Enough to pay $12,000 for it?

I just got the results for the Domainfest first-day auction, described as “very strong” by Oversee’s main on the ground, Mason. Certainly looks better than last year, which was a bit of a wash-out. Is this another sign the economy is finally picking up?

Anyway, of 73 domains, 49 were sold totaling $150,950.00. It’s good but it still seems under-par. Oversee’s CEO Jeff Kupietzky alluded to this in his opening speech. Jeff believes that this is early days, that the world of domains will explode some time soon, like a real estate boom.

Maybe he’s right; maybe he needs to persuade himself he’s right, with a portfolio of one million domains that will cost over $5 million a year in holding fees. I’ll ask him tomorrow morning.

Here’s a random selection of domains, prices and mindless comments from me from the list:

familycounselor.com – $12,000 – really?
pucks.com – $12,000 – because it’s sort-of like “fucks”?
snack.net – $7,500 – I think this is a cracker
borrow.net – $5,500 – pretty good. Can’t decide whether more or less useful in a bad economy
gallows.com – $1,600 – Gallows humour if you think the domain is worth this much
taxicabs.net – $1,000 – you’d think that was worth more – maybe *too* generic
handheldvideogames.com – $900 – waste of money
cooks.info – $500 – I’d say that was worth it, people love searching for recipes online

And the lowest sold: manhattanapartmentbuilding.com for $100.

Just an update on my previous post – Adam Epstein from AdMarketplace won the first round of the PITCHfest.

The winning idea – pubMarketplace can be found at, well, pubMarketplace.com. There is a flyer in the Domainfest bag about the service.

It advertises itself as “Bringing the Power of Search to Content Publishers” and offers the ad tag cloud that he showed off during his presentation.

Dangerous degree of arrogance backfires

You know it’s bad when you start to feel sorry for the person on stage. Hal Bailey must have wondered what the hell happened. Coming to DOMAINfest Hollywood as the man in charge of AdSense for Domains, Hal was here to tell the assembled masses that Google was going to allow them to make money while sitting on their arses.

This incredible gift was going to come with some rules though: domainers would have to clean up their game. They would have to post original – i.e. not stolen – content on all the domains they owned, and they would have to provide a valuable informational service to their fellow Netizens. If they did that, they would find Google warm in their embrace; if they did not then Google would not help them and they would be out in the cold.

You can imagine Hal planning out this gentle lecture in his head before taking the stage with fellow Google employee Matt Parry: tough love but they would thank him for it later. It didn’t quite pan out like that.

Instead, the one-hour “Google Perspective: Winning over the Advertiser and Optimizing Site Performance through Analytics” was a lesson that Google executives would do well to learn from. Customers are customers and not just grateful users of services – no matter how much market share you have.

The whole thing started badly when Matt Parry used his presentation on Google’s Analytics tool as no more than an advertisement for the service, running through a series of slides that showed its features and telling everyone why they should use it. The problem was everyone in the room was already using Analytics, alongside one of the many other tools out there that help you find out who is visiting your websites and what they do there (Mint, Performancing, Quantcast, SlimStat, and so on).

Mistook Domainer conference for sales pitch

He did slightly better while promoting another service – Google’s Website Optimizer – by at least giving some real-world indications for why this might be useful. But he had horribly misjudged the audience. The people in the room make a living from following, gathering and analyzing traffic and design on their multitude of websites. If they weren’t good at it they would never have paid the $995 conference fee. So why was Google taking up their valuable time telling them that if a webpage looks nice and the links are friendly that more people will click on them – and that will make them more money. Was this guy serious? Is that the best Google can offer?

Parry sat down and Hal Bailey – the man who leads the partner management team for Google AdSense for Domains – proceeded to leap straight into a snake pit. In the US, the expression used most often for describing people that have been brainwashed by their own corporate hype is “drinking the Kool-Aid” (Wikipedia will tell you more).

Well as Hal got on stage and told his audience that to his mind cloud computing is the way forward (“If I was a student, I would be thinking to myself ‘why spend $600 on software when you can have free office tools online?’”) you could practically see the Kool-Aid dripping out his ears.

AdSense, he told us like only a true believer could, is a “very powerful revolution for the world”. It has brought users and advertisers and domain property owners together. Online advertising has changed people’s lives – and Google was to thank for it. “People can make a living doing what they love,” Hal revealed. “Five years ago that would have been impossible.”

Welcome to Google World™

Of course in many respects, Hal is right, Google’s AdSense program was a leap ahead of the previous ad-serving services and so it still retains a first-mover advantage. But in Google World™, AdSense didn’t build on years of innovation from a range of companies and industries (the porn industry of course was the true innovator). No, instead online advertising is something that Google created. Sort of like how God created Man.

