Over this past week both Namejet.com and Godaddy.com ran auctions of re-branded ccTLD's and I think the results are a preview of what's to come for new gTLD's that attempt the same strategy.
Namejet.com ran an auction of .PW single character domain names; single letter domains and single numbered domain names.
Arguably single letter and single numbered domains such as; o.co, 8.asia, and z.com, are some of the most valuable inventory any registry will ever have, especially in the new gTLD world when two letter domains are going to require ICANN approval.
.PW was recently re-branded and re-launched as the "Professional Web" by Directi which has 29 remaining applications for new gTLD's under the name Radix.
In all, 33 single letter and single number domain names went into auction on Namejet.com and although each domain attracted some bidding, there were no sales. Apparently none of the domain names reached the reserved set by the .PW registry.
All the letters from A-Z.Pw were up for sale, except for p.pw and u.pw, and every number 0-9 .pw domain.
33 domains, no sales
The highest bid I saw on any of those domains was the domain X.pw, which got a single bid of over $4,400.
Several domains received bids of $3K or more, while most of the domain had a high bid of $1,111.
I'm not sure what the reserve price of the domain names were, but it seems as if they had a reserve of $5K or more, which in my opinion is too high for a .PW domain when you're trying to sell them in bulk, all at the same time through an online auction house.
Asking for more than $5K for a .PW domain name on a platform that is dominated by domainers and wholesale buyers, is not going to result in a great sell through rate. Nor in my opinion, is putting up all the inventory in one week on the same platform, going to result in a substantial amount of sales either by volumes (sell through rate) or by total revenue.
As a contrast Godaddy.com held an auction of .LA domain names, which were recently re-branded by the CentralNic Registry and Godaddy.com, to be a Geo TLD for Los Angeles.
As part of the process Billboards went up in Los Angeles letting the public know about the extension.
The Godaddy auction for .LA was quite different from the NameJet.com auction for .PW, in that none of the .LA domain names had a reserve price but required just an opening bid of $100 for each name.
The Godaddy .LA auction generated some $25,000 in sales, however the highest price paid was $1,720 and only 4 domain names, sold for $1,000 or more.
Only 6 domain names sold for $500 or more.
In all, out of 273 domain names in the Godaddy .LA auction, only 112 sold meaning that only about 60% of the domain couldn't even get a $100 bid.
62 of the 112 domains that sold, or more than 50%, went for between $100 and $200.
Some of the domains that sold included some bang on premium domains for .LA including domains in the entertainment/movie industry for which Los Angeles is famous. These names sold for a total of only $8K:
If you want end user prices you need to go to end users or work with a company that specializes in end user domain placement and sales.
The new gTLD's registries that choose to chuck all their premium domains into an online auction platform be it Namejet.com, Sedo.com, Godaddy.com or some other platform, are going to soon find out there is not the kind of money in the domainer channel to purchase 1/10th of 1% of the inventory that is going to be hitting the market in 2014, unless your willing to let the domains go at no reserve and for pennies on the dollar.
If you want end user sales you have to go to end users, slowly, steady and over the long haul.
Imagine what is going to happen when 20 new registries, each and every WEEK in 2014, start dumping their premium domains into one platform on an exclusive basis like NameJet.com, Sedo.com or Godaddy.com by the thousands.
Week after week.
Every week of the year.
Add all that inventory to the millions of domains already for sale on existing marketplaces the platforms.
Some registries will place reserves on the domains, some will let them go for whatever they go for.
This week was a test run on both strategies.
For registries looking to recoup a substantial amount of the millions or tens of millions they are going to invest in acquiring and marketing the TLD, by selling off their premium domains in this manner, are going to be sadly disappointed.
On the other hand, preparing a strategic comprehensive reserve list of premium domains to sell and use by the registry and then to properly market itself by finding a select number of end users in a Founders / Pioneer Program basis, both before and after launch, will be key to maximize revenue to the registry. This strategy will also lead to more registrations and higher renewals over time. Dumping domains in a liquidation market will only devalue all other domains reserved by the registry and all the other registries that follow the ones that do.
Operating a registry, especially when it comes to selling and maximizing the value of premium domains, is a long and winding road, which needs a compressive long term and well planned out strategy.
There is a place for the online auction houses in the new gTLD sales process, however, just flooding auction houses and the market with an endless supply of premium domains, is not the right strategy.
By Michael Berkens, President of Worldwide Media, Inc.. Michael H. Berkens is a member of the Florida Bar, President of Worldwide Media, Inc. which owns over 75,000 domain name, a Director in RightoftheDot.com and writes a blog at TheDomains.com.
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