I Wouldn't Want To Be in The Domain Registrar Business Serving Domain Investors | DomainInvesting.com
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I Wouldn’t Want To Be in The Domain Registrar Business Serving Domain Investors

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I was going to write this long comment/rant in response to a couple of the comments left in the Moniker sale post, but I believe it merits its own post. I can only imagine the domain registrar business would suck if the primary target audience is domain investors.

As a domain registrar catering to the needs of domain investors, there are a whole lot of downsides and few upsides that I can see. You have demanding and time consuming clients (like me) who only wish to pay just above the actual cost for the domain name, so the profit margin is slim. You also need to have tech support and customer support staff, and that certainly isn’t cheap. When there’s a problem, people are quick to complain on forums and Twitter, without regard for the people working behind the scenes.

From a legal perspective, the company would frequently face litigation from other companies who claim the registrar is contributing to trademark disputes, although I don’t know if there has been a case where a registrar has lost. There are ICANN compliance and regulation issues to deal with, and many registrars need to send representatives to ICANN conferences. All of this is super expensive, considering that customers only want to pay a few cents premium over cost for their domain names.

There are also significant technology costs to consider, since domain investors want an advanced user interface that performs well and is easy to use. In addition, there are hackers who are always trying to find ways to hack into the company’s database to steal credit card information, user information, and of course, domain names. These are additional expenses.

One reason end user-centric registrars like Go Daddy, Name.com, and Network Solutions have seen success and continue to have success is that their end user customers buy add-ons like hosting and storage. These products and services have significantly more robust profit margins, driving profitable revenue for the registrar. Most domain investors don’t buy these additional products.

With all of these costs, a domain registrar needs to have massive scale, and that isn’t easy to achieve, especially with some of the factors above. I really wouldn’t want to be in the domain registrar business servicing domain investors like myself.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (27)

    Kevin Murphy

    Excellent post Elliot.

    I’m always staggered when I hear a domainer complaining that their registrar is taking a $2 margin (!!!) or something.

    When you think about how much it costs to employ somebody just to answer the phone, a single tech support call once a year can make some registrants unprofitable.

    February 3rd, 2012 at 12:36 pm

    Don

    I can understand your sentiment. However, I would venture to say that the majority of the domain registrants are not dealing with premium domains, nor do they qualify for a dedicated rep. The majority are happy to keep renewing their collection, whether for business, personal or both. The inflated costs for domains from registrars like Network Solutions, and the vast array of additional services, as you’ve noted, makes the majority of their customer base very lucrative. Naturally, it makes sense to pamper the top tier of their customer base to aid them in spending even more money. To me, being the middle man / a registrar, perhaps logistically challenging, would seem like a great gig to be in nonetheless.

    February 3rd, 2012 at 12:44 pm

    Ron

    What business is easy? Certainly not domaining!

    February 3rd, 2012 at 12:50 pm

    Victor Pitts

    Elliot, this article is right on the mark. Having been behind the scenes at several registrars now, and having worked with most registrars from the registry level – I know that the business model of a “Domainer” focused registrar is about high volume, low margin, low touch. Domainers in general do not buy upsell and cross-sell services, so profits must come from the margin on the registration and renewals.

    In respect to Moniker, I have purposely kept quite about them since I left in 2010. I will say this. The people who have left were good people. The people who are still there are good people. The core group remaining might not be as well known publicly as those who are gone, but those still there are very capable and are committed to their job and their customers. Those employees need some love and support from their management, and I am hopeful that they will now get it from the new management.

    February 3rd, 2012 at 12:55 pm

    Ron

    @Kevin

    Isn’t that why godaddy is at the forefront with their 30% premium listings channel, and bevy of add ons… and they have a large workfoce, and would never have been bought out for those numbers had they not been profitable.

    This is the risk in any given business, Moniker had a early lead in the game, there is no reason why they could not have been a major player in their business, if others came from behind and succeeded them, who is to blame, management?

    February 3rd, 2012 at 1:11 pm

    Uzoma

    Elliot,

    Here we go again.

    So, let me get this straight, you are dumping on your fellow domain investors to placate the big guys for what exactly? I read your post twice, and I can’t seem to find what brought about this post. You name off the normal rigors of doing any business, and in the end keep kissing these guys ass for what exactly? It’s getting to be really boring.

