My JointVentures.com partner Danny Welsh has got something to share today about the incongruity of the salary of Babe Ruth versus the minimum league salary today, and the maximum money paid to the top guys in the majors today. Who was the better baseball player? Does it matter? What’s it have to do with valuating the BEST domain names? Every time YOU fill the stadium with people, how much are you paid? This was one of the first posts Danny wrote but we’ve saved it for today, for a reason I think will become clear soon enough.
By Danny Welsh:
The PRICE paid to hire Babe Ruth vs Alex Rodriguez’s salary…and who owns the LEAGUE of a business full of players online?
My mentor Rick Schwartz has taught me that baseball salaries over time are a great analogy to point to for valuing domain names, just like Babe Ruth famously pointed into the stands predicting a home run shot. What does it mean that in 2013 the *average* salary per player in MLB is $3,200,000 US Dollars-- compared to the highest annual salary EVER earned by the Great Bambino himself, the MVP of his age in the 1930s, at $84,000 per year?
Can we chalk it up to “inflation”? Nope. Sorry, but if you use this lens to explain the value of your best domain names that “inflation” statement will be a weak answer that weak and/or dishonest people with an agenda will resort to in attempting to refute YOUR assertion that the times have changed not only in baseball but in all kinds of commerce as the world has EVOLVED.
Today I’d like to talk more about how TRUE VALUE is intrinsic, while “price” is variable with the times and how things unfold. Yes, it’s the same line you’ve heard from me throughout this series of guest blog posts Rick has allowed me to make— the truth savvy investors see shown again and again through a different lens, and if my job is done properly with each lens shown the bright and blinding truth Rick revealed to me will grow more magnified as more and more folks in the domain universe “get it” and see what Rick Schwartz saw long before I was a blip on the radar coming along to simply articulate these truths we both see maybe a little better than he can.
In my inaugural guest post on RicksBlog I said I’d be posting in the future to answer this question:
“When exactly in the maturation of premium dot com category domain name values are we currently experiencing in 2013 along the scale paralleled by premier baseball player salaries, Babe Ruth's earning less than $1,000,000 over his entire 1914-1935 career or the $30,000,000 in salary paid for Alex Rodriguez in 2012 alone?”
You see, if we ignore the internet and “domain names” and just look at the lens of commerce through the lens of just ONE category/industry, is the BUSINESS of “Baseball” more or less profitable in 2013 than in 1995? That was when many of the best generic commercial and social domain names such as Baseball.com for example were first hand registered by who I feel are some very smart visionary entrepreneurs.
In case you missed the $250,000,000 contracts paid for a single player, the “salary cap” attempts of some sports to create parity among a rich ball-team owners’ game, the World Series ratings and TV commercials bonanzas, billions and billions in merchandising and endorsements, or the 60,000 person baseball stadiums costing up to $1.5 BILLION to build according to MLB.com (Yankees)…
That was a rhetorical question.
Of COURSE, the business of baseball
has become more profitable over the years.
The Chicago Cubs play in a stadium built in 1912, costing $250,000. I love that stadium! Wrigley Field is the past history of baseball wrapped up in all its splendor and tradition.
But the future of baseball as a business is more and more going to be about merging tradition with MONEY. Money flows downhill to VALUE, no matter what people want or believe. How many multiples is it from that $250K 1912 Chicago stadium to the $1,500,000,000 2012 New York Yankees stadium?
Let me do the math for you, since it’s probably really early in the morning when Rick will be posting this blog post for everyone to read. J
The 2012 investment in a stadium was 6000x the 1912 investment in a stadium.
And those are BOTH buildings meant to accomplish the same things…give people a place to SIT while they consume a company’s products.
There’s yet another “lens” through which you can see the true value of a top-tier generic category-defining dot com domain name property like Baseball.com, as an EXAMPLE.
The most valuable domain names like that one for the most part aren't in the game at 2012’s Yankee Stadium. They're "parked" in the lot outside the stadium, selling hot dogs every day to passersby drawn by just the HINT that a ball-game they want to see might be going on inside.
I’m not knocking domain parking as a way to make money. Really, I’m not.
Many times these category-killer domain names make a LOT of money, just as Rick’s Porno.com has made $1,000,000+ per year without effort or work, parked and selling nickel-a-pop peep shows by the click to passersby that more often than not will never come again.
(no pun intended)
But even with 7 figure earnings possible on the higher ends of the spectrum for a single domain name…and with many other $xxx,xxx to $xx,xxx,xxx VALUE domain names earning $xxx-$xxx,xxx per year or whatever …STILL nobody I know thinks domain parking is the BEST MONETIZATION strategy for a great domain name like that, do they?
