When the Strong Hurt, the Weak get Crushed

Morning Folks!!

The first half of 2009 is over and now the tough times are coming.  Put your head in the sand, fine with me, but when the big guys are hurting the small guys are getting decimated.  Nobody runs around posting about their great failures but if they were to do that the boards would all crash from posts. Don’t kid yourself. A significant part of the domain industry is in absolute collapse. Large, worthless portfolios are burying the big and small worthless portfolios are making small guys look for a new formula because crappy domains STINK  like dead fish.

Folks need to get out of their head that my posts are about doom and gloom, they are not. They articulate a problem and search for the bi-product. Search for the crevices in the economy that fortunes are made of. They are about navigating some of the toughest times we have faced in many decades and coming out of it stronger and with life changing businesses. But to do that it is about adjusting before being consumed. About being one step ahead and not one step behind. Those that are not "Surprised" by events are prepared. They ask "What if" questions and are not afraid of the answers. Nor do they dodge the question. The road is full of twists and turns and unexpected events. Knowing the terrain before others figure it out present great opportunity. So my posts are about opportunity and reality.

Significant amount of domainers are sitting on a worthless empire. That's reality. Renewing year after year waiting for the domain fairy to appear. The dream ends now. Those domains first try to be sold on the market and when nobody takes the bait, they are destined to drop and  we’ll see if someone else can repeat failure.

So now even the big say this is a good time to sell some domains to make up the shortfall of PPC income. So we are getting some very nice domains coming to market at really good prices. If the guys with the crap want to turn it around, get rid of the crap and buy quality this time around. Nobody forces you to keep choosing domains that mean nothing.  And until you hone your skill of picking domain names you can have complete access to .anything and you would still pick worthless domains. I see it with every new extension. Folks have their choice of quality if an extension is to hit at some point in the future and they still pick worthless or secondary domains. It’s almost like they are afraid to date the pretty girl.

This era will be the very last opportunity for domains that have meaning, that have value, that have great future value to be bought at prices that are downright cheap. Circumstance has made an appearance right into the middle of the domain world.  I am not sure how long it will last. Months? Maybe a year or so.  The one thing about domains, being unique assets and a once in a lifetime opportunity to but these domains, you still have to have cash to take advantage of what is out there. No cash, you are sitting on the sidelines. So even those in good shape that may be thin on cash need to get rid of their weaker domains to fill them in with stronger ones, ones that can fortify your portfolios and add great value.

Timing, timing, timing and then there is the time. This is the time. This is the best opportunity to buy domains since 2003. 6 years ago. So on one hand things are bad, but bad produces good, produces opportunity. So when you focus on the adverse you are likely to find the opportunity hidden in a place nobody is willing to look.

Have a GREAT Day!
Rick Schwartz

Comments

[Kevin]

Everyone has a different strategy that works best for their capital resources and objectives. The best insurance policy is to have a nice diversification so when one part of a portfolio isn't producing as well another will.

Your strategy works well for you Rick because you were fortunate to have shrewdly acquired several prime one word domains in a specific niche that enabled
you a tremendous cash flow for over a decade now. But for 99% of the domainers they don't have domain assets in that specific sector that "always" do cash flow, since that sector is one of a very few that has immense popularity on the Net and constant huge traffic generation capabilities. Having those kinds of domain assets as a base provides a much stronger ability to deploy any type of strategy desired for other domain sectors.

For everyone else I think it's important to just invest within your means and like Rick says aim for quality, no matter what level you are investing at. Then deploy a strategy that enables cash flow on a continuous basis even if you are dealing mostly in the lower side of the marketplace. There is money to be made there also, it's just more of a volume based arena where you have to hustle since you're dealing in lower price tags. But always buy some domains to hold for the long term, some for development, and a bunch specifically for reselling short to mid term to keep cash flow always coming in for your portfolio. Don't depend on just one form of revenue monetization. As we've seen PPC as seen it's better days, though don't rule that out completely, as it still serves a very useful purpose for certain domains. Also understand that dev'ing domains isn't at all like easy simple ppc monetization and you have to deal with a wider set of logistics, rev models, growth factors, and capital investments.

Remarkably from a percentage basis there are much larger percentage gains available in the low priced market where investors are able to buy domains at reg fee and flip them for 5 to 10 times what they paid and often even more of a multiple than that if you grab strong longer keywords with genuine useful meaning and not just gibberish type domains. How many domain investors that paid $1 Million for a domain can flip at 10 to 1 or 50 to 1 on their money? None that I know of. So I don't think it is fair to say you have to only have high end domains to make money from this industry because that is simply not the reality of the market. Plenty of guys are doing well at all levels despite the current global economic situation just by buying quality domains no matter what the price range. And companies are still advertising online at the rate of $1 Billion every 2 weeks so there is money to be made from advertising sales like never before.

