a thing or two. I know people who have done it and if they won the auction, they became the end user. Take your time and search for the things most aren’t looking for, it requires patience and a lot of days no value buys will come along.
Another reason why you stick to a budget is to protect against shill bidding. There are some people out there who employ some clever techniques you might not spot very easy. Pay attention to patterns, and increment moves.
Some see you as easy prey
With the growing Adam Dicker scandal that has been discussed on Namepros and TheRealShane.com, it has been a wake up call for many that they should never pay for web development all up front, never pay for appraisals and to get in writing what you are entering into. Take your time, no need to rush. Look there are valuable services in this industry worth paying for, but there are many things that are hyped up that you don’t need. I don’t know all the details of everything with the claims about Adam Dicker, I have read the thread and believe people lost money and need to be refunded. I know that no one has ever come to me and asked for help or said to me that Adam Dicker ripped them off.
Whenever you are going to enter into a business transaction, go to Namepros ask others what they think about the offer. Now understand you will get differing opinions and the ultimate choice is yours. The reason why you go to Namepros first is that if it is a scam, a verified scam, there will be people who will tell you and provide proof. If it is a legit opportunity someone may give you a different viewpoint, that may help you save money, that may show you how to structure a deal more in your favor.
When buying names keep the same value in mind no matter who owns the domain. Over the years I have spoken to people who got excited to buy a domain from a big domainer, I understand excitement on a sale, but there is no need for excitement when buying, the name is no better because they own it.
I have had friends and readers tell me names they bought from big domainers where they overpaid, one time it was a Geo that didn’t exist, I won’t give the name as I am not trying to embarrass anyone, but it was along the lines of buying SouthBermuda.com a term which is not used, and is available to hand register by the way, I don’t recommend it.
Everyone doesn’t know one another
There is a misconception that all big domain owners know one another intimately, they know the details of their business and their finances. That is not true, plenty of people happen to show up at the same conferences and maybe on the same panels. They may be friends or friendly, but they don’t know everything going on. Especially when deception is involved, most of the time you will never know who someone is fucking, literally or figuratively.
I have gone with this basic premise my whole life, “No one ever knows anyone truly and completely, people tend to focus on what they have been exposed to, which in most cases if not all, is not the entirety of the person.”
So pay attention and always ask questions, if someone can’t tell you one name they have sold that shows up on DN Journal or Namebio they may not be as big as they say they are.
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