Just like nobody who gets “inside” after visiting a parked domain thinks they got their ‘money’s worth’, even spending NOTHING as they click-and-go elsewhere to find what they were looking for, do they?
We all KNOW that a truly great domain name DESERVES something BETTER.
Truly great domain
names deserve to be
IN THE GAME and not in the parking lot.
So you witness the search for real, solid solutions by Rick and others among “the 500” for many years.
The first innings of this game are over. The middle innings are ending.
We’re in the 7th inning stretch of a 20 year plan and a ball-game Rick Schwartz predicted how it would end…20 years ago, right there in his virtual living room before the first strike-out of “.whatever” (of which there will be MANY more in the coming years, littering the stadium of business like discarded popcorn boxes filled with kernels of popcorn that were sold and never POPPED).
So far as I can tell, the biggest “curve ball” Rick swung at personally and missed was the .mobi fiasco…and he admitted that mistake when so many self-promoters never tell you the bad, only the good. Personally, I like that in a guy I’m doing business with. Don’t you?
TIMING IS KEY TO HIT THE FASTBALL OUT OF THE PARK.
A number of people in the domain community have seen what Rick and I are doing with JointVentures.com and have brought up this company or that company that has “tried” domain leasing and failed. Others have been and will continue to jump into the domain leasing game as we shake the bushes and demonstrate deals (don’t be surprised to learn many of the domain investors the smaller players all look up to have been doing this quietly for YEARS).
There may be many variables for the companies that FAILED to
“represent” domain leasing as brokers or 3rd party platforms, and
specific companies could have a most
important factor each for why they failed.
The biggest GENERAL reason if you ask me would be TIMING.
Same reason it doesn’t matter who was the BETTER player, Babe Ruth or Alex Rodriguez.
It’s not comparing apples to apples, even when BOTH played in the BIG APPLE of New York City.
Timing is what determined the difference in price of each player’s salary, not the value of the player.
Hell, Rick himself fought an uphill battle early on trying to get mainstream business owners to see the value of premium generic domains in the 1990s. No one listened except for the adult entertainment people, and Rick made them a lot of money.
The commercial business owners were being told by their “webmaster” that a 10 digit numerical IP address was a perfectly good online address for a website, and by their “advertising agency” that branding was more important than sales.
Today, more and more they know differently.
And they COVET what “the 500” have, those of you who like Rick had the foresight to grab Baseball.com level generic category-defining domain names before companies in the mainstream had a clue.
They also COVET the best domain properties owned by select other smart domain name owners—myself included-- to a significantly lesser degree at THIS TIME-- but the next couple years TIMING and the movements made in the market by “the 500” are pivotal in whether the end user businessman of the future pays FULL VALUE to get what they covet ala Alex Rodriguez’s salary…or “today’s price” in between Babe Ruth and that time in the future when people will look back and say with disbelief “Baseball.com made HOW little money per year?”
Rick and I predict that in the next 3 years these companies— both established companies looking to increase their presence online and small start-ups looking to get an edge over the competition— will continue striking out with “.whatever” domains and we believe that it’ll become obvious VERY quick that .com is here to stay and .whatever is the minor leagues for any REAL business with REAL ambition.
Others will end up choosing to play only in the minor leagues using made up words as their business name online, using hyphens and numbers and modifiers like “My”, “The” ETC ETC cutesy little attempts to get around the guy “sitting on the home-plate” of the very BEST generic domain name they’d have and want if money was no object.
Many will build companies (and have) on domains they’ll want to “truncate” and trade-up from a lead-off hitter to a CLEANUP BATTER.
Many will dislike the guy they see as blocking anyone from a grand slam score without paying what they feel is an exorbitant sales cost to get past…
But it only takes ONE PLAYER IN EACH LEAGUE to see what we see, one business in each niche that knows the true value of NICHE.com, and soon every great domain name that deserves to be a part of a great business CAN be the MVP of a great business.
So long as that guy sitting on home-plate where
he knew everyone would want to be one day sets up a toll-booth instead of a cash register because he REALIZES that one day he’ll be recognized as a visionary business leader and not a “cyber squatter”.
So go ahead, we invite all businesses looking to do big things online with either big ideas and talents OR big resources to point to the fences and “call your shot”.
Hit a homerun, start-ups!
Hit a grand slam, established companies!
The more you win, the more we win.
Rick Schwartz and the 500 domain name league owners will be waiting patiently at home-plate where the crowds are going to be showing up daily no matter what else may happen in the next couple years.
Meet you there!