Domain Name Industry Set for Growth Shift
Domain name trading is about as productive as stock trading. An old friend in the "domain industry" won't invest in stocks, he says, because he'd rather put his money to work growing his own businesses. Indeed, this is the problem with the current industry, which is more like a Market really than an industry in most respects—that is, it's more about buying and selling domains than it is about creating real value. The next phase of the industry's growth will shift to a a different focus.
That's not to say that there aren't some real revenue-generating players in the market. The parking companies have definitely carved out a good revenue niche, but it's a very unstable one that is at the whims of larger players such as Google and Yahoo.
Google, for example, has recently launched its own service that will allow domain owners to implement the Google feed directly, and avoid the hefty fees of domain parking companies. Gone are the days of Parking companies taking 50%, 60%, 70%... very few people know the real cut. The lack of transparency, along with little past emphasis on developing relationships with advertisers directly, will certainly shift the profit balance back to the domain holder.
"Domaining" as it has evolved into an industry, is in its early stages. But the current emphasis on trading and parking is not productive enough to sustain the business.
I started "domaining" in 1995. Back then it was certainly speculative, but the carrying costs were minimal and the Internet dream had not yet exploded into what it is today. There's no doubt that a lot of money has been made in trading domain names. In fact, with some foresight, time, and a little luck, one can still buy a $7 dropped domain and turn around and sell it for $10K+. And parking companies have generated hundreds of millions.
But the business can develop into something much more productive and rewarding—just not on the volume scale of many current domain portfolios.
Enterprising entrepreneurs have started developing some of their premium domains. Companies such as Recall Media Group's FuneralHomes.com, for example, are building real businesses and the underlying platform necessary to expand them. It's believing in, and investing in these ideas that has grown these businesses, and so far they have done so on their own—building the development, marketing and sales teams, and creating real value.
I've always been somewhat surprised that most of the domain industry conferences do not yet cater to domain name developers. So far they really have focused on portfolio owners and traders—buying and selling domain names, and monetizing domain name portfolios. Since many have thousands of domain names, in most cases it's not practical to develop on a large scale. Some types of domains work better for large scale development, such as directories, which can work for Geo Domains, but many development projects are superficial sites that are feeds from other sources, and heavy on the advertising and affiliate links.
For some practical tips on developing domains, see Building Out Your Domain name Portfolio. In the next phase of the domain industry's growth, there is sure to be more representation at industry conferences from companies that offer development and publishing platform solutions, consulting, and other project development services.
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Every week there's more gloomy news about the performance of Wall Street, the excessive salaries and bonuses that executives there are taking right off the top, and a growing clarity about the overall culture that has bred outright fraud.
It is time that real entrepreneurs will see that it makes perfect sense to increase investment in our own ideas, businesses and dreams. And with the faltering economy, existing business can grow their current revenue by expanding to fill this niche. Those companies that have until now been developing businesses and platforms for their own portfolios, can begin to share that technology. For example, sites such as DNhour.com or MedNews.com can license their publishing platforms (for a fee, or profit sharing) to a variety of non-competing business. Others will provide complete content development, publishing and sales solutions.
In the next article of this series, we'll provide an overview and list of Domain Development Service companies. Subscribe to DomainRich to stay informed about the latest domain name news and trends.
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