Why Babe Ruth and TV (Stars and Ads) are the Roadmap for Domain Name Values

Morning Folks!!

Everything we do and discover already happened in another medium and your job is to find that parallel and connect the dots by finding the corresponding components. That's how you get ahead of the crowd.

I will tell you what I see because it is bigger than the first 20 years put together. The difference between the pay Babe Ruth got and what 'A-Rod' gets.

Except I see the years condensed. Per the chart below, it took 50 years from Babe Ruth Until Catfish Hunter making 10x more. Compare that to a domain name that may have only taken 5 years for it to go up 10x in value. Maybe even 100x in value. Maybe much more. So in this medium things are accelerated and always has been. But the start is slow. It always is. The bigger, the slower. But now we are past slow. We are rolling. Rolling along. Rolling along and gaining momentum.

With top baseball salaries It took only 20 years for the next growth of 10x. 1975 to 1995. So I have always used THIS model below melted in with the history and growth of TV, the survival of Radio and the phenomenon of the Hula Hoop along with all the advertising dollars spent and how long it takes the masses to adjust to something new and big. Then ending up with a sale somewhere because nothing happens until a sale is made. In other words, study the past to see the future. It all happened before. Just with another medium or with a different vehicle.

The 1994 NBC clip that has been going around TV and the Internet this past week is a PERFECT example of how FAST we are moving to change the world like that in less than 20 years. It accelerates from here in an exponential way. Facebook is the beginning not the end. An exit for your domain an on ramp to your domain a window into your domain. All roads still lead to the domain regardless of the stops along the way.

And while $70,000 was a lot of money in 1927, it did not have the buying power that $33 Million has today. Where are we today in reference to that graph and the ultimate value of domain names? I would say somewhere between 1972 and 1975. The upside is something incredible.

1927 $70,000 Babe Ruth New York Yankees
1930 $80,000 Babe Ruth New York Yankees
1949 $100,000 Ted Williams Boston Red Sox
1966 $130,000 Willie Mays San Francisco Giants
1972 $200,000 Hank Aaron Atlanta Braves
1975 $740,000 Catfish Hunter New York Yankees

Major League Baseball's reserve clause was struck down in 1976, beginning an era of free agency and thus market-value player contracts

1979 $1,000,000 Nolan Ryan Houston Astros
1981 $2,000,000 Dave Winfield New York Yankees
1985 $2,130,300 Mike Schmidt Philadelphia Phillies
1986 $2,800,000 George Foster New York Mets
1990 $3,000,000 Rickey Henderson Oakland Athletics
1991 $4,700,000 José Canseco Oakland Athletics
1992 $5,800,000 Bobby Bonilla New York Mets
1993 $5,975,000* Ryne Sandberg Chicago Cubs
1995 $9,237,500 Cecil Fielder Detroit Tigers
1997 $10,000,000 Albert Belle Chicago White Sox
1998 $14,936,667 Gary Sheffield Florida Marlins
2000 $15,714,286 Kevin Brown Los Angeles Dodgers
2001 $22,000,000 Alex Rodriguez Texas Rangers
2005 $26,000,000 Alex Rodriguez New York Yankees
2009 $33,000,000 Alex Rodriguez New York Yankees
Source: http://en.wikipedia.org/wiki/List_of_highest_paid_baseball_players

Have a GREAT Day!

Rick Schwartz

14 thoughts on “Why Babe Ruth and TV (Stars and Ads) are the Roadmap for Domain Name Values

  1. em

    Hi Rick,
    Nice post. Essentially you’ve broken down and made a nice analogy of what viral marketing can do.”Free Agency” was like the viral marketing of MLB. We are just beginning to see the power and pervasiveness of viral marketing on the internet. Domains are well-positioned to benefit from exponential growth.

  2. me.yahoo.com/a/WKp7U88wqsxoCMCCYMLy2e93thQMq5c-

    Rick – I read all of you posts, and don’t always agree with your comments. But I must say that this one is a true classic, and really puts things into perspective. Frankly, I’d suggest that you post this baseball salary chart right on your left nav bar as a constant reminder to your audience.
    What’s most compelling about your comments is that they inspire domainers to have the patience that they (we) need, rather than rush to sell ‘unripened fruit.’
    Granted, that we all need to be honest with ourselves and realize that your advice only applies to ‘true quality’ – not our garbage holdings. But your readers are smart enough to know that.
    Anyway, thanks again.