With this awesome power comes responsibility, so Hal embarked on his lecture: “Google’s role in domain world is trying to educate people about quality – to provide a positive user experience to users.” What Google was looking for was “stability and integrity”. Not only that but Google has a vision. It is “providing the world’s information”. And in case you were wondering how grand this vision was, Hal explains: “And when we say the world, we truly mean the world – not just the United States.”

Hal then informed the room how to create websites that please the Google God. “If there’s something you’re excited about and want to teach everyone about it, we encourage everyone to do that. But if you are planning on scrapping content – with no end value to end users – that is probably waste a lot of time and effort for not a lot of return.”

We were also let in on the Google secret for how it values websites: “If have a growing number of people visiting your site, you’re probably providing value.”

Let me tell you why I'm not going to answer that question...

And then it was back to how great Google was and how it was helping domainers to help themselves. “We have helped improve the domain space as a whole. Years ago domains were seen as a bad place to be. So we provide value to the Internet as a whole and we expect to continue to go down that path.” And Hal leaned back to enable the lucky benefactors of Google’s patronage to ask questions of its wisdom.

Clearly these words and this Google God vision is a very popular concept in Mountain View. The problem is that it is also nonsense. And arrogant, self-serving nonsense at that. Google provides a service and it provides that service for a fee. And, as Hal was just about to find out, that means that people aren’t quite ready to accept the world as painted by the Big G.

Any questions?

“I wonder if you could tell us what the revenue cut is that Google takes from Adsense?” was the first question posed from the floor. “I’m afraid that revenue share is not disclosed,” was Hal’s response to a few snorts in the room.

“What are Google’s plan for the domain channel?” asked the next speaker. Hal couldn’t speak from AFS (AdSense for search presumably) because that was a different department but in terms of AdSense for Domains, well that was proprietary information.

Will Google add all the books it is scanning to the Google main search and “flood the Google database”? (From the domainers’ perspective this would like the sudden arrival of millions of high-level websites competing with their own). Hal’s not going to take that one either. “Book search is a separate product at the moment so I don’t know about that.”

With Hal giving a series of non-answers, the questions started getting a little more aggressive. “You say that you want transparency for the advertisers, but when you are asked for any information, you say it is proprietary. Shouldn’t people know what you are making?”

So how much of my money do you intend to keep?

Hal had nowhere to go. “Well, that’s a different product and a different group. But all of them have a non-disclosed web share. But I am pretty sure that that share has not been changing.”

“People should know!” exclaimed the speaker to applause in the room.

The next question: is Google aware of how much money different domains make? Another risky pass. “There are confidentiality agreements with respect to that so I can’t go into details about what information we do and do not share with partners.”

The questioner asks again: can Google tell how much a domain making? “We don’t talk about that,” Hal insisted.

Let’s recap

So, to recap, Google has so far told the people that it makes very large sums of revenue from that:

a) They have to change their behaviour if Google is going to allow them to give it money
b) They don’t have a right to know how much Google is making from their work
c) They aren’t allowed to know any aspect of the information that Google has built up from code running on their websites

This prompted the next question: “Would it motivate Google to be a little more open if all the domainers boycotted them?”

It was at this point that Hal’s realized that something had gone very badly wrong. To his credit, he tried to joke his way out of it. “Er, yes, we did a calculation and it would take 16 days.” He got some laughter and leapt in fast. “We’re here to support the domain industry. A year ago, advertisers were calling us saying ‘get us off the domains’ – so we put a lot of effort into working with community.”

Hal then also remembered a piece of Google messaging designed to persuade Congress that it doesn’t need to investigate the company for abuse of market power: “You are more than welcome to try out other programs.”

The next questioner then tried to throw Hal a lifeline: “It is quite clear that you don’t want to say anything about transparency – but do you think the market will be more transparent in future?”

Hal was too flustered to see the route out though. “For our large partners that we have contracts with, they know what cut they receive. But for online, for different compartments, I don’t think they will change that.” The questioner tried again: Google for Domains for example is a step forward for more transparency. “I don’t know what plans are there,” Hal responded desperate to get off the stage.

Is that more Kool-Aid, Hal?

And there it ended, much to Hal’s relief and to Matt Parry’s, who had sat there praying that no one asked him any questions. The session was billed as “Google executives share their knowledge of the evolving analytical tools available.” A more accurate description would have been “Google executives get roasted by the domainer community for their dangerous arrogance.”

