Seven Mile, Uncategorized

VegasBaby.com

Bottoms up, bottoms up, ey, what’s in ya cup
Got a couple bottles, but a couple ain’t enough
Bottoms up, bottoms up, throw your hands up
Tell security we bout to tear this club up
Bottoms up, bottoms up, pocket full of green
Girl, you know I love the way you shake it in them jeans
Bottoms up, bottoms up, throw ya hands up
Bottoms up, bottoms up, bottoms up

—  Trey Songz

It’s not every day one of your best friends turn 30. When my friends go through those youthful milestones,   we do something old-fashioned, we save for it and then we do it right, no holding back.  Heavy jet to Vegas; choppers from the airport to the Vegas Motor Speedway, racing Ferrarris and Lambos for the day. A bus full of dancers ferrying us back to the hotel.  Then the club, and a five-figure bar-tab at Palazzo’s Lavo (on a Tuesday no less) an afterparty – waking up on a bench in a roped off section of a club with people vacuuming around you, wondering what happened.  Any one memory would have been enough to last a lifetime, if only I could recall a few more.  My friends deserve it and all the guys chip-in.  We work hard and we play hard. Boy did we laugh hard. It was a great trip.

Looking out across the dance floor of the club I was struck by what a bubble Vegas is.  As bad as things get in the suburbs off Sahara Ave., the party in the clubs seems to roll on. Dollar bills in the air, making it rain, Crystal Rose by the magnum, spraying the crowd with it.  It’s like its own little world. The domain name business has operated in its own little world for years as well.

In fact, names have never sold more consistently, to the point where a model of selling domain names is a consistent flow of bankable revenue.  9-11 didn’t stop it. The .com bust was a hiccup in the flow.  The financial crisis of 2008 (which continues) only seems to have steeled the resolve of those trying to buy names.

You could say the domain business is very much like the Vegas nightlife.  When times are good people drink to celebrate, the angel and equity money is all too happy to spend big bucks for a good name.  When times are bad, people drink to forget, and in the domain world, money comes out looking for a hedge. Something of real intrinsic value in a sea of uncertainty.

For the longest time I heard skeptics say “if PPC advertising goes away, then so will the value of names.”  Well those guys (and you know who you are) were just DEAD WRONG folks. PPC is completely dead at the moment … perhaps on life support – and name sales are chugging along like never before.  Masthead names are not breaking out at new highs in the millions of dollars, but companies and people have finally come to the realization that a quality name is going to cost them tens or hundreds of thousands of dollars and those sales are flowing at a pace I could never have imagined.

It’s remarkable how quickly things have reversed.  Only a few years ago 80% of domain portfolio revenues came from selling advertising.  Today those dollars come from name-sales and leases and development.  The Well of ready, willing and able buyers is much deeper than I previously thought.  Domainers like me are practically priced out of good names at auction.  While I lament the death of the wildcatting dynamic which brought me so much prosperity, in this new market era there is a floor to the prices that people will accept for the good names we own, and there are many more savvy people now, who can tell the difference between the good names and the crap.

It wasn’t so many years ago when people asked what I did for a living and the first part of my answer consisted of: “Do you know what a domain name is?”.  Today when I tell my line of work, I get replies which run from “I have a brother who does that”, or “I’ve heard of some guy in Vancouver who owns the Internet!”  All that knowledge goes to firm up prices and set expectations for the value of names which mean something.

I find it funny that this maturation of the domain name space is occurring at such a terrible juxtaposition to the broader economy, or perhaps it’s not such a coincidence. Interest rates are at zero percent folks.  We are all being cheated by the assorted governments around the world as they race to debase their currencies so that 1 dollar buys 50 cents of “stuff” in the future.  It’s the only way we seem to be able to get out of the present value of the debts we’ve accumulated. The frying pan of social unrest, food-lines and real pain has been overruled, in favor of a slow fire of currency debasement. Eventually this system will self-destruct.  As a frequent traveler I have already seen the beginnings of it and how it might end. The trends in payment always start with the things we need, in particular that most precious of evaporating commodities: fuel. I tried to buy gas recently in Canada with a crisp new US $100 bill and the attendant wanted nothing to do with my paper at any exchange rate. “I need Canadian dollars or a credit card, no US paper”. After fuel it usually moves to food… so I was shaken when a similar situation occurred in a Toronto restaurant 3 days ago.  The closer the Greenback gets to parity with the Canadian dollar, the lousier the exchange rate I’m offered, the grumpier the foreign recipient and the greater the lack of respect I received from those a was handing the paper to.

This is the beginning of a real problem folks.  I grew up in Canada and can tell you that any sane Canadian of my youth would have taken a US dollar and run like the wind for the nearest border and outlet mall. Well those days are gone. The Chinese, the Oil states and others who have accumulated hundreds of US billions have the same problem on a much larger scale.  Remember congress voting down the Dubai ports deal because of national security issues?  Or BHP being blocked from buying Potash Corp in Canada, or the Chinese oil co’s being told they can’t buy US refineries.  Nothing of value seems to be for sale at any price in US dollars, unless there’s a huge premium attached. This is only the beginning of that trend.  The smart money is burning their dollars (or borrowing everything they can at 0%) to buy anything with permanent value. It’s the main reason the stock markets are up right now even though the mood is down and there’s10-12% unemployment.  Put those Zero% Benjamins anywhere but the mattress. Anything that will bring a return.

On the Internet, the domain name is equivalent to Gold. It is the only packaged item online which is globally tax-free, portable, with value that is universal across different cultures – and has withstood the test of time. As I’ve stated on my website:

“The humble domain name stands resolute as the only tangible asset on the Web. Everything needs a unique address and on the Internet, your domain name is the physical real estate you occupy in the hearts and minds of people. After the first dot com bust, the only asset left to resell was often the DOMAIN NAME  of the company that failed. If anything on the Internet should have any value at all, it is the Real Estate which underpins your location on the Web.”

Well gang, we live in a domain world with dismal PPC revenues and stunted advertising revenue growth for publishers.  Things have never been worse and the white knight coming to save us seems be the domain name itself.  I am not the only one to realize the truism of the italicized and underlined words above.

The “dollars” are flowing to domains, as surely as I write these words. Two sales for $30,000 in the last 30 minutes as I typed this. This is going on each day. The biggest risk I see is that we wake up one fine morning and the money is no longer worth anything.  Or currency controls stop us from exchanging the cash freely. That is by far the clearest and most present danger we all face in the domain name business.  At least we’ll have an audience we can complain to.  Perhaps the next tea party like movement or the next global sea-change where CNN doesn’t dare to tread, will be born from a network of websites, unable to make money displaying advertising, which all broadcast some other information or content to the millions who come.

Whatever the future holds, I sleep well knowing that I have generic names bringing an audience of tens of millions of monthly visits.  Domain names offer something tangible and real in a world that is quickly becoming surreal.  Judging by the sales que forming in my inbox,  I am not the only one who feels that way.

They say in Vegas, the real winner is the person who walks into the casino, bets some significant wager, wins, and then walks out the door,  never to return.  Well on the Internet, the real winners of the last five years have proven themselves to be those with traffic producing domain names. There is no logical talk-around for the value of the real estate which underpins the Web.  If you own some good ones, then cheers to you, and bottoms up baby.  You deserve this drink.