Hundreds of millions of dollars each year in excess profits are flowing to Verisign because several years ago ICANN failed to protect the interests of the Internet community and instead caved to pressure from Verisign. Verisign and ICANN settled a dispute between themselves by agreeing to raid the wallets of consumers and businesses worldwide for their mutual benefit and self-enrichment.

The dispute began in 2003 when Verisign rolled out its SiteFinder service which gave Verisign control over all the typo traffic going to misspelled or non-existent domains. After a huge public outcry, ICANN requested that Verisign roll back the service. Verisign refused. ICANN then ordered Verisign to roll back the SiteFinder service. Verisign responded by filing a lawsuit claiming that ICANN had overstepped its bounds by not acting as merely a technical coordinating organization and instead acting as the “de facto regulator of the domain name system”.

At the time, ICANN’s position was precarious. Many governments were unhappy that a US based organization was in charge of overseeing core functions of the Internet. ICANN’s role was also not clearly defined. Was it merely a technical group, as it often insisted? Or did it have the powers and responsibilities of a regulator? It did not help ICANN’s position that the most powerful and important registry, Verisign, was rebelling at ICANN’s efforts to assert its authority and moving forward with a lawsuit that could severely constrain ICANN’s role. Fighting Verisign’s lawsuit was costing so much that ICANN couldn’t hire the staff it needed and it was impeding ICANN’s ability to carry out its functions.

So ICANN and Verisign retreated to a back room to work out a settlement out of public view. What they come up with was that Verisign would drop the lawsuit, would pay ICANN millions of dollars, would support higher fees for ICANN from each domain registration, and in return Verisign would be granted a perpetual monopoly to the .com registry with regular price increases.

ICANN converted Verisign from an antagonist into an ally. ICANN solidified its support and would have a much larger budget. Verisign secured its rights to a monopoly worth billions of dollars. It was a win for ICANN and a win for Verisign. ICANN and Verisign agreed to join forces and leverage the control that together they had over the domain space to forge a deal that would enrich each of them on the backs of everyone else. The deal resulted in hundreds of millions of dollars per year in excess fees to ICANN and Verisign.

In a maneuver worthy of a Judo master, Verisign used ICANN’s effort to rein it in against ICANN. Verisign used its lawsuit against ICANN as leverage to obtain a perpetual monopoly on the .com registry that allowed windfall monopoly profits from the start, as well as further price increases, because hundreds of millions of dollars in annual excess profits wasn’t sufficient. As Ross Rader of Tucows put it:

VeriSign successfully leveraged the litigation into a complete renegotiation of its contract with ICANN staff who seemingly played right along to avoid further litigation.

This sweetheart deal came under attack. It resulted in an unusually close 9-5 vote by the ICANN board. But ICANN approved the deal.

ICANN’s approval of the settlement agreement with Verisign is a clear example of Regulatory Capture. As described by Wikipedia, it is when an “agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating.” In this case, ICANN, instead of putting limits on Verisign’s control of the dot-com name space for the benefit of the Internet community at large, advanced a settlement that allowed Verisign to reap monopoly profits at everyone else’s expense.

Verisign and ICANN celebrate their success by throwing lavish parties at the ICANN conferences held around the world in spots such as Sao Paulo, Lisbon and San Francisco largely paid for by Verisign’s sponsorship. Milton Mueller at the Lisbon conference:

I just returned from ICANN’s “gala dinner,” lavish affairs that have become an institutionalized part of its meetings. My perspective on this was best encapsulated by a remark made by John Berryhill, a domain name lawyer, at the Marrakesh, Morocco meeting. As we finished a huge meal and moved on to see dozens of Berber horsemen shooting rifles, setting off fireworks and rustling camels he deadpanned, “Yeah. This is the proper way to run a computer addressing system.”

And former ICANN board member Karl Auerbach’s perspective:

[W]ould you think it a fair exchange if you gave someone $15 and they said, here I’m repaying you with this nice shiny one cent piece?” Well, that’s roughly the same ratio of the benefit that ICANN confers unto Verisign every year and the amount of Verisign’s “sponsorship” amount, i.e. about 1500:1.

Basically, the munificence of this event reminds me less of words like “dignified” and more of words like “ostentatious”. Perhaps “corrupt”; certainly “for sale”. We of the internet community are paying for all of this… I do find ICANN’s expenditures to be entirely out of line with its mission and its status as a non-profit, tax exempt, public-benefit organization.

Former Saving and Loan regulator William K. Black’s quote about the causes of the financial crisis also applies here, “The defining characteristic of crony capitalism is the ability of favored elites to loot with impunity and the failure of regulators to do their jobs.”

As John Kenneth Galbraith stated in his book, The Great Crash 1929:

Regulatory bodies, like the people who comprise them, have a marked life cycle. In youth, they are vigorous, aggressive, evangelistic, and even intolerant. Later they mellow and in old age – after a matter of 10 or 15 years – they become, with some exceptions, either an arm of the industry they are regulating or senile.

Perhaps due to its role at the heart of the Internet, ICANN has acted in this manner with Internet speed, in a few short years becoming a seeming appendage of the industry it is supposed to be overseeing for the public benefit.

ICANN, though, does not necessarily see its mission as acting for the public benefit. It has many stakeholders, and the public at large is just one of many. This was made clear in 2006 exchange between then ICANN chairman Vint Cerf and attorney Bret Fausett.

Bret Fausett: …Whether you are right or I am right about the merits of .com, I think we ought to use what I am hearing in the hallways to make it better. Because frankly, if we can’t figure out how to represent the public interest better, there are other organizations that start to look like they might be able to do that.

Vint Cerf: Just keep in mind that a multistakeholder organizations have more than just public interest to represent. Is that a fair observation, Bret?

Bret Fausett: I think in an organization like ICANN, public interest is the overriding interest that should be represented.

Vint Cerf: We should talk about that because I have a different model.

Bret Fausett: Then I think that your different model and my model of the public interest being paramount might be exactly at the source of the tensions that we are feeling.

Vint Cerf: See you over a pinot noir.

The very structure of ICANN leads it to favor registrars and registries over the interests of the public. ICANN is structured so that these groups have more influence and power within ICANN than the public, so it should not be surprising that ICANN would be more attentive to the desires of these groups than to the public interest.

The Coalition for ICANN transparency (CFIT), a group with its origins in the domain industry, sued to prevent the Verisign settlement saying that it was collusion between ICANN and Versign and violated antitrust and unfair competition laws. But earlier this year the case was settled for free. The reason the suit was in effect dropped hasn’t been made public. Verisign is now a multi-billion dollar behemoth. It turned ICANN’s lawsuit to its advantage. It would have been a long-shot for a small group of domainers to prevail against it.

One of the questions about Verisign’s control of dot-com is whether it is really a monopoly. The argument is that dot-com is just one of dozens of extensions and if someone doesn’t like the price of a dot-com domain they can pick a different extension instead. This argument says that Verizon’s control of dot-com isn’t a monopoly but that Verisign is just one of many competing providers of domain names.