That won’t be the end though: we can expect many more of these confrontations until Google lifts the lid of secrecy of its main revenue source. When it does reveal its percentage cut on online advertising, it already knows that every single AdSense competitor will advertise madly that they charge less, and as a result a huge slice of Google’s market share will vanish overnight.

Until then, Google will just have to calculate how much the domainer community’s anger is worth to them.

We first learned that the domain name market was far from stable around eight years ago when the dotcom crash turned a booming market into dust in just a few months.

Over the years, that market has grown in strength: its stability saw people invest in advanced systems for buying and selling domains, and the never-ending demand for Internet sites, coupled with the fact the the number of top-level domains stayed the same and so the domain space became smaller, meant that prices increased steadily to the point where tens of thousands of domains became worth tens of thousands of dollars.

Well, the DOMAINfest domain auction has just demonstrated that the domain name space may be more stable but it ranks alongside art, rather than houses, when it comes to property.

In short, the auction was a bit of a wash-out, with none of the 200+ domains available exceeding expectations; most hitting the bottom-end of their estimated value; and a very large number meeting no bidders and being pulled off the floor.

The big names were especially badly hit: zimbabwe.com was slated for $100,000+, no one would touch it and it went unsold. Monalisa.com – possibly frivolous but clearly memorable – also went unsold. Rather worryingly for the blogging community, weblog.com – a snip at $500,000 – has very solid traffic – 700,000 visitors every month. It went down to $200,000 and still failed to sell*.

Strikingly, sleep.com – a domain I wouldn’t mind having – went unsold, failing miserably its $1 million to $5 million price tag. Screensavers.com – which purportedly has made more than $13 million in revenue and boasts 5,000 downloads per day – did slightly better and was sold for $800,000.

Publishing.com was also in the $1 million to $5 million bracket. It opened at $500,000 and no one went for it. Unsold. And spotlights.com suffered the same fate. Jet.com started at $200,000 and saw no bids.

So the big spending is out on domain names. But how about the smaller fish – the day-to-day businesses?

Well, they fared better, but no one was leaving with a windfall today. The exceedingly well-priced fly.travel went for a measly $2,500 – with the auctioneer practically pleading with the sole bidder. I nearly bought it myself. Inventions.info – which strikes me as a good long-term bet – went for just $1,250, but at least that was within its expected range.

The “.me” domains – which are currently being extensively marketed following the registry’s purchase last year – did better than expected, but I still think that $10,000 for contact.me is going to be widely seen as an incredible bargain in just a few years’ time.

The domain name market certainly seems to follow the vagaries of the wider economy. Digitalnotebooks.com – a dotcom! – went from $5,000 to $4,000 to $3,000 to $2,000 to $1,000 to $500 and still there were no buyers. Seems no one wants to buy laptops and no one wants their respective domains either.

All that said, there was still a lot of money flying around for what remain largely intangible names on an invisible network. No one believes the Internet is going anywhere soon – and .me’s comparative success shows that marketing breeds confidence – but now is not the time for flashy auctions it seems.

The big event at domaining conferences is the auction – almost like an online cattle show – where proud owners get to show off their biggest beasts and wait in silent anticipation for the huge pay-off.

I’m at DOMAINfest in Hollywood and it being Hollywood, there is some glitz and glamour to proceedings. The auctions people are dressed in tuxedos, swirling lights, a booming PA piping music and MCs, bars in the corners and excited chatter.

For an economy in the doldrums, the online auction market looks healthy (we shall see in a minute I suppose). There are 203 domains up for auction. No less than 18 of them are going for between $100,000 and $250,000; 4 for between $250,000 and $750,000; and no less than four domains with an “opening bid range” of over $1 million.

So what are those domains?

Well, the four big ones are screensavers.com, sleep.com, copiers.com and publishing.com. I’m not sure the screensavers domain is worth anywhere near that but I quite fancy sleep.com – but for one million?!

What is also striking is the fact that dotcom remains king. Of the 26 valued at more than $100,000, all but one are dotcoms – and that one exception is no less than four .net domains bundled into one (forclosures, forclosure, foreclosures and foreclosure.net).

The “premium” .me domains are mostly valued at between $5,000 and $10,000 – even good ones like contact.me. And, the President of Oversee.net Jeff Kupietzky has just told us it is the first time that .travel domains are up for auction (“now that the restrictions have been lifted”). But .travel has to work on its value – we have free.travel – surely a great name – for just $1 to $5,000. Maybe it’s just untested waters – we shall see in a minute.