    February 3rd, 2012 at 1:27 pm

    RaTHeaD

    i suggested to my registrar that they also sell cheese. i like cheese. they never responded.

    February 3rd, 2012 at 1:28 pm

    Elliot Silver

    @ RaTHeaD

    I like cheese, too.

    February 3rd, 2012 at 1:29 pm

    Elliot Silver

    @ Uzoma

    For the record, I clearly included myself in the group of domain investors.

    I think what I wrote is true, and I wrote it because I think it is a good topic of discussion and something we all need to think about the next time we whine about things not getting done rapidly or paying a couple pennies more for renewals. Again, I include myself in this as well.

    So far nobody has said what I wrote is incorrect or provided any type of evidence to the contrary.

    As far as your comment about it being boring, my apologies to you. I have recommended that you don’t visit my blog many times because you are bored and don’t agree with what I write, but you continue to visit. I don’t know what else to tell you.

    February 3rd, 2012 at 1:34 pm

    Uzoma

    I know you included yourself in it, but that doesn’t vitiate the damage this type of write-ups do to our nascent industry. Some people, and I’m not saying you are, have low esteem to what they do and contribute, so for the mere fact that you have the propensity to dump on your industry doesn’t factor in this. I don’t think Registrars are starving. If they don’t want to do that job, they can quit, somebody else will gladly take their place. As a matter of fact, it’s the Registrars that are making this business unprofitable to most domainers. If they have in mind the profitability of the average web developer, domain investor, or the industry at large, we will all be doing better. Their negotiations with ICANN, Google, and such are basically limited to their own success. If they wanted, they can make life easier for us all when they go into negotiations. If registrars go out of their way to educate the general public, the end user about the beauty of domain names, it will all be for the better. Sure Godaddy.com does a fair job in this regard, but only once a year in the super-bowl. The other ones are pathetic in this regard.

    You should devote more time in your blog feeling sorry for our industry, because the fat cats will do just fine.

    On the issue of me responding to your blog, I do it because I do like your blog, and you seem to be a nice guy, even thou I have not met you in person; you are just carried away with worshiping idols, big companies, and such, but, it’s only a small slice of what you do. 99% of your blog is great. The 1%, such as this post is super boring. I’m not trying to pick on you, but stop this kind of posts, please.

    February 3rd, 2012 at 2:02 pm

    Elliot Silver

    “You should devote more time in your blog feeling sorry for our industry,”

    @ Uzoma

    Why would anyone feel sorry for this industry? I think times are very good for people who are investing full time. It may not be as good as it once was, but compared to the rest of the economy, it’s a good time to be a domain investor. If people are struggling and/or not doing well, they should re-evaluate whether they should be investing in domain names. There are plenty of other investment vehicles and options out there for people with all types of risk appetite. Domain investing is not for everybody and people will lose money, just like with every single other investment. If there was no risk, there would be no potential for reward.

    February 3rd, 2012 at 2:06 pm

    Uzoma

    Now, your last entry is the sort of sentiments that bring me to this blog. That is a correct input. I have no qualms with that opinion. All I’m saying is that you extend such brutal honesty, tough love, analysis, criticism to the Sedos, Googles, Godaddy’s of this world. You are tough talking only when it comes to the little guy. Do you mean to tell me there’s nothing to criticize about the big shots of this industry?

    As an example, I refer you to a post made by Berkens today at thedomains: http://www.domaining.com/headline/?id=3775530

    There he was criticizing Sedo.com for double reporting sales and so forth. That’s what we all should be doing to make the industry sound, not kissing their rears.

    February 3rd, 2012 at 2:13 pm

    Elliot Silver

    @ Uzoma

    Mike’s post is a great example.

    I criticized Moniker for doing that a few years ago. They reported one of my sales that was meant to be private, and thankfully Ron Jackson took it down. I didn’t know I had to explicitly ask them to keep a sale private when I was only using them for escrow.

    “My one and only beef is that they will usually report a private sale with DNJournal unless you tell them otherwise (happened to me twice). Make sure you ask for confidentiality – especially if you sign a separate NDA with the buyer/seller, as Moniker isn’t a participant to that side agreement and may report it publicly.”