This view ignores the historical background that has given dot-com a unique position in the marketplace. By the time Verisign took control of the .com registry, it was already the dominant extension, was used by most of the commercial internet, was supported by huge sums of money spent on advertising by companies using dot-com websites that reinforced that dot-com was synonymous with the Internet in the minds of many consumers, and most consumers’ interactions with the Internet occurred on dot-com addresses.

I don’t know how good an analogy this is, but it seems similar to the Electric utility claiming that it isn’t a monopoly because consumers don’t have to use electricity to light their houses, they could use candles or whale oil instead. Yes, there are alternatives to dot-com but those alternatives are qualitatively different in that no other extension offers the same benefits as dot-com.

Verisign’s monopoly on dot-com doesn’t just give it hundreds of millions of dollars in windfall profits each year, it also gives it a competitive edge to extend its dominance to other extensions. Verisign uses these monopoly profits to build a very robust infrastructure. It can then use that investment to subsidize its costs in running other registries.

This advantage was key when in 2005 Verisign had to compete for the renewal of the rights to run the .net registry. One of the key factors in evaluating the competing bids was “the ability to run a secure and stable registry”. Because the revenue from the dot-com monopoly has allowed Verisign to build a very robust infrastructure, no other competing registry could outscore Verisign on this point. ICANN used an outside firm, Telcordia, to evaluate the bids. Telcordia was owned by the same parent company as Verisign for several years. Telcordia picked Verisign to run .net.

Awarding .net to Verisign was met with a barrage of criticism and prompted observers to remark that “The bias for Verisign written into the .net process by ICANN is remarkable.”

Another remarkable outcome of the .net bid is that Verisign’s winning bid to run the .net registry was $3.50 per registration, far lower than the registration fees they charge for the much larger .com registry. This would seem to confirm many people’s belief that the actual cost to run the .com registry is less than $3 per domain, with some believing the .com registry could be profitably and securely run for $1 or less per domain registration.

With similar fixed costs to run a registry, and with a much larger base of registered domains to defray the costs, the .com registry should be far cheaper on a per domain basis than the .net registry. As Bob Parsons of GoDaddy said at the time, “it costs VeriSign… next to nothing to add each new .COM name to the registry.” Every new .com registration is pure profit.

This demonstrates one or both of two points: a) Verisign’s profit margins are enormous on .com registrations, and b) Verisign can use its profits and the infrastructure investments it made to run .com to subsidize its costs of running other registries.

I just spoke with someone who made the very good point that Verisign is well positioned to win the contracts to operate the majority of the new gTLD registries that will be coming online in the next few years. Verisign can leverage the robust registry infrastructure paid for by the .com monopoly to extend its reach to become the dominant operator of the new gTLDs. Without the windfall profits from dot-com, it is hard for other registries to put in place a similar infrastructure to support a brand new gTLD.

Verisign seems well positioned to be able to use the competitive advantages from its monopoly position in dot-com to shut out competition in the new gTLDs and become even more dominant.

This isn’t because what the ICA does isn’t worthwhile and it’s not because the ICA isn’t effective.

I think it boils down to most domainers are not that affected by the issues that the ICA fights for.

The ICA is the Internet Commerce Association, a trade group advocating for domain registrant rights. It is supported by a small group of dedicated domainers, and domain industry companies including Sedo, Oversee, HitFarm, NameDrive, TrafficZ and Tucows. Phil Corwin, a veteran DC attorney, has for many years been the lobbyist for the ICA and is the only person who receives compensation from the organization.

Even though ICANN and Congress set the rules by which our businesses run, and even through every .com domain and other gTLD domain we own is subject to a Registration Agreement written by ICANN, and even though that Registration Agreement says that any domain we own can be taken from us through a cheap and flawed UDRP process, most of us can go about our business blissfully free from any thoughts of ICANN, or Congress, or the UDRP.

You can look at domainers and find three primary business models: parking, flipping, and long-term investing. If you are parking product domains, then you are probably safe. If you are parking trademark typos, then losing your domains to a UDRP is a cost of doing business. The fault line lies if you are parking generic/dictionary word domains that could also be subject to trademark. Then you could risk losing a valuable generic in a UDRP due a stray ad on a parked page. If this has happened to you then you may care about UDRP reform, and you may become interested in the ICA. But otherwise, likely not.

If you are a domain flipper, then you probably don’t hold onto your domains long enough to get hit by a UDRP. There have been instances where a UDRP was filed very soon after a domain was purchased, but by and large, as a domain flipper, you probably feel safe and you won’t care about the ICA.

If you are a long-term domain investor, then you are most likely to be concerned about ICANN and domain policy. You will be concerned about UDRPs, about the URS and efforts to weaken the UDRP, about trademark clearinghouses, about Verisign’s dot-com contract, about attempts to put preferential pricing provisions in new gTLDs, and the new gTLD release.

But if you are long-term domain investor, then you likely have a lot of cash tied up in your domain portfolio. You may have made a big investment and have been waiting years for it to pay off. So money may be your issue. Are you going to give away $5k-$10k to the ICA, if you even have the cash available? Or if you do have the cash, wouldn’t it be a better investment to buy another domain?

Maybe you got hit with a UDRP that you think is unfair from a trademark bully. Maybe you got a bad decision and your domain was transferred, and you face an expensive lawsuit to keep it. Then you’ll care, but you’re already dealing with a large, unexpected legal bill, and the last thing you want to do is take out your wallet for another large payment.

If you are a long-term domain investor, who is big enough that you’ve been hit with a few bogus UDRPs so that you start to care about UDRP reform and ICANN issues, and also successful enough that you still have cash left over, then you may look at the ICA as a worthwhile investment to help sustain the long-term viability of the large investment in your domain portfolio. But there aren’t many domainers who fit this description.

If this description doesn’t fit you, then you may not see much value in the ICA.

Even if you do match this description, there are many other obstacles that get in the way of supporting the ICA.

One of the biggest obstacles is that as businesspeople, we expect a return on our investment. We like to see a clear cause and effect relationship. What do I get for my money? If I donate a few thousand dollars, what difference will it make?

In the world of lobbying, and especially when dealing with ICANN or Congress, everything is murky and there is no clear cause and effect mechanism. The ICA can point to involvement in some successes. But what would the outcome have been if the ICA wasn’t involved? It is very hard to say, as most policy decisions have input from dozens of stakeholders.

It doesn’t help that the ICA doesn’t wield much direct power at ICANN. The ICA is a member of the business constituency, which is largely dominated by trademark interests, and is itself one of many sub-constituencies of a larger constituency, the GNSO, the Generic Names Supporting Organization, that even in total doesn’t have much influence at ICANN. If I understand the ICANN structure correctly, the entire GNSO is entitled to appoint only two of the 21 members of the ICANN board of directors. Aren’t your eyes starting to glaze over already?