Update:

The auction experience is a little intense – a bloke with a microphone the usual super-fast-paced auction rattle, but with three attendants pacing up and down at the front, pointing at bidders with a variety of signals, shouting out comments, prices and yelping indecipherable exclamations when they get a response.

One screen on the left lists the lots and expected range, a screen on the right gives a real-time bid list – where it is, what’s being asked for, where the bid is coming from – the ROOM or ONLINE etc. It’s an intense experience and it’s hard to concentrate sufficiently to write this post.

I’ve recorded one of the exchanges on my mobile phone so you can get a sense…

Listen to the DOMAINfest auction noises

Second update:
Well, the economy is clearly having an impact – almost all the domains are at the bottom of their ranges; some below; some are pulled out after no interest. Spotlights.com was listed as $100,000 to $250,000 but no one took it when reduced to $50,000.

Likewise the four foreclosure domains (.nets) referenced above. The auctioneer even broke off his patter and started talking about the value of foreclosures – billions of dollars in 2008, he explained (at breakneck speed – maybe people couldn’t catch the words as they zoomed past their ears). It made no difference – it was pulled off the table after no one bid on $100,000.

And just now one of the big boys – jet.com – set up for $500,000+. It was opened at $200,000 and no one bit. Which is a shame because I have no doubt it will be worth double that in just two years. All you need is the $200,000 to start with :-).

I’ll be taking pictures at DOMAINfest today and sticking them on Flickr – and possibly here – with a CreativeCommons license (free non-commercial use; attribution required). The stream is below:

Today I’m at DOMAINfest in Hollywood. It’s the last day of a two-day conference all about the domaining side of the domain name industry – the sale and resale of domain names and associated websites.

Doug Brent, ICANN COO, is here to talk about policy issues and the work ICANN is doing this year – some of which is likely to impinge quite heavily on this fresh industry. But I wanted to come and learn about this aspect of the DNS and hopefully encourage people to get involved in ICANN.

So, if you are here and you see me, come over and chat. I’ll be here and writing blog posts throughout the day.

Singer Jennifer Lopez has filed papers against the owner of jenniferlopez.org and jenniferlopez.net, accusing him of cybersquatting.

The two sites are owned by one Jeremiah Tieman who lives in Arizona and uses the sites to display news, pictures and videos of and about the singer and includes a disclaimer at the bottom stating that the sites are fan sites and are not endorsed by Lopez. However, both sites also include prominent ads and links through to affiliate sites.

Case D2009-0057 was filed last week with the World Intellectual Property Organization (WIPO) by Lopez’s charitable foundation – which support women and children on low incomes – rather than her hard-hitting IP lawyers Fross, Zelnick, Lehrman and Zissu who are the registered owners of Lopez’s dotcom website.

It is not yet known if Tieman will put up a fight for the domains – I have emailed him asking for an interview – but his chances don’t look good after WIPO has consistently found in favour of celebrities in such cases. Tom Cruise was awarded TomCruise.com by WIPO in a carefully fudged judgment (my analysis here) but also a judgment in which it was argued that if someone made any money at all from a namesake domain that it could be taken as a sign of “bad faith” – one of the three things that someone must prove in order to be given their domain. Another similar fudge gave England and Manchester United footballer Wayne Rooney his dotcom.

Other celebrities recently involved in cybersquatting cases have been Scarlett Johansson, who was given scarlettjohansson.com after its owner unwisely decided to have a competition which gave applicants the “chance” to have a threesome with the sexy actress. Chef Raymond Blanc also won back his dotcom namesake last year.

However, all is not lost for Tieman. Sting lost his attempt at Sting.com; and most famously Kevin Spacey lost his bid for KevinSpacey.com in the California courts, put in an appeal and then reached a deal with the notorious celebrity-domain-name owner Jeff Burgar who handed it over.

We shall have to wait and see what happens with JenniferLopez.net.

Update: Jennifer Lopez’s Foundation won back the domains. You can read the decision here.

Previous owner Tieman didn’t help his case by changing the “Whois” registration details for the domain twice in an apparent effort to sidestep the UDRP process. It didn’t work. Tieman also offered to sell the domain to the Lopez Foundations twice – for $80,000 and then for $45,000.

All that aside though the UDRP decision is shaky, and, as I have covered a number of times in past cases, have built its case on the foundation of suspect decisions, themselves built on top of suspect decisions. It’s a whole house of cards that will fall down if WIPO doesn’t start looking at UDRP properly and firming it up.

This time around, the nine-year delay between the domain registration and Lopez’ action is dismissed, despite there being a whole legal theory in the US of “laches”. The panelist finds that this doesn’t apply in “injunctive” cases – although I have to say handing over intangible property (as also defined in US law) strikes me as more than just injunctive action.

