So what has Richard been up to? For the past year or so, he has been quietly working on revolutionizing the domain industry and creating a new Web 2.0 media empire in the process.
Here’s how it all began. Like thousands of domainers and soon-to-be domainers at the time, Richard read a compelling article entitled “Masters of Their Domains” in the December 2005 issue of Business 2.0.
The article described how millions of people ignore search engines and type domain names into their browsers (a concept known as “direct navigation“) and how well-positioned domainers make a fortune by selling clicks generated by this traffic to PPC (pay-per-click) search engines such as Google.
In a recent interview with Business 2.0, Richard described his reaction to the December 2005 article:
“I thought, it can’t be that easy. So I talked to some domainers, and they said, ‘We own 300,000 domains, we make $20 million a year, we have just four employees and some servers in the Caymans.’ I thought, ‘If you can make that much doing nothing, what if we added some Web 2.0 sprinkle so that people would come back - user publishing tools, social networking? What if we built a platform where we could snap that into as many domains as we wanted?’ That’s when the lightning bolt hit me: You’d have a company that generates its own traffic, generates its own content, and monetizes itself. It would be the perfect lazy-man’s media company!”
Many domainers have had similar ideas before, but they did not know how to turn them into reality. Domainers who do not have the large portfolio required to deal directly with Google’s Adsense for Domains face the following dilemma: If they park their domains, they lose up to 80% of the revenue generated by PPC ads to Google and to their parking provider. To be exact, about half of the advertiser’s payment goes to Google, and the remaining half is split, usually in unfavorable proportions, between the parking provider, e.g. Sedo, Namedrive, Fabulous etc., and the domain owner.
To increase their profits, many domainers are motivated to develop their most promising domains into a website or forum. By doing so they can usually more than double a domain’s income as they are now dealing directly with Google’s Adsense and no longer with a parking provider who takes his own cut.
But many domainers soon realize that developing domains to a point where they convert one-time visitors into regulars takes a lot of time and effort. They end up developing one domain after another, and even if they put the same type of software on each domain (like, for example, a discussion forum), maintaining and building these sites is a full-time endeavor. These domainers are now web developers and they no longer have the time to research and buy new domains.
Go back to PPC and park the vast majority of your domains. That’s what most domainers who don’t see themselves as full-time web developers end up doing.
But Richard asked himself something like this: (not a direct quote)
- “What if we could equip one single domain with a powerful Web 2.0 community software that turns one-time visitors into regulars?
- What if we could then duplicate that domain’s software over thousands and hundreds of thousands of domains at the click of a button?
- What if these domains could automatically brand and customize themselves according to their visitor’s perceived preferences and expectations?
- What if these domains could interact with each other on the back-end to transfer content, users and ads among each other?”
Well, Richard found a way to do all of the above, and more. And he’s going to control every single element in the “revenue chain” and generate massive profits in the process:
- He owns the domains and the traffic. Demand Media acquired eNom and Bulk Register and is now the second largest domain registrar behind GoDaddy, and a major player in the expiring domains market.
- He controls the content:
“In consideration of having your work posted on the Site for any period of time, You grant eHow a perpetual, worldwide, irrevocable, royalty-free, non-exclusive license to use, reproduce, modify, transmit, distribute, publicly perform and display, and create derivative works of the Content, in any form, media, or technology now known or later developed, to make, have made, import, and sell the Content, and to sublicense all of the foregoing rights (including the right to grant further such sublicenses).”
- And he will certainly sell his own content-targeted ads, even though he didn’t mention it yet because doing so will put him into direct competition with Google, Yahoo and MSN.
wehow.com and ehow.com already host a wealth of user-generated content. Now imagine millions of automatically branded and customized domains drawing from ehow’s content and allowing users to add their own material. Then add some social networking tools and some Web 2.0 “sprinkle”, and compare the end result to a traditional, ugly parked domain like, well, you know where to find them.
What does this mean to domainers? Is Richard going to make a deal with domainers to host and populate their domains in the same way as his own domains? Or will he try to buy out as many domainers as he can?
Probably both. Richard can “snap” his community software from one domain to another at the click of a button. He will probably buy as many domains as possible, and offer to share ad revenue with domainers who give him control over their domains.
As Richard’s domains retain visitors through valuable content and community interaction, the earning potential of domains that are using his software is increased dramatically. If his solution is as vastly superior as it promises to be, it could put current domain parking companies out of business in a matter of weeks if they don’t adapt.
However, the Daily Domainer is confident that as the word about this innovation is getting out, Demand Media’s competition will soon respond with their own product. 2007 will be a highly interesting year, and domain parking as we know it will be changed forever.