John Andrews is a Competitive Webmaster and Search Engine Optimization Consultant in Seattle, Washington. This is John Andrews blog on issues of interest to the SEO community and competitive webmasters. Want to know more?

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Paying for Privilege

I’m sitting in the Moniker/TRAFFIC Domain Live Auction. Right now Mucho.com is on the block…. $13,000…. $16,000…. $18,000…. all the way up it goes. Now $30k, once, twice… now $37,500 and the auctioneer makes a joke. Where’s Alf? He’d like this one, but maybe not at the $47.5k it’s at already. Did he just say $52,500? Once, twice, third and final call, SOLD at $50,000.

Yes that’s $50,000 for a domain name. For this one I can see the value. Mucho.com is so brandable in Latin American markets. The growth of the Hispanic markets here in the US alone is adequate to support Mucho.com as a US business. Surely one could build a business on Mucho.com and recover that domain cost in a reasonable time frame, and the business would still have the domain in possession as a (probably appreciating) asset. A bargain at $50k? Not really, because there is significant risk in the market at this early stage, which needs to be accommodated. But I’m pretty sure one day I’ll look back and say “Yes, Mucho.com was a bargain at $50k. If only I had bought it…”

MaineLobsters.com is on the block. $20k, now $40,000, now $45,000 and SOLD for $45,000. Another bargain?

The buyer paid for the domain name, but I think I understand it to really be paying for a privilege. I am reminded of the day long ago that I “bought” a GetOutOfJailFREE card from my older brother Glenn during a monopoly game. He had gotten it for free as he rolled through “chance”, and held it as an asset on his side of the board. I had “chanced” several times without getting a getoutOfJailFREE card myself, and now I was locked up for some sort of Monopoly violation. My 8 year old brain didn’t quite understand the violation that landed me in jail, but I understood I was losing turns in jail. And that he had that card… the privilege card. With that card, I could get out of jail. But I didn’t have the card. But I had cash.

So he sold me the privilege to get out of jail for $400. Sweet deal for him… $0 to $400 in a half hour of Monopoly. But I was able to buy privilege for cash, where I had no such privilege otherwise. No need for a lawyer, an eloquent tongue, or a missed turn, I was out of jail for a measly four hundred bucks.

Public.com is on the block… nobody wants it for $50k. Here’s cab.mobi at $10k, $12k, $15, $17.5k, nobody wants it for $20k… so it is SOLD for $17.5k.

Domain investors understand that only one entity can retain the privilege to publish on a domain name at any given time, and they invest cash into the system in exchange for the rights to that privilege. Cash from other productivity sources. Cash which props up the Internet industry, and fuels activities like domain development, which in turn fuels the Internet economy. In exchange for that investment, They reap the rewards of domain appreciation. My brother realized an infinite appreciation of value of his GetOutOfJailFREE card, because he got it for $0 and sold it for $400. Some domainers buy at $7 and sell for $15,000 a few years later. Nice return if you can get it. Insight into the Internet industry and ecommerce plus investment plus risk assumption equals capital gains. That’s how it works, right?

As the secondary domain market takes shape, we see the investments of cash, sweat, and brains that are fueling the Internet portion of the world’s economy. If you ever wonder why some people are “allowed” to have domains they aren’t using, I suggest you take a close look at how things really work. Once you gain some insight, I guarantee not only will you understand why it works the way it does, but I bet you’ll start buying domains for yourself.

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5 Responses to “Paying for Privilege”

  1. Naomi Dunford Says:

    That was an AWESOME post. I read your blog through Bloglines and I’ll admit, I haven’t been clicking through for most of the TRAFFIC posts but there’s something about a pseudotranscription of a live auction that got me. Combine that with Monopoly, and you got me!

    Now I’m going to go back and read the rest of them instead of working.

    Thanks for your blog - really great.

  2. Nick Kisberg Says:

    Super post John. Your blog is an amazing read. (Damn do I wish I’d have made it to the TRAFFIC conference)

  3. Kenneth Dreyer Says:

    Great post! Now I need to go buy some domains.. :)

  4. lucasng Says:

    “Once you gain some insight, I guarantee not only will you understand why it works the way it does, but I bet you’ll start buying domains for yourself.”

    Oh so true. It’s not too late!

  5. » T.R.A.F.F.I.C. Conference - John Andrews - johnon.com Says:

    […] Live from T.R.A.F.F.I.C.: Paying For Privilege […]

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