  3. Jeff Schneider

    Hello Rick,
    This analogy is why most of the boardrooms at major corporations follow you! Google,Bing,Yahoo, are up nights trying to figure the stuff out after you post. It is no surprise to me that these three are publicly nosing around Domainers meetings as Owen Frager pointed out. The eyes on the STREET are now concentrating on DOMAINERS !
    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

  4. Johnny

    Excellent post. The very best .com short category generics and top athletes, entertainers, etc have a very similar extreme scarcity. And that extreme scarcity can lead to violent increases in price based on small increases in perception among buyers. Right now the buyers – CEOs of large companies – largely do not care about acquiring the best .coms. As their perception changes from not caring at all, to caring a little, to caring a little more and more, to caring a lot, to caring a whole lot, the prices can move up several-fold with each incremental change in perception.
    Even if the prices of the very best .coms were to move up 10-20 fold in the next 5-10 years to $50-$100M, they would still be extremely affordable to large end-users, particularly if financed over 10-20 years. Several $M a year to a large biz for what is by far their most important marketing asset is nothing.

  5. AlanR

    Great comparisons Rick! Fifteen years ago, most could not have imagined that a domain could sell for a million dollars or more but now, it’s common place. I see the day when certain dotcoms will sell for $50 million or more due to their potential. Why not?
    In New York City, what do you get for $50 million if you buy a building? Not much if you just want to put one good sized business or a few small businesses in it. Then you get the headaches of all the overhead involved with a brick and mortar business like utilities, inventory, property taxes, etc. and then you are limited to that local area. You are also at the mercy of the weather or available, convenient parking and access to your business.
    With a great dotcom, you can setup shop anywhere in the world and then the world becomes your customer rather than being stuck in some town dealing only with the local economy. But most business people of today can’t see that comparison so most of them are missing out on the best investment in history.
    Besides buildings, I also like to compare domains to signs. I’ve seen where business people will pay $5,000 for a small sign for their small business that is only seen by passersby and where larger businesses will pay hundreds of thousands for signs but those same people wouldn’t think of spending a grand on a decent domain that can be seen anywhere in the world, anytime of the day, 365 days a year and isn’t at the mercy of a local economy.
    Not only is a business person getting a sign, they are also getting a brand, a building and worldwide exposure for a fraction of what they are paying now. Plus, their net revenue goes way up with all the exposure and without all that extra overhead.

  6. Anunt

    you are a total moron if you really think google, bing, yahoo are worried about your bullshit domains
    you domain nerds are not even 1% of their total revenue.
    if google wanted your domains…they could buy ALL of your domains that ALL of you guys own put together…but they are not that stupid…they dont want your bullshit domains
    you domainers are full of shit especially jeff schneider’s comment…”google, yahoo, bing nosing around, up nights trying to figure this out, eyes on the street concentrating on domainers”….you are a complete moron jeff!
    quit trying to make yourself feel important…you’re NOT
    trying to compare yourselves with google, yahoo, bing…what a moron!

  7. John B

    I have thought that a category killer domain is akin to that legendary great uncle you never had. The one who purchased coca-cola stock back when it was new and the stock is now worth (add a large sum here). Your grandkids might be in awe of the value of your present portfolio!

  8. George

    Hi Rick,
    You said:
    “your job is to find that parallel and connect the dots by finding the corresponding components.”
    Go and find out what you were able to buy with $1.00 in 1927.
    Now, go out and see what you can do with $1.00.
    That’s how you get ahead of the crowd.
    Oh, one last thing. Don’t forget to include the Inflation Factor.

  9. Rick Schwartz

    Superbowl #1 1967-1968 the salary for that game to the star player was $25,000
    Fast Forward to today and Superbowl XLV and the average lineman is getting in excess of $2.4M and as much as $7.5M and more.

  10. Michael

    Once again, a genius post with a few lines in it worth more than a whole semester of”business,” or 95% of the business books in the book store combined. Do the readers realize that this blog is only about domaining on the surface? Otherwise it’s really about success, philosophy of value, business and life.

  11. SDM

    Celebrity + media = massive exposure.
    Or substitute dollars for celebrity and still generate huge, widespread attention, and enjoy the commensurate revenues that come with it. There’s much to be said for the power of brute force marketing:
    Unfortunately, the concept isn’t widely embraced by the domain industry. When that day comes, EVERYTHING will change.


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