Another obstacle is lack of comfort with the whole idea of lobbying, or lack of familiarity with it. I live in Washington, DC. I used to work for the Federal Government where I dealt with lobbyists on a daily basis. My next-door neighbor runs a large lobbying firm. Yet I still have only the vaguest idea of what lobbyists do and how they are effective.

The United States has a strong culture of using lobbyists. Many other countries don’t. If you are a domainer from one of these countries where lobbying isn’t as prevalent, the whole idea of lobbying may be foreign to you.

Lack of experience. I’m going to try to find a way to say this that doesn’t sound obnoxious. Many successful domainers are young. They are techno-geeks. They have dedicated themselves to building their business. They may not have yet paid much attention to the legislative process, to policy development, to the nuances of the UDRP language. And this applies to many old geezers too. There are certainly many exceptions, but it is a lot to ask a young person, who is making their first steps at starting a business in a new industry, to shift their attention and focus on the obscure, complex issues of ICANN policy making.

Another obstacle is the perception that the ICA is dominated by Parking companies and only responsive to their concerns, not to the concerns of domainers. This is a concern that Rick Schwartz and Howard Neu have raised. This is a bit of a Catch-22. As Howard says, if only Parking Companies give money to the ICA, and if only Parking companies are involved in the ICA, then it follows that the ICA will be most responsive to their concerns. The parking companies want domainer involvement, and have been responsive to domainer concerns, but this perception is one more obstacle for domainers to overcome.

Lack of outreach is another Catch-22 problem. The ICA used to have an Executive Director position to do fundraising and to try to attract new members. But the EDs weren’t successful enough to support their salaries, so the position was terminated. The ICA is run by volunteer members who all have demanding work responsibilities to which they must give priority. So little time is left over to do outreach. And as I’ve been describing, persuading someone to join the ICA is not an easy sell. It takes a consistent effort, lots of education, and plenty of engagement to overcome the many obstacles. There simply isn’t enough time or resources within the ICA to do this on a consistent basis.

There is also the freeloader problem.  This is one I didn’t mention in the original post.  As long as the ICA exists, and is carrying out its mission because other people have funded it, then there is no need to contribute yourself.  Especially if you have any of the doubts or reservations described above, the path of least resistance is to do nothing.

Another objection I overlooked originally can be called the reverse freeloader problem.  Or, in other words, ‘if the big boys aren’t supporting ICA then why should I’?  This is articulated by ‘domains’ in the comments below:  “Let me know how much they contribute and if I’m happy with the amount, I will start supporting.”  There hasn’t been a lot of visibility into who is, or is not, supporting the ICA.  Beyond a few well known prominent domainers, there isn’t even a lot of visibility into who are the top domainers in the industry.  With so little clarity about who is supporting the ICA and how much support the ICA has, it is hard for the industry as a whole to get behind the ICA.

Yet another hurdle is that there are no clear benefits to joining the ICA.  Most industry associations offer valuable benefits that more than offset the membership costs.  These can include favorable rates for trade conference attendance, group purchase discounts, industry newsletters with useful insights, and so on.  In the domain industry, private groups put on the trade shows, not the association.  No registrar or parking providers offers discounts to ICA members.  Industry information is shared broadly be a network of bloggers.  The absence of clear, direct benefits makes supporting the ICA a harder sell.

So for all these reasons, it is a wonder that the ICA gets any domainer support at all.

The surprising thing is that many of the domainers who support the ICA do so even though they have very little appetite for the policy issues that the ICA focuses on. Chad Wright of WebQuest generously supported the ICA even though he was in the middle of a very expensive fight to overturn a UDRP decision that ordered the transfer of his Hayward.com domain name, and even though, as he says, “Legal issues give me a headache.”

Eric Grant of Reflex Publishing put it this way:

I tend to not follow policy issues as closely as I should. It’s not that I don’t recognize the importance of presenting the domain investor viewpoint, it’s just that this is something that I don’t enjoy, despite the relevance to my business.

In a broad sense, that is why I’m contributing to the ICA: I’m hoping that I can at least contribute funds to help where I should also be spending more of my time.

This isn’t a post to give reasons for why the ICA is deserving of domainer support. I hope to do that in another post.

This post is an attempt to put out there for discussion reasons why the ICA hasn’t received more domainer support.

Andy Booth, photo taken by Richard Lau at the Playboy Mansion, Jan 2011

In 2006, Andy Booth, a 22-year old recent university graduate, had to borrow a thousand pounds from his Mum to make his first domain purchase.  Two years later Andy was regularly buying and selling six-figure super-premium domains, had quit his job and was traveling around the world with his new Mexican girlfriend, and was locked in a battle with one of the world’s largest corporations over a super-premium domain that he had recently acquired and that it desperately wanted.

Andy is one of my good friends in the domain industry.  I’ve done more deals with Andy over the past few years than with anyone else.

Andy has had a remarkable rise to success in the domain industry. This is his story in his own words.

–

My first success with domains came when I was 18.  I had recently launched a WWF-related fan site when I heard a rumor that the WWF was changing its name to WWE.  I did a few domain searches, including for WWE.com, finding out that several of these names had been registered by the same person. I was feeling more confident about the legitimacy of the news and so registered a few domains, just in case, including WWEWrestling.com. Around a week later, the WWE name change was confirmed and I had immediate email interest in the domain.  Having paid $8 or so, I agreed to sell wwewrestling.com for $1000, a substantial sum at the time, which allowed me to embark on a tour of Europe with a friend.

That was the turning point for me. I then realized that domains were highly valuable commodities and would always have half an eye out for another preemptive registration to make me “rich”.

Very little in my background would suggest that I would become a domainer.  I grew up in the North part of England, a notoriously working-class part of the country called Chorley. My father was a pilot, having flown in the air-force and going on to became a commercial airline pilot, which meant he was often away. My mother had met my father in the air force as a radio-controller, but she had become a property marketer in my early life.

I have two brothers, one older and one younger, and one of the ways we would vent our competitive edge (apart from the odd physical bashings) was to play video games.  I always had a natural affinity towards games and it gave rise to the creative side in me.

My parents divorced when I was about 10 years old, at which point my father went to work in Borneo, flying for Royal Brunei Airlines. My mother decided that a change of scene was in order and having made friends with my father’s ex-fiancée (of all people), she was convinced to move near her to the south-east of England, a quiet county called Norfolk.

The change of venue was both exciting and nerve wracking at the same time and the process of making friends would have to begin once again from scratch. Being a huge fan of football (soccer) and a keen player myself, I made a good impression on the school team and helped us to win some games, which was an achievement for a school in an obscure small-village in Norfolk. Victory was not something they had been accustomed to.

My primary interests of football and video games were a big reason I helped to make friends and I found myself naturally getting along with like-minded people. In high school, I joined the school team and the junior team (not affiliated with the school) and would continue pursuing my ultimate dream, to be a professional football player.

Andy Booth - Footballer - Nov 2007

As the years went by, despite winning several trophies and awards including the “best player” at a soccer school of 200 kids, I realized that the dream would be hard to achieve, particularly as I was physically smaller than a lot of my peers both in height and physicality. Late developers struggle in competitive sport, particularly at the higher levels, as proved to be the case for me.