The most important key succesful domain investing no matter if you are a Rick Schwartz at the high end or a newbie Joe The Domainer flipping reg fee domains for $50 in the forums is to just be "reasonable" and "realistic" in valuing and pricing your domains and invest in domains that have a meaning even if they are long ones. Do your homework and see what the market is commanding for comparable domains as you are selling. If you want to move domains quickly than offer a great deal and still build in a nice smaller profit for yourself. Greed, silly, and unrealistic pricing is what prevents domains from selling in any market. If you offer a good deal you'll have no problem selling domains at any time or in any economic cycle.

[seodomainnames]

Hello Rick. I have been a regular DNJournal.com reader for quite a while, written to you a few times, and found your blog tonight.
I am a day late on the one word domain names, and am still searching for that perfect money maker. PPC revenues have dropped since I got my first investment names over regular business names, and now I sit on a lot of names that fit your worthless portfolio category. I too am letting names drop, and have wasted quite a few dollars. I am opting for quality instead of quantity, with the last few names “Snapped”, and a lot more dropping. I am also now trying Affiliate advertising. First it was parking sites; it then became my own server with google adsense; now affiliate advertising. With the explosion of affiliate sites however, will we once again have a hard earned site that will get diluted with commonality as we have seen pay per click weaken with users?
I too want to see that “hidden opportunity” niche you talk about. I too am a relentless optimist. I too think this is the dot com bust of today, and deals are to be had. I too still want to buy names, still. Am I addicted or “what is that” with me? I think there is a niche that I can fill, that will be the 1mm plus site over the next three to five years. I also think there will be that one name that someone overlooked, and I end up with the mother lode of assets, value, and better yet, income.
The funny thing, all this relentless optimism is what got me to waste so much money in the first place on domain names. I don’t feel any less enthusiastic about domain names as I had a few years ago because I think I am smarter now. I have gotten a lot better and faster at building web sites. That will make these next few years different for me, right?
I am indeed a relentless optimist, but is that what got me “where I am not” today? I do admit, this is the first time that I have seen a solid businesses complete with real estate, intelligence assets, and everything is basically worthless. No one will lend on it, and no one wants it. At least the overhead of a server and website is low compared to brick and mortar stores with employees and the myriad of taxes and insurance. Boy is my years of solid business experience and opinions now worthless too, all that I thought was right. I also need new “out of the box” thinking.
God Bless ya Mr. Schwartz. Maybe someday I too can afford to come to a Domain Conference, and share the glory that I have finally found. A bunch of us want to come. When will this industry finally be the Cash Cow for the rest of us little guys? Bill

[DomainVirus]

Rick, thank you for showing us your side of opportunities.

Unless a domainer knows and insists on just one way to make money with domaining (like ppc domain parking), he/she can take advantage of many systems out there.

And, for sellers, people worldwide are buying domains for 3-4 figure each. Negotiate and make it a win-win. When potential buyers say it's 'final offer', explore further and negotiate ... you can usually get more than their final offer.

There're ALWAYS all kinds of opportunities. That's WHY buyers are willing to pay thousand$. That's WHY a not so 'premium' domain can bring in so much for a marketer.

As we learn, grow and recognize opportunities, we achieve a new level. For example, you'll find that type in traffic is not necessarily the quality traffic most beginners think so highly of. Other methods exist to generate better quality traffic.

Thank you again, Rick, for showing us opportunities AND reality check.

[Dave Wrixon]

Rick is absolutely right and smarter than most. I argued with Frank Schilling long ago that the Long Tail strategy was flawed and that real way to extend success was Geographically and unexploited cultures. By staging Traffics in Amsterdam, Rick has shown that he is prepared to move with the market. It is about time other did too. I got banned from Namepros for telling them that most of them are wasting their time and money. OK, they got the satisfaction of kicking me out. I get little satisfaction from being right. It gives me no great pleasure watching small guy pouring their savings down toilet. And it is not just the small guys that have been squandering cash. Some of those frequently featured at DNJ have wasted a fortune.

Before buying a domain, serious ask yourself why somebody might want to type it. You would have to be mentally deranged to have a reason to type three quarters of the dot com registrations out there. Sure dot com is King, but without a good combination of keywords, he has no kingdom.