    February 3rd, 2012 at 2:17 pm

    AB

    I hear you Elliot,

    I’d hate to run a business with any kind of hardcore user base (which I guess is pretty much 90% of business)

    I read a frequent flier board/blog and those types are the worst. I feel for them sometimes, but they think that just because their employer is paying a massive amount for the ticket that that somehow entitles these frequent fliers to be treated like kings and queens.

    You should see some of the commentary, like how an airline sucks because the flight attendants don’t hang up the first class passengers jackets or that they don’t address everyone by their last name.

    Anyway, yeah…I’d hate to be a registrar right now

    February 3rd, 2012 at 3:23 pm

    T1 Connected

    If your business model is one that you cannot afford to provide adequate customer service, then your business model isn’t working or you need to be up front with your customers that you are a wholesale operation and customer service beyond the point of sale will be limited.

    The catch is, what constitutes ‘adequate’.
    There are some inexperienced domain owners who demand 20 minute personal hand-holding sessions to make a domain transfer… with their ‘portfolio’ of 20 names.

    There are others who have hundreds, thousands of names and require essentially no ‘service’.

    The core of the issue is, on that freak occasion when the experienced person does require service, it’s not unreasonable to expect ‘certain things’ and unfortunately, ‘certain registrars’ are notoriously bad about NOT providing those ‘certain things’.

    You have the Godaddy approach of intensive low-level service, since that’s going to be adequate for 95% of their customer base and 95% of all questions, but when an advanced “5%” issue arises, their advanced support can be spotty. You have certain registrars that have consistently mediocre access to customer service, but their agents are very experienced and can resolve most any problems. Different models for different client bases.

    Objectivity can be diminished on stuff like this among domainer-bloggers, as an expected and natural outcome of what happens when you spend time dining and drinking with the people in question.

    February 3rd, 2012 at 4:34 pm

      Elliot Silver

      “Objectivity can be diminished on stuff like this among domainer-bloggers, as an expected and natural outcome of what happens when you spend time dining and drinking with the people in question.”

      @ T1

      Yes, probably, but good customer service trumps everything else. I’ve never gone out drinking or dined with Brad from Godaddy, but he is my #1 account representative right now and he’s earning more of my business. Similarly, GoDaddy has NEVER advertised on my blog. I’ve almost only had good experiences using them since I started buying names in 2003/2004. They’ve earned my business. Where I HATE Godaddy is on the 60 day lock they put on names that are transferred there or have gone under account changes. It’s a pain in the ass, and despite my complaints, it hasn’t changed. Knowing this, I transfer almost all purchases to Moniker, which doesn’t have that lock.

      Damn… I just went all Rick with my caps there :)

      February 3rd, 2012 at 4:37 pm

    Larry

    Curious what the redemption fees are with the usual suspect registrars that domainers typically use. Have you (Elliott) or anyone else ever needed to get a domain back that was deleted by accident?

    February 3rd, 2012 at 7:08 pm

      Elliot Silver

      @ Larry

      Haven’t had that happen to me yet.

      February 3rd, 2012 at 10:40 pm

    John Surrey

    There is only 1 Registrar I have ever found to be as close to perfect as possible ,and at prices that are no more and often less than others, and that is Fabulous.com . They simply have the best system for domainers, including very good security so domains could not be stolen easily .Very impressed and have used for over 5 years.

    February 4th, 2012 at 6:48 am

    Joe

    I have to disagree with you Eliot in my case I have about 800 names which are all with the same registrar, I may call once or twice a year but for the number of names I have I don’t think that ratio is a problem for them.
    Now if those 800 names were owned by 800 different people I would guess the register would be getting many more calls a year with question like “how do I change my nameservers?” “how do I forward my domain?” etc, etc, etc.
    I as a domainer just don’t have the need to call my registrar that often with questions.

    February 4th, 2012 at 8:26 am

    TopDomainDeal

    2Every company today is trying to expand its services and products as they want to continue to be on the market!
    I was so easy to prosper by only selling domain names in the past but those days you need to offer every service that a client may want and provide these services at the highest possible level!