We lived in a nice house growing up, but were always somewhat restricted financially. My mother was the main bread winner, despite my father paying maintenance payments, and as she only had a modest job, it was difficult for her having to support 3 boys as well. We got by, however, and my mother would always go the extra mile – although luxury was never something any of us were used to.

My first real experience with the internet was in about 1998. Of course I had no idea about domains, or the significance they had, let alone how to navigate the ever-expanding web of information that was the internet. Our high school’s library had installed the internet onto one computer – which would often mean sitting patiently during breaks for the current user to finish.

A friend of mine, somewhat precocious, had started an internet business from his bedroom at the age of 14. He let a few of my friends into this after we had started to become aware of the internet phenomenon. At this time, the internet was by no means present in the average household and dialup was the only way to connect – so the library was our only option. He came to school one day speaking of his earnings of around 800 pounds a month from his website, K-Gaming.com. It was a huge sum considering the majority of us were earning 5 pounds a week in pocket money.

I was always a keen writer from an early age and my friend was vying for a content producer for his increasingly popular gaming site. I agreed to help out, but had to convince my mother to install the internet, and even more so, to buy a personal computer. We got there in the end, but not without the odd sacrifice here and there.

I started to write reviews for my friend and I thought that I should get involved myself. I wanted to produce a website, and back then, Geocities was an easy platform to use. One of the most exciting parts for me was to choose the domain – geocities.com/keyword. Obviously one-word generics were long gone, so came the trial and error part we associate with the grueling search for an available .com today.

I eventually found one and evolved to a .com, finally launching the WWF related website I mentioned above which led to the registration and profitable sale of WWEwrestling.com.  Even though I would register and sell (via Dnforum) some hand-registered domains, my focus was not really on the internet.  I went to university which kept me busy from 2002-2005.

This changed again after I graduated and went for a job with Google. I had my hopes pinned on this job, having landed an interview according to my degree and strong interest in the IT world, but it didn’t come to fruition. This left me devastated and, working at an insurance company for 10,000 pounds a year gave me little hope going forward.

The 2006 soccer World Cup happened, which I watched eagerly and suddenly, Cristiano Ronaldo became extremely famous (or infamous) for an incident during the Portugal vs England match.  Several months had passed and I checked out the domain name, CristianoRonaldo.com. It was listed for sale at 1500 pounds, a price I could not justify paying given my salary. I called my mother, desperately seeking a backer, and she agreed to lend me 1,000 pounds from her credit card. I called the seller, and eventually convinced him to part with the domain for 1,000 pounds.

Aguascalientes, Mexico - Feb 2010

I knew quickly I had struck gold. I put a website up and it made around $20 a day from its Google ads. I discussed this with a friend on DNforum.com, the now owner of Bodis.com, Matt Wegrzyn, and he agreed to buy it from me for $11,000. This was a windfall for me and was the kick-start I needed to get me to fully focus on domains. I used this money to buy 3 more domains; LionelMessi.com (another hugely famous soccer star), BHC.com (a rare, valuable 3-letter.com) and WrestlingWorld.com, all interests I had in the past.

I would then sell BHC.com for around $13,000 on DNForum and the trend continued. I would buy and sell (flip) sometimes in hours, quickly having established a contact list of significant domain buyers. Due to the success and seemingly relative ease, I then decided to focus on LLL.com domains and almost went through them all (many coca-cola fuelled late nights sifting through 17,500-plus combos).

I was acquiring sometimes 5-6 per week as clearly the market had not been properly “tapped” and would often sell them to the same buyers who I had met through forums and internet business friends of friends. On one instance, one of my regular LLL.com buyers, Gerry Brady (an extremely astute businessman from Ireland) could not justify paying top dollar for a premium LLL.com I had bought, OPT.com. Instead, he referred me to Nat Cohen, now one of my best friends and colleagues in the industry. Needless to say, Nat and I reached an agreement and the rest is history. I owe a lot to DNforum for meeting people, contacts I would end up reaching out more and more to by chat clients like AIM and MSN messenger, which helped to forge good business relationships.

Andy and Steven Kennedy at DomainFest 2009

I was lucky enough to meet several of my online friends in person at domain conferences, something I think which helps build rapport and trust. I am still in touch with many people I have met at domain conferences face-to-face, and I can count several as real life friends. One such example is Steven Kennedy, a fellow domainer who took a similar path to me. We have since met in person and continue to exchange our opinions not just on domains, but life in general.

The majority of my success in the industry has come from short domains. I estimate that I have bought and sold around 50 LLL.com domains over the years, around 8 LL.com and numerous NNN.com domains. I also have owned several NN.com domains, including 82.com and 75.com. These short domains were relatively affordable in 2007 and the early part of 2008, owners not accustomed to receiving significant unsolicited high five figure offers. As a result, these domains were easy to flip, and now their value has approximately doubled since the time I bought them.

Eventually I shifted my focus and diversified into other types of domains. I now had a new job in London working for a TV company, but during the 6 months or so I was there, my focus was always on my own business. I was taking phone calls during the middle of my typical working day with a view to purchasing such titans as Face.com and Celebs.com, so it came as no surprise to my boss when I told him I would be leaving.  I was investing the equivalent of 7 times my annual wage for the Face.com purchase, for example. After flipping, I made the equivalent of about 4 times my annual wage with the company in profit, 40 hours per week, almost 50 weeks per year.

Securing Face.com was a big deal. It was not easy to acquire, but I saw a listing on Afternic, where it had a $130,000 bid on it. I contacted the owner and established that he was looking to sell it, but wanted the market to dictate its value. After numerous calls, I convinced him to accept my $160,000 offer, and we got the deal wrapped up. I felt that given the general domain market, this kind of money was more than value for such a premium, generic domain and later DNF appraisals and the resultant sale would affirm this belief.

Machu Picchu, December 2008

I went on to travel Thailand, Australia and New Zealand, all while remaining active in the domain space. I hadn’t the funds to retain all the good domains at the same time, so in the instances of Face.com and Celebs.com, they had to be flipped in order to pay for my next potentially “big” acquisition.

One such domain came from speaking to someone while I was in Australia. I had graduated on to making inquiries into LL.com, much more valuable and prestigious, and received a huge surprise when I heard that the owners of LG.com may be willing to sell. I had already sold a few (TN.com and GR.com for example) but was particularly struck by this one as it had masses of potential. I had just bought Indian.com for the whopping sum of $225,000, a figure which shocked many, but at the time, I had a well-known DNForum’er contact me repeatedly about it. He had been involved in the auction (private bidding) for Indian.com and had not believed the seller that they had received a higher offer (my offer). Calling their bluff, he unwittingly allowed the sale to proceed, and was surprised that they had been telling the truth.

