Seven Mile, Uncategorized

Domain Distribution Vacuum

Greetings from France.  I’m a US centric guy so I never thought I’d be writing from France, let alone gushing about how enjoyable it is to be among the French people in the summer.  They really have a great panache and a style and it’s neat to hang out where everyone tries hard to be a bit of a character or individual.  There is a lot of passion and pride here. I’m actually liking it and plan to return.

Today I was in the pool at the Hotel du Cap.  What a place.   I haven’t been this relaxed since I left Cayman. Some guy pulled his yacht up at the Hotel (a daily occurrence) and took a $2000 a night room at mid-day just so that he could enjoy lunch at the restaurant while swimming in the hotel pool. He then strolled back to the dock, climbed on his yacht and sailed away.  Serious ballers here.  The smell of helicopter fuel hangs thick in the air as choppers dart like insects between boats.  Crazy wealth. It’s hard to see the recession we’re all living through from this vantage point.

Later in the afternoon my family and I drove through the area surrounding the hotel and we noticed how the real estate system in France is not as sophisticated or developed as it is in the US or Canada.  Many properties are listed exclusively with one agent (no MLS) and information about the complete range of listings available is only known to those with boots on the ground and a knowledge of the local language. I could not locate many of the properties on the local sales sites I was browsing with my iPhone. It reminded me of an old episode of Melrose Place, pre Internet, pre real estate bubble; where Kyle buys some dream lot on the bluff in Malibu from some older wealthy guy (who’s owned it forever), who cuts Kyle a deal because he has a soft spot in his heart for Kyle’s tale of wishing to build a dream home for he and Amanda.  Very whimsical, romantic and nostalgic, but there is no way that old guy would be turning over the deed on a heartstring if he could have gone to Zillow on his iPhone and found said lot to have a zestimate of 10 million dollars.

More than low interest rates, you could say much of the real estate bubble we had was fueled by the technology advances which ran parallel to Greenspan’s lowering of interest rates. Technology.  People becoming appraisers, and having access to information about every listing, then participating with cheap and easy credit.

Later I recalled a comment Owen Frager made after the re-launch of my blog last month:  “The problem with your domain (name) assumption is what can anyone sell when people have no means to buy. More than the domain you need strategy like Apple that fills the store in the midst of a recession and with every phone is a case, car charger etc.”

What Apple has really done is to sell a cheap but capable computer with a phone app, while its competitors try and fail to create phones which act like computers. Their strategy is winning. Google recently gave up on its droid nexus-one. A just end to a lousy product (I owned two of them).

Owen is right.  What Apple has done is to create the store and “show” around their product which is innovative, but which has been here all along.  They made the phone sexy and created a delivery system with their marketing and stores to make acquisition of the product easy.  Their history designing GUI’s gave them that extra push to win and sealed their fate as master of the space.

Those of you hoping to see the domain nexus in this back-story will have to wait a few moments longer as I provide the another prolog – and a stock tip. One company ripping a page right out of Apple’s playbook is Nestle.  They have opened a bunch of polished shops in the big cities of Europe to sell their Nespresso Coffee makers and capsules.  You buy the coffee maker for a few hundred bucks and then pay through the nose for the capsules for an eternity.  They are big here in France, London, Switzerland and I expect them to go to the States with this marketing method in a bigger way (lots of shops) soon.  My wife and I love Nespresso. I thought they were to eurotrashy at first, then I had one. Nespresso is coffee “crack”.  It’s so good, I’m saying load up on Nestle stock. Nestle has created the “Strategy which fills the store in a recession”, which Owen wisely spoke of.

Compare Apple’s phone marketing or Nestle’s coffee marketing to the domain name business and you will see a glaring dichotomy. I recently sold a valuable name and had to hold the seller’s hand as they created an escrow transaction, worked through a contract, requested an invoice, and worked through a cumbersome registrar transfer - all before they ever even turned on a website. Still the buyer saw the potential of their purchase as prolific, and worked hard to muddle through the steps to an end.  There was no system. Much like the real estate system in France, this insider still received a great tactical advantage because of a lack of organized information in regard to the value of the name.

Domain names are critical to the Internet economy and to all web marketing efforts. They are bought, sold, leased and fought for each day – yet there is just a small patchwork of IP management companies which hold the hands of IP interests looking to acquire names. There are less than 10 domain name specialized attorneys in the world (with 5 of those being great). There are just 10 major registrars such as Godaddy, NetSol, Tucows and eNom who have risen to dominate the mass registration market, yet there are countless registrants like you and I who own many of the best names which people repeatedly wish to acquire. Unfortunately I think prices will stay low for registrants until an organized system for marketing our product materializes. Everyone may need domain names (as surely as we all need water and oxygen), but there is no Nespresso or Apple store to market to the masses and fill the store during a recession.

Some of the present situation results from the respective competitive stance we all find ourselves in.  eNom would rather sell the .me of your coveted .com name because it serves them and they get no benefit from promoting your .com. Facebook would rather get you off domains and into their walled garden.  And Google doesn’t care where the information is, they just want to organize it. The domain industry – The entire Internet for that matter is less than 20 years old. There have been no Steve Jobs or Howard Schultz (Starbucks) or Nespresso Mastermind to blaze the trail yet.  Bob Parsons may be the closest with his brilliant move of selling business incorporations and domain names together. Still I have a hunch Bob is more interested in enjoying the fruits from the great machine he’s already built, than he is in becoming the next Nespresso.  Still you never know.  Maybe he’ll get his second wind.  Or maybe you will get your second – or maybe I’ll get mine.

I picture that Godaddy store, like a Starbucks inside an OfficeDepot, one which looks much like an apple store, which allows a consumer to buy a premium name for their business, a rep who explains the value proposition of a better quality name on a series of large screen walls, and then prints a certificate for the purchaser’s records after checkout.

You could say domain names today are like the cheap real estate in that Melrose Place episode.  A technology product which has not benefited from advances in technology. Those consumer friendly advances have happened in email such as (Hotmail, Gmail and Yahoomail).  They have happened in the platforms such as Facebook and Twitter.  They have even happened in phones and coffee, yet domain names; which everyone needs and continues to buy, have been left behind to market and sell themselves.  All things considered, even the most recalcitrant pessimist would have to concede that our disorganized patchwork of an industry hasn’t done too badly for itself.

These are still the early days of the Internet folks, like the real estate industry before the iPhone, before the MLS. There is no uniform or organized or credible marketing platform to serve the masses.  Godaddy would be the closest but they can only do so much.  While I predict many great returns for those who buy Nestle (Nespresso) stock, I predict untold riches for the mastermind who helps the consumer understand the lifetime value of domains – and to ease delivery of same.

Until then, there will still be a haphazard system of transfers and sales and closings and the artificially muted values we have today, as an unfortunate result.

Au Revoir from the Cote d’ Azur