    February 4th, 2012 at 9:08 am

    @Domains

    It might be true if a registrar’s clients were only domain investors, but that can never really be the case. Look at Godaddy, they cater to a huge amount of domain investors and are doing really well financially. A lot of the problems you list any registrar would have anyways. Domainers may be up on the best coupon codes to get cheap registrations, but some do upsell to the other products. And domain investors are more likely to use the Premium selling service, 20-30% commission to Godaddy! Expiring names? they go to auction and make potential commission for Godaddy, attract buying to the site and create new accounts. Checking domain in Whois? If you see they are registered at Godaddy it’s like a free ad for them. So while Godaddy may lose out on domain regs to domainers, there are a lot of upsides to their business where they make it up. That’s how they afford to have annual Christmas parties in Football stadiums, God bless them!

    February 4th, 2012 at 11:02 am

    Stephen Douglas

    And the domain game just gets more… weird and quite sad.

    I hope I don’t have to buy/renew domains from a company run by a Larry Flynt wannabee, who spends more time promoting titillation and sexual innuendo than educating the world on domains being “appreciable marketing assets” more powerful than any other form of traditional advertising.

    When, (I really am asking sincerely), will the most successful domainers give back to the domain community by creating AND promoting heavily a “domain value education” website?

    Until that happens, all domainers will get is tons of emails from domainers and domain auctions trying to sell their domains, as bad or as good as they are. Add to that the lowball offers from sincere “buyers” who think $50 is really a good price to offer.

    Back to the domain companies and bloggers. Who are we reaching? US. Domain investors. We’re easy and cheap to contact. We’re as simple as a mailing list. I do it too. And it doesn’t work and we’ll end up continuing to have a laughable industry that gets no respect, lots of derision from those who don’t have the domain they want, or those who don’t “get it” altogether.

    When you get $10 offers on domains you know from experience should be getting offers 100 times more, and the enquirers actually truly don’t understand that generic domains have incredible VALUE typical to real estate, you can appreciate the absolute requirement for this industry to spend a few million to educate people.

    We need a domain education site, and I don’t mean just create a site and give this info, but actually PROMOTE IT. All the heavy hitters, the new “posers” (people coming into the game with lots of money made elsewhere, trying to grab your business when you have years more experience than they do,) promote and get promoted how great their “domains and domain services” are, yet they’re still just selling this to…

    Domainers. They sell it to us. They sell to the domain industry. Milk the crowd that already understands domain value. Regurgitate the same old stories, offers, kudos, asskissing, ridiculous claims, and attack those with new ideas and that hateful “populist” attitude that there actually might be money and elite internet positioning with a domain name for every company or person that needs to define their business in a simple generic brand domain.

    Another faction of our industry and one of the saddest parts are so-called “domain auctions”. What domain auction has ever been held where the auction company spent $50k on hiring a public relations company to promote the value and reasons why the first thing any company should do before they start their company, is to buy their generic prodserv domains? Never. Not one domain auction ever held can claim this.

    So we get the “never-spoken” truth about domain auctions:

    DOMAIN AUCTIONS = “no more than 1 bidder” on a domain. What domain, if anyone can remember, had a “bidding war” for it in the last five years? Yeah, that’s right. You can’t name them. Name one domain that had three+ bidders.

    That’s a whole other “inside” secret about domain sales that I can’t even discuss.

    There you go, Elliot. I ranted for you.

    February 6th, 2012 at 9:13 am

    Elliot Silver

    @ Stephen

    I think educating potential buyers is important, but I personally don’t have the patience to do it. I think the audience of potential buyers is huge, and many Internet savvy people who would be interested in great domain names already have preconceived notions about domain investors, who they likely believe are squatters and may even know of them only as squatters. I personally would rather work with a smaller audience of buyers than spend the time and effort teaching others with no guarantee of a payoff for that effort. Frankly, it’s a big reason I am not a domain broker – I would rather not spend my time and effort trying to sell a domain name for a small percentage of the overall sale and no guarantee of a return. This is just me, but if someone thinks they can teach the masses and has the drive and incentive to do so, more power to that person.

    February 6th, 2012 at 11:20 am

    Stephen Douglas

    @Elliot,

    I agree with you on some points, which is “hate brokering other domain names for a small % when i can sell my own for huge payouts.”

    However, reaching the full spectrum of domain buyers depends on EDUCATION OF THE PUBLIC AND BUSINESS SECTORS.

    Your choice of working within the small market of domain investors to sell or work with you on domains is smart, but some of us have thousands of domains that are no longer making PPC income (which I’ve railed against since 2003 for being non-transparent).