He then contacted me making several offers, all of which I declined (I loved indian food!). This was at a time when Chinese.com had just sold on Sedo for $1 million. Eventually, he offered $400,000, an offer I felt was far too good to turn down. I accepted and sold it. This would allow me more negotiating power for LG.com.

Celebrating the launch of Live Games on the LG.com domain with good friend, Robin, in Cuzco, Peru, Christmas 2008

With the funds from the Indian deal, I was now in a much stronger position to discuss LG.com. I would call their legal counsel from Australia, sometimes as late as midnight and a few beers under, due to the time difference. This was something I needed to secure!

I got back to London and eventually settled on a price for LG.com, ensuring no previous “legal” action had been taken. I wanted a clean domain and had plans to launch the website – Live Games. Perfect with a short and resonant domain.

On the Zero G flight, February 2008

I continued traveling and in early 2008 visited North America, Canada and then the US, ultimately leading to San Jose, California to take part in a Zero G flight (gozerog.com). The whole concept was fairly novel at the time, and it was only from the advice of a successful Internet businessman and friend, Val Katayev, that I decided to “take a chance” and experience weightlessness. I didn’t regret it one bit and got to meet Simpsons and Futurama creator Matt Groening, who was on the same flight! A terrific experience.

My travels continued and I ended up settling for a while in Costa Rica, even bringing along my brothers, when a dreaded legal letter arrived into my inbox. The firm LG Electronics were ready to sue me and immediately I contacted John Berryhill. The company tried to claim immediate ownership of the domain, which struck fear into me, but luckily the ruling judge dismissed their claims. John referred me to his friend, Stevan Liebermann, and following months of discussions with the electronics giant, we reached a settlement. It was not particularly lucrative, but I was reimbursed for my outlay on the LG.com domain (funds which I simply could not have afforded to lose).

At the 2010 World Cup in South Africa with Ana

I continued traveling and met my then girlfriend, Ana, in Mexico just months later. I had a new found confidence from my wealth of traveling and had become much more outgoing. Something had changed, as she approached me, and that never happened before! We were together for over three years and got to travel and see the world together, visiting Europe, South America, the US and South Africa (for the World Cup in 2010).

I think what allowed me to be successful in this industry was the timing of my approaches. The phrase “right time, right place” applies appropriately to the domain industry and sometimes, you have to be perseverant, the moment a potential seller reveals any interest to sell. The business of course is a game of numbers, and in my experience, the more inquiries you make, of course the more success you’ll have. Therefore, my advice to someone starting out would be to work hard and hunt the unexpected. There is really no domain too big or too small for anyone out there. You just have to ask. It does no harm. I have now accumulated a strong portfolio of domains which earns a solid income each month, thanks to Frank’s InternetTraffic.com.

At flight school in Daytona, June 2011

This has allowed me to take on another challenge in my life, learning to fly. It has always been something that has been in the back of my mind, my Dad being a commercial pilot for Singapore Airlines. After 6 months in Daytona Beach, I got my private pilot’s license, even starting a blog to document my experience on DumbPilot.com. It was certainly an accomplishment and one now I would like to further.

I have now set up Booth.com, which gives an overview of what my company does and hope one day to become a more serious domain consultant, to acquire domains on the behalf of a company who would prefer not to do the leg work.
I have also finally launched Messi.com, a website dedicated to the best football player in the world, Lionel Messi. My motivation is not financial, rather I enjoy giving something back to one of my biggest interests, football.

Domains have been very good to me and have afforded me the lifestyle that most people could only dream of. I am 27 and I have been fortunate enough to do and see many amazing things. I am still very much active in the industry and am always on the hunt for great generic .coms.

In the C&D letter, Sofitel claims that SoFitDC.com “imitates its trademark SOFITEL [and] refers to the name of the hotel located at Washington DC operated by Accor” (the parent company of Sofitel).  The letter goes on to say that unless Sofitel receives a satisfactory reply, that “our client will take all necessary measures to put an end to this infringement including legal proceedings” [emphasis in letter].

Chay plans to respond that he registered SoFitDC.com for a fitness website, and so his use isn’t infringing.

The letter was written by Nathalie Dreyfus, a French attorney who founded her own IP law firm and represents many trademark holders in domain disputes.   The Dreyfus website boasts of its success in winning UDRP complaints for trademark holders.

After more than 5 years in existence, [as of 2009] Dreyfus & associés has filed before the WIPO Arbitration and Mediation Center almost 200 UDRP complaints with a successful outcome in 99% of the cases. This high success rate is greatly above the average, as approximately 15% of the Complaints are denied by the WIPO Arbitration and Mediation Center.

But that is only part of her accomplishments.

How would you like the opportunity to have Nathalie Dreyfus serve as a UDRP panelist for a dispute involving one of your domains, and have her decide whether you get to keep the domain or whether it will be transferred to the company that is claiming trademark rights to the domain?

Well, you’re in luck.  You can!

In addition to being a trademark attorney, she is also a WIPO panelist and an NAF panelist.  According to her website, as of 2009 she had appeared on 70 UDRP panels.  She sends threatening C&D letters by day, and decides UDRP cases by night.

John Berryhill has already called out Ms. Dreyfus for the inherent conflicts of this double-duty, in comments on Domain Name Wire.  It is a fascinating thread.  Berryhill points out that in 2001, Dreyfus was on the UDRP panel that ruled in favor of Pernod Ricard and ordered the transfer of the domain pernod.com.  Fast forward several years to 2008, when Pernod Ricard decides to go after Ricard.com, owned by Tucows as a personal name through their MailBank acquisition.   Whom does Pernod Ricard choose to represent them?  The panelist that helped decide the Pernod.com case in their favor – Ms. Nathalie Dreyfus.

The panelists deciding the Ricard.com UDRP case are now in the awkward position of ruling on a case in which one of their colleagues is representing the Complainant.  Further, as a Panelist in the earlier case involving Pernot Ricard, Dreyfus helped draft the Pernod.com UDRP decision, which the Ricard.com panel will likely rely on for guidance on how to decide the dispute involving Ricard.com.

Tucows has a nearly unbroken string of success in defending its surname domains, which it uses as part of its Hover personal email service.   But not in this case.  The panel ordered Ricard.com, which was registered by MailBank back in 1996, transferred to Pernod Ricard.

Bill Sweetman is the General Manager in charge of the Domain Portfolio at Tucows.  “Because of unhappiness with the UDRP process,” Sweetman says, “Tucows now responds very aggressively and in certain cases has filed preemptive lawsuits to avoid what feels like a flawed UDRP process.  We used to have some faith in the UDRP process, but it has become so flawed.  I’ve become so much more cynical and I’m not a cynical person.”

The flaws in the UDRP process are largely the responsibility of ICANN, which has neglected its oversight role over the UDRP process it put in place.  ICANN authorized WIPO and NAF to decide UDRP cases without requiring them to be bound by a contract that spells out their obligations and permitted behavior.  WIPO and NAF can, and do, create their own supplemental rules.  They can accredit whomever they see fit as panelists.  They operate without any observable oversight from ICANN.

