The domainer space is interesting and exciting for me because it is a rapidly changing market built on a disruptive concept, tightly linked to search marketing. It’s got style, including wild success stories and Big Courageous Egos, yet is actually quite simple in concept. In short, it’s beautiful. But like most things beautiful, it suffers from constant threats of destruction (that’s a video clip from Fight Club).
Recession Means Opportunity
A big recession is a gold mine for domainers. When money gets tight and people have to focus on their core jobs, they often decide to allow domains they are holding to drop, in order to save the reg fees. Of the millions of held domains out there, plenty would drop if the costs of maintaining them rose much higher than it is now. Inflation can cause that to happen, as can the tightening of budgets normally associated with a recession. So smart domainers have been building up cash reserves, getting ready to step in and buy whatever drops if the cash crunch gets serious enough.
Liquidity is a Problem
For many smaller domainers, though, liquidity was already an issue. I hear SEOs comment that “domainer’s are cheap” and “domainers are so used to paying $8 for something they won’t pay real money for consultants or contractors” but I know many domainers are already strapped for development cash, as domain parking pays very little and Google et al. actively “manages” the advertising profits shared with parked domains (very efficiently, I might add). How can a domain investor get some liquidity out of a domain portfolio, without selling domains into a downmarket, or even selling into an up market likely to go much higher?
Buying Shares in Domains
Enter domain stock markets like Fusu. Fusu hopes to provide domainers with cash for development, by creating opportunities for samll investments in domains much like the stockmarket enables large investments in industry via smaller, risk-managed investments in shares of the company. Via Fusu, you can buy shares in a domain (and the domain owner can sell shares of the domain for cash). It is a way to get some liquidity out of a domain asset, without losing control of the domain. I can’t say much good about the existing implementation of Fusu, but even that may demonstrate the sincere need for quality development resources in this domaining industry.
Partnering to Develop Domains
Another avenue to liquidity is partnering for development. There are VC-like development funds out there now, actively investing in domains by providing directed funds for team building, including web development, marketing and SEO. Some domainers have taken a direct route, offering partnerships for development in a Request For Proposal fashion. One press release I received recently for celebs.com reads:
The perfect partner for Celebs.com will likely have the resources to execute an entire business plan around developing this domain property. All aspects of the business will be the responsibility of the partner. Domains For Media plans to consider 4-5 partner proposals in the next 30 days and make a final decision by the end of February.
That’s right. All you need to bring to the table is everything but the domain name. Interesting approach, but it speaks to the purity of domaining.
Sweat Equity as Liquidity
Over the past 12 months I have spoken with a number of people active in this domain name liquidity event, but compared to SEO, this field moves very slowly. My experience with web development and search marketing tells me many of these players will lose their shirts to their vendors at least the first few times in the asset development game. I know more than a few CEOs of web development shops who are assuming control of web businesses right now because they build up controlling equity as contracted players on development projects over the past few years. Unless carefully managed, web development teams tend to do what they are contracted to do, and not what you really need done. The market is Darwinian in that respect, as I suppose all efficient markets are.
As an SEO consultant, I am interested in these opportunities. Given my experience, I am careful selecting projects, but my high standards are very practical and defensible, and not secret. I have no interest in being someone’s monkey, so yes, if there is real sweat to be invested there needs to be more to the business plan than one big exit event. If you have a real opportunity and need a high-integrity individual to help navigate to success, drop me a note.