    I’ve been renewing “irrigationpipes.com” for many years, and it doesn’t get a lot of traffic, but I know manufacturers and distributors would benefit greatly by using it when they OFFER IRRIGATION PIPES for sale either online or off. However, they have to decide “hmmm, $10,000 for an ad in an industry publication or two, or $10,000 for a domain name that will work for me nonstop, gain value, and give us a chance to actually resell it to recoup our initial investment?”

    How many businesses, truly, do you think understand that concept about domains? I guarantee you that it’s in the low 15 percentile. You know it, I know it, Ricky, Dicky, Mikey, Franky and the rest all know it.

    Without getting into my perception of every domainer’s revenue scheme, not ONE of them will argue against this point, just as I said about domain auctions. Domains auctions give you 1 bidder, cuz the auction is a kidder.

    Thanks for taking the time to respond.

    February 7th, 2012 at 1:17 pm

    Elliot Silver

    @ Stephen

    Why not spend the time to convince these potential end users why they should buy your domain name? I would imagine you can price your time into this effort to make it worthwhile.

    February 7th, 2012 at 1:21 pm

    Stephen Douglas

    @ Elliot,

    Exactly. That’s what I’m asking the biggest of the big and the richest of the rich domainers to help the rest of the domain community to provide this knowledge simply by creating a very informative site, with thousands of examples in every category of domain sales, showing the public info on domain prices and who bought them, and promote this site weekly or monthly with PRwires sent to marketing and ad firms, and if possible, marketing directors within companies.

    Of course I’ve already done what you suggest, Elliot, and so have 1000’s of other domainers. But how much time do you think it takes for one person to get past the front desk at any corporation? It’s very hard to first explain domaining to the front desk, then see if they decide whether a “let me connect you with VP o Markketing Jane/John Doe” answer from them will be achieved.

    I know for a fact the richest of the domainers have these inside connections already established. It’s a no-brainer. But when you read their blogs, and exhortations about “how to make it by being like me” crap, the bottom line is they don’t want the competition. They’d rather see the competition start to waver and start selling their valuable domains off for cheap, so they can pick them up on the drop and sell the domains to their list of company contacts. Having a squad of 12 people making phone calls every day and representing someone who is holding 400,000 domains or more is just like Walmart and Mom and Pop stores.

    As a publisher and an author, I had to BUY space, like every other product seller, from the big corporate retail firms. That four inch, 1 foot deep spot on the shelf can cost you as much as $100,000 per year. Why? The biggest of the big can pay this, and shut out the “newcomers”. The dumbing down of capitalism. The “crony capitalism” that has ruined our economy exists at the top levels of domain investing, primarily in aftermarket sales.

    I’ve hired ex-Sedo and other domain listing sites ex employees to do this, with very healthy rewards. PROBLEM: When you base your sales on commission and not an hourly or salary… even people who’ve worked for domain auction sites will quit you for the same reasons they quit the large domain auction/listing sites.

    These salespeople don’t say it’s about domain name quality (not on my domains!), but the time and effort spent by the salesperson to try to make the sale. Your salespeople will say they are hindered by the time and their ability to EXPLAIN what domain name values are. The salespeople’s downfall is their inability of making the buyer to understand what you’re talking about at the same time you’re expecting them to understand that you are selling is better than any other advertising expenditure available.

    Facts are, after 10 years, domaining is still old school. Still carrying that “cybersquatter” tag around. Still wondering when every marketing director, in 2012, will grasp the details and benefits of owning a generic descriptive domain of their company’s prodservs.

    I’ve never sold a domain name by “approaching” a potential buyer, who would benefit greatly by the domain. Well, maybe that’s not true, but usually my sales occur by approaching a small business owner with a list of domain names of half of his prodservs. That seems to scare them a bit, and they will buy, but these are small time purchases, $500 a domain for 10 domains, etc.

    There’s really no “option” to consider outside of what I’ve discussed here. It costs money to “contact” individual “potential” buyers who don’t understand what you’re selling. If I had to spend all my time trying to explain to a company that distributes
    prodservs matching my com domain, It could take months’ to complete the connections and the conversion for the sale.

    February 8th, 2012 at 9:35 am

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