The rot at the root of the system is that the Complainant chooses the UDRP forum.  The various forums who handle UDRP cases compete against each other to be chosen by the Complainant, in effect screaming “Pick Me!”, “Pick Me!”  All their incentives rest with pleasing and making themselves attractive to the Complainant.  The domain owner, who is the Respondent, is just along for the ride.  In this environment is it a big surprise that active trademark lawyers also serve as panelists?  Do you think that active trademark lawyers would be picked as panelists if the Respondent, rather than the Complainant, was empowered to choose the forum that will decide a UDRP complaint?

Who is more qualified, and more expert, in UDRP disputes than domain attorneys such as Ari Goldberger, John Berryhill, and Zak Muscovitch?  But don’t hold your breath waiting for any of them to be qualified as WIPO or NAF panelists.  None of them are.  It is possible that they would even refuse the appointment, recognizing the inherent conflicts that would present.

But WIPO and NAF pick attorneys, such as Nathalie Dreyfus, who make their livelihood enforcing trademark interests and appoint them as “impartial” panelists to decide disputes between these same trademark interests and domain owners.  Is an attorney serving as a panelist likely to make a decision that would adversely affect her ability to make a pro-Complainant argument when she is serving as a lawyer in front of a panelist?  Would an active trademark attorney who is constantly seeking new clients, make a ruling that would be viewed unfavorably by a prospective client?

The conflicts of interest are inherent in trying to fulfill both roles.  Even if the attorney/panelist has no relationship with the parties in a dispute, she cannot claim to be impartial as to the outcome.  The decisions reached by the panel on which she serves may be used as guidance by those panels before which she appears.

I am not suggesting that Ms. Dreyfus has fulfilled her duties as a UDRP panelist with anything less than the utmost professionalism and integrity.  I am questioning a process that permits, and even encourages, the potential for the conflicts of interest that arise when the same person serves as an advocate and a panelist in the same forum.

As John Berryhill eloquently says in the same comment thread mentioned above,

[P]ermitting panelists to also represent parties in proceedings is structurally unethical, because it is a needless opportunity for mischief. There are plenty of qualified attorneys, and accredited panelists, who do not represent claimants in UDRP proceedings. There is no need to have panelists which also represent UDRP claimants. None.

The UDRP was intended to be a quick, inexpensive, and efficient alternative to Federal court as a means to resolve domain disputes.  Due to the persistent, uncorrected flaws in the UDRP process, however, some participants have lost confidence in the UDRP process and are choosing to opt out of the UDRP entirely to go straight to court.  ICANN can address this problem and help fulfill the original intent of the UDRP process as a fair and efficient domain dispute mechanism by fixing some of the well-known inequities in the UDRP process.

Ten years have passed since the UDRP came into existence.  UDRP reform is overdue.  ICANN recently considered whether the time had come at last to review the UDRP procedures for possible corrections.  Their decision: “Not Yet“.

Chay has not yet responded to Ms. Dreyfus.  I hope she is satisfied with his answer.  Otherwise, he may find himself facing Ms. Dreyfus as the attorney for Sofitel in front of a UDRP panel composed of her former and future colleagues.

There were some high quality domains, Power.com, Dubai.com, Prague.com, Avatars.com, Cheese.com, Tie.com, and Movies.xxx etc, but the reserves were too high.  UPDATE.  Per Mike Berkens the movie theater domains did not sell.  The highest selling lot was the pair of MovieTheater.com and MovieTheatre.com for $45,000, pending seller approval of a bid that was well below the published reserve.   That leaves two number domains as the top lot, with 002.com and 689.com selling as a pair for $38,000.

The auctioneer was entertaining and kept things moving fairly well.

Rick’s innovation to start low and bid up until the market price was reached provided useful market information even when domains failed to meet reserve.  But the bids on passed domains were likely suppressed and lower than they would have been in a No Reserve auction as there was little reason to bid if the reserve was out of reach, so it wasn’t that useful a gauge of market values.

A Live Auction works best when there are multiple competing bidders going for high value domains.  The dynamics of a live auction can add interest and excitement. The visceral experience of going head-to-head with a competing bidder in the same room leads to bidding wars and higher prices.

A live auction has a high hurdle to justify the investment in time and effort to put it together, and the investment in time for those attending.  An online auction can handle multiple auctions efficiently.  A live auction has to go through each domain in the auction list sequentially over the course of several hours.

Did the Live Auction provide value over an online auction?  In this case, the answer is ‘No’.

Just once I would love to see a live auction of high quality domains all at No Reserve.  That would be exciting.

It would require the domain owners to sell their domains at the prevailing market price.  If they aren’t willing to do that, then why even hold an auction?

Other impressions-

.CO domains didn’t have a great showing.  The values were approximately 1% or less of what the corresponding .com would fetch.   Sex.co had a high bid of $60k, less than 1% of the $10m+ valuation of sex.com.  GoldJewelry.co went for $750.  GoldJewelry.com would likely fetch at least $75k.   Duchang.co (casino in Chinese) sold for $500.  I don’t know what the .com would be worth, but $50k sounds reasonable.  Touchdown.co had a high bid of $1,000 (didn’t sell).  Touchdown.com would be a six-figure domain.  Her.co had a high bid of $500.  Her.com would be at $50k or close.

It is deflating to have the premium domains such as Power.com, Optical.com, Dubai.com fetching high bids so far below the reserves.  It is also disorienting to have the auctioneer beat up bidders for an extra hundred dollars for iPerformer.com (sold for $200) and then move on to ask for million dollars bids for Power.com and the other premium domains.  Low quality domains like iPerformer.com and iCabin.com shouldn’t be in a live auction wasting a combined live and online audience of hundreds of people.  You don’t see auction houses hawking motel-quality landscapes at a Picasso auction.  You wouldn’t expect a serious bidder for super premium domains such as Power.com and Dubai.com to sit through auctions for iConsumers.com and FreePreviews.tv.

What is the total value of the .XXX name space?  Orgy.xxx sold for $25k, Movies.xxx received a high bid (without selling) of $80,000, Personals.xxx sold for $25,000, Chatroom.xxx sold for $10,000.  How many domains in the .XXX extension would sell for $10k or more?  3,000?  5,000?  I have no idea.  Let’s say it is only 1,000 domains, that would set the floor for the .XXX name space at $10,000,000, and of course some domains would fetch much higher prices such as Gay.XXX for $500k.

It’s incredible that so much value can be created out of thin air, just by rolling out a new domain extension.  It’s understandable why there is so much interest in the new gTLDs from marketers hoping to recreate .XXX’s success.

–

Unofficial results provided by DNN.com’s auction coverage

Using .co as a URL shorteners has taken one of .co’s defects – that it doesn’t have a separate identity from .com – and turned it into an advantage.   By being a ‘nickname’ for .Com, the .Co extension works as a natural URL shortener for longer .Com domains.

t.co is the 22nd most visited site in the US according to Alexa.  t.co isn’t a website, however.  It isn’t a destination.  It is a redirect to a real website, one that probably has a .Com extension.