So in conclusion: Lopez won; the original owner was a bit dodgy; the UDRP process is a mess; and WIPO continues to fudge the rules.

I have long said that Google is going to become the new Microsoft. People forget that Microsoft was once also a poster-child, before its control over the majority of the world’s operating systems turned it into a monster.

The fact is that Google has a dangerous amount of power and it is only a matter of time before that level of power corrupts. The company has gone beyond providing neat, market-changing products for free and has started to dictate what is allowed online through the rules it creates. Again, it is only a matter of time before those rules start being bent in favour of the corporation, rather than the improvement of its products or an improved end-user experience.

So, my first quick example of where Google has a dangerous amount of power. This site – kierenmccarthy.com and my other main site kierenmccarthy.co.uk – have this morning completely disappeared from Google. Last night my sites existed, this morning, they do not.

Why? Is it because I am a cyber-criminal, or because I am posting copyrighted or illicit material? No, it is because I decide to redirect some links from my .co.uk site to my .com site. I was trying to build up awareness of the dotcom site and make it more professional and then turn the .co.uk site into a more personal site. So I have copied the exact same content from my .co.uk site to the .com site and then added in a redirect. I have done this for approximately 20 pages.

And that was enough for Google to completely delist both sites and as a result visitors have plummeted – because a huge number of online users use Google to find material online.

Hijacking

So I do a bit of research and it turns out that redirects are increasingly used by domain hijackers. They hack into the account of a popular domain and then redirect traffic to one of their sites – which they cover in ads (probably using Google Adsense) and then make a profit from.

So Google has instituted some kind of procedure – it is unclear what exactly because it won’t tell you – that attempts to identify this sort of behaviour and then acts (without notice) immediately by cutting all ties. No doubt this is all intended to be in the service of the average Internet user.

Except – and here is the big problem – Google isn’t responding to complaints about where this approach doesn’t work. In fact, from various webmaster pages I have found online, this problem has been going on for at least nine months and no one has heard anything from Google.

Now, even a cursory look at my websites would make it clear that my redirects are entirely legitimate. Except of course, because there are millions of websites out there, Google would have to have several dedicated people just working on this one tiny aspect of the workings of the domain name system in order to fix the problem. Instead what it does is cut you off, and then allow its automated systems to revisit the site at a later date (estimates for this particular breach of Google Rules is 90 days) to see if anything has changed.

Getting away with it

Now Google is not going to dedicate hundreds of employees to doing these administrative tasks because:
a) It doesn’t have to
b) It can claim it is protecting the majority of Internet users
c) It is a for-profit company and there is no financial come back on it

What will happen is that these problems will get bigger, people will sue Google, Google will build a crack team of lawyers and spend more each year knocking down any lawsuits and – if the lawsuits on one particular aspect get too big or too expensive – it will make small changes to its systems.

At some point – the crucial turning point in it becoming the inevitable monster it will become – Google will decide that, despite the risk of lawsuits, it is in the corporation’s wider interests to not make a change that directly impinges Internet users. And after it does that a few times, eventually the US government and the European Union will take it to court – exactly as has happened with Microsoft.

In the meantime however, I am penalised for an entirely legitimate action that has nothing whatsoever to do with Google. I have had no choice but to adjust my behaviour, change what I want to do online in order to fit in with Google Rules. I have killed the redirects – and now I have to see how long it will be before the majority of Internet users are able to see my websites again.

Update: Approximately eight hours after I posted this article about nine hours after I killed my redirects, this website has again been listed in Google.

The redirects were only in place from 10pm to 7am yesterday. So now I’m uncertain about whether to experiment with this a bit and see what the process is.

I’m also pondering whether this blog post itself captured attention or whether it was purely automated. Views and experiences welcome.

I am going to have to make a determined effort to update this blog more often. I always feel better when I am writing. Anyway, just as an update: I am currently in New Delhi in the Maurya Hotel following a busy conference week. I’ll be heading to the airport soon to go to Paris, where I hope to meet up with various folk that are integral to the next two conferences coming up both in June: the OECD ministerial in Seoul, followed immediately afterwards by the next ICANN meeting in Paris.

But in between, and for Thursday and Friday this week, I will be at Domainpulse in Vienna giving a talk partly about my book, Sex.com, and partly about the history of making money from domain names. You can see the full programme here. It should be interesting: Wolfgang Kleinwachter, Peter van Roste, Sabine Dolderer, Patrik Faltström, Daniel Karrenberg plus a number of people I have yet to meet and look forward to doing so. If you’re going, see you there.