Because of .co domains’ adoption as URL shorteners, likely 99.99% of the public’s interaction with .Co domains is as a URL shortener.

.Co risks being permanently branded as a redirect, rather than a destination.  Someone seeing a .Co domain will think it is a redirect, not a brand in itself.

This will be reinforced as longer domains are being used as redirects. such as the Denver Broncos using dbron.co as a redirect to DenverBroncos.com.

The trend is picking up with JDM Digital selecting JMDr.co as a redirect, the launch of the lnk.co URL shortening service,  Virgin with virg.co, Politico with Politi.co, and Venture Hacks with vh.co.

The .CO registry is promoting the use of .co domains as branded shorteners on its Opportunity.co site.  I agree that this seems like a good use of the .Co extension, as the brand is retained in a shorter domain.  The .Co registry could carve out a nice, profitable niche for itself if .co domains are widely adopted as shorteners.

The risk is that the use of .Co as URL shorteners will drown out the other possible uses promoted by the .Co registry at Opportunity.co, such as using .Co for a company’s web site.   There are five companies highlighted on Opportunity.co “company”  page.  Only one is an established company, the venture capital firm Draper, Fisher, Jurvetson.   The promo text is:

DFJ knows what it takes to build a successful company. One of the most important things of all? A solid domain name, like DFJ.CO

Type in DFJ.CO, however, and you are redirected to the corporate web site at DFJ.COM.

Will that increasingly by the fate of .Co domains – to not be sites under their own name but merely redirects to .Com sites?

The Internet offers global reach and low-cost distribution.  It is a winner-take-all environment without the traditional barriers to entry.

Google, Apple, Amazon, Facebook, and Verizon are becoming the dominant players in the Internet age, and destroying many traditional businesses along the way.

What other long-established companies will next fall victim to competition from the Internet?

It isn’t a good time to be a bookseller selling books in big, expensive retail spaces, especially not against Amazon and the rise of the Kindle and downloadable books.  Borders failed.  Barnes & Noble is hanging tough, due in part to the success of their color e-reader, the Nook.  But Amazon’s new Kindle Fire threatens to make the Nook obsolete.  What will keep Barnes & Noble from the downward spiral now?

Comcast/Xfinity is a dominant company with steadily growing revenues.  But will they be able to keep their price structure intact in the face of Verizon’s Fios service, and more television shows being delivered and viewed through the Internet?  Will the day come that HBO doesn’t need Comcast to deliver its shows, since enough people will have fast Internet connections and Internet-enabled TVs to be able to watch high quality TV over their Internet connections, obsoleting Comcast cable.  Comcast’s huge investment in infrastructure leaves it with a $40 billion pile of debt.  It can’t afford to lose customers or reduce its pricing.

We’ve heard for a while that the YellowPages is on its way out, as people no longer use the books to locate businesses.  What about Radio?  Will advertisers continue to pay for radio spots if radio’s listeners have migrated to Pandora, Spotify or are to listening to iTunes through the Bluetooth enables speakers in their cars?

Sprint and BlackBerry are vulnerable to the rise of smartphones and next generation wireless.  Sprint, with its smaller customer base, may have a hard time keeping up with the nationwide rollout of new infrastructure that Verizon and AT&T can better afford.  BlackBerry (RIM) has strong cash-flow from business users, but those business users are migrating over to iPhone and Droid phones as these are adding the features and security that business users need.

Could we one day read about the bankruptcy of one of these formidable businesses?

What other businesses do you think are vulnerable to the rise of the Internet?

Domaining is not immune to risks from the larger economy, but a diversified domain business can cushion some of the blow.

A diversified domain business can rely on income from three main business models.  These are domain parking, flipping domains or volume sales of low priced domains, and higher dollar negotiated end-user sales.

Domain parking is nice to have for its steady cash flow. If your parking revenues cover your basic living expenses, then you don’t have to worry about where your next sale is coming from in order to pay the bills, and it can save you from having to liquidate some of your better names at fire-sale prices to come up with needed cash.

The downside to domain parking, as we’ve seen, is if parking revenues drop. The portfolio that was purchased for 5 times revenues, can turn into a portfolio that will take 10 years or longer to recoup the original investment.  That purchase went from being a reasonable investment to digging a huge hole in the domainer’s cash reserves that will take a long time to be refilled.

Flipping domains is another good source of revenue.  It requires hustle, and a lot of effort, to find domains in private hands that can be obtained for less than reseller pricing. But these domains are out there, and the return on investment is usually great, as even if you flip for a small profit the holding period is very short, and by reinvesting your profits in new domains and then flipping them, you can see your pile of cash grow quickly.  Domain flippers can start with, let’s say, $10,000 at the beginning of the year and end the year with $50,000 or $100,000 in profits, if not more. The other great thing about domain flipping is that it isn’t capital-intensive. You don’t have to tie up a lot of cash for a long period of time in domain name inventory. Some domain flippers, if they have good relationships and can trust buyers who are longer-term domain investors, can even pre-sell the domains so there is no risk because they can purchase the name knowing ahead of time that they’ll be able to resell it immediately for a profit.

The downside to domain flipping is that it is time-consuming, and that it can require a lot of effort for not a lot of profit from each individual domain sale.  Hours of sending out domain inquiries, many more hours of negotiating, can result in acquiring one domain that can then be flipped for a $500 or $1000 profit perhaps.   Domain flipping is more like a job, where you are paid by the hour, even though you may get lucky and find some highly profitable domains to resell.   One of the challenges with domain flipping is that often you use your profits to cover your living expenses, so you don’t end the year any richer than when you started.  In addition you also have to pay income tax, at least in many countries, on the profits that you make from flipping the domains. So it is a little bit like running on a treadmill, where you’re going two steps forward, but then one step back after the effect of taxes is taken into account.

As you build a war chest and start buying and flipping higher value names, then the potential for profit is much higher as well, as one domain sale could bring in a $5000 or $10,000 profit when resold.   But the risks are much higher as well. One mistake in overpaying for high-value name where you misjudged the resale value, and you may have to take a quick $10,000 or $20,000 hit that could wipe out much of your profits from the previous few months.

Volume sales of low-priced domains to end-users is a little bit like domain flipping. Instead of selling to domain investors, you sell to end-users, but price the domains cheaply enough that you can sell a good volume of domains.   unlike with domain flipping, you don’t expect to resell all your domains, but your profit margin is also somewhat higher to offset the investment in the domains that don’t sell. This is the business model that BuyDomains has had for many years, and is now opening up to more domain investors as the secondary market distribution channels of Sedo, AfterNIC DLS, GoDaddy, and others expose domain inventory to more end-users.

Holding premium domains as long-term investments for high-end negotiated end user sales is a third business model. It requires a large enough portfolio so that the portfolio will generate several end-user sales per year, which brings in the cash that is required to make this business model work.   The benefits of this business model is that it is largely passive, although you can work with brokers to actively reach out to possible end-users, but the domain investor can focus on other activities, in particular trying to acquire more domains for the portfolio.    This business model takes advantage of the appreciation in the value of domains over the years as the Internet has become an increasingly important sector of the economy. If the value of domains stops appreciating, then this model becomes much less attractive. But it works well when the domain is bought for a low price, then appreciates considerably in value, and then is sold for full value to a motivated end-user, usually for many times the original acquisition cost.  It is also tax efficient, because there isn’t a lot of churn,  and the domain can appreciate in value over the years without being taxed on the increased value along the way.

Usually a domain will need to be sold to end-user for many times the acquisition cost in order to make this model work. This model is very capital intensive, as it requires tying up  large amounts of cash for long periods of time in domains that otherwise don’t generate much revenue.   If it works well,  in this model the appreciation of the domains does the domain owner’s work for him, as the portfolio increases in value simply by being patient. But the risk is that you spend a lot of money buying high-priced domains, using up all your cash, and then wait in vain for an end user buyer to appear. Or if buyers appear but with modest budgets, you may make some sales but not enough to offset the investment and all the other domains that haven’t sold.

The long-term hold model is the opposite of the domain flipping model.  One is passive, the other active.   One is very capital intensive, with the other you can get started with next to no capital.  One has a relatively low ROI on the value of the portfolio as a whole, the other, on an annualized basis, can have a very high ROI of 1000% or more.   The revenue from a long-term hold model is like the return on an investment. The profit from the domain flipping model is more like earning a salary or a commission.

Because I am lazy and got in early enough,  I focus on holding domains long-term.  Because these domains are so illiquid, it is possible to buy them at reseller prices that can be a small fraction of what these domains can sell for to end-users.   As long as enough sales come in to cover living expenses and the replacement cost of the domains that sold, this business model can be sustainable long-term.

I’m most impressed with the domain flippers, many of them young guys who entered the domain industry in the last few years, and through hard work, hustle, and a keen sense for the market value of a wide range of domain names, were able to start with a very modest investment and before long would start outbidding the established players on the highest value domain names.

Over-reliance on one business model can create serious problems for a domainer if that business runs in the trouble. If you can diversify into two or three of the domain related business models described above then it can help you weather a downturn in any one of the businesses, and keep your business intact through the tough times.

After reading about the amount of time, effort, and brain power devoted to coming up with a new brand name, I have a new appreciation for how valuable the domain name must be that is the exact match for that newly minted product name.

The number of high-tech trademarks has jumped from under 10,000 in 1980 to over 300,000 now, according to the article, suggesting a huge demand for brandable domains.

The usual qualities of a great name are that it is short, has a consonant-vowel pattern, and has a pleasant sound.  But the art is to evoke the “story” of the product, even if it results in a product name that is not intuitive.   A successful brand is likened to a short poem, capturing the essence of many associations and meanings in one word.

An abstract of the article is available for free.  A subscription is required for the full article.

My main take-aways are:

1.  Michael and David Castello’s advice to drill deep.  In other words, to focus on one city, and to develop rich content to be the authority site for that city.

2.  Gordon Borrell’s presentation showed that tens of billions of dollars of local advertising currently spent on Yellow Pages and Direct Mailing is up for grabs as those advertising dollars migrate to the web, and capturing those advertisers should be a focus of geo-developers.  Small business owners are even more confused by the rapid changes in the ad marketplace than we are, so we can add value by consulting with them and showing them how to use new media to their advantage.

3.  Borrell made a strong case that effective advertising is ‘news’ and valuable content.  He supported that claim with a chart showing that for the top five media/publishing sites by revenue (AT&T Yellowpages, AutoTrader, Groupon, CareerBuilder, Yellow Pages Canada) their content is primarily advertising.  He reinforced this with on-point quotes:  “Stopping advertising to save money is like stopping your watch to save time” (Henry Ford) and “Advertising in the final analysis should be news.  If it is not news, it’s worthless” (Adolph Ochs).

4.  Sara Mannix and Jessica Bookstaff Doppelt spoke about how you should put out roots into the community.  Sara has had great success becoming the title sponsor for local events and charity galas in return for publicizing the events.  Jessica interviews local businesses and develops itineraries around advertisers.  Geo sites don’t need, and shouldn’t want, to compete on breaking news stories, but focused content on weddings, happy hours, and itineraries can make your sites the top authority on these topics that attract visitors who are of great value to advertisers.

5.  A major theme was the rise of mobile and mobile advertising.  Paul Wagner of ForkFly.com showed how mobile, and the rise of NFC (Near Field Communication) devices, are a new disruptive force that could disrupt online advertising, even as online advertising is upending traditional media advertising.  Wagner demonstrated the ability of html5 to push apps directly to smart phones (bypassing the iTunes store), and the advertising value of being able to push messages through your own branded app directly to your visitor base.   The underlying message is to make your sites mobile friendly.

6.  Many presenters gave advice on how to build your membership.  Techniques included overlays to request emails, starting facebook pages – even unbranded -for your local area, running contests and promotions to encourage visitors to share email addresses.  Paul Wagner highly recommended that everyone read the American Society of News Editors (ASNE) guide to the 10 best practices for social media.

7.  Spending time with Bill Hammack and Don Jones of NewOrleans.com and David Castello and hearing their enthusiasm for the brand value of dot-com city domains.  They see a tremendous opportunity if geo domain owners can collaborate and, by combining our collective market reach, start bringing on board national advertisers.  They believe that the traffic to geopublishers’ sites is high quality and high-converting.  Once the national advertisers get a taste, they’ll want more.

The GeoPublishers association is a new association for geo-domainers that was started after the prior association, Associated Cities, dissolved amid acrimony between its founding members.  While much is the same, much is new.  Fred Mercaldo of Scottsdale.com and CitiesPlanet.com returns as President.  Jessica Bookstaff Doppelt returns as a Board Member.  Many of the members are the same.   The goal is similar, to share best practices among geo-publishers and to find ways to work together for the benefit of all.

Yet much is different.  Associated Cities was a for-profit group.  GeoPublishers is a non-profit.  Associated Cities was limited to dot-com owners of pure city domains.  GeoPublishers is open to all publishers of geo sites, whether it is a dot-com extension, or a geo-based domain, such as TampaDoctors.com.  The guiding vision is different.  Bill Hammack and Don Jones of NewOrleans.com, who successfully started an association for independent yellow page publishers many years ago, see an even better opportunity in the geo-publishing space now.  My understanding is that it was their initiative that is largely responsible for the establishment of the GeoPublishers association.  They teamed up with Borrell Associates, a top consulting company in the local advertising space who organizes many conferences.  The result was a very informative couple of days in the spirit of cooperating to move our industry forward.

You can read more about the GeoPublisher conference at Michael Cyger’s DomainSherpa.  It was great to meet Michael and to hear about his plans and early successes with his hometown site, BainbridgeIsland.com.  Ron Jackson endured straitened travel conditions to make his way to Chicago.  His report on DNJournal should be out shortly is now available here.