Responding to Geodomain Discussion
I was going to write this response to Sahar on his blog, but I decided to just post it here since it encompasses more than one post. I have a great deal of respect for Sahar and some of the things he has done in the domain industry. Seeing Sahar build some of his domain names into business has helped spark my interest in development, and I believe he has been instrumental in getting domain investors to begin to develop their valuable domain names. However, I disagree and am a bit confused by some of the things he has recently said.
Before I begin, I want to define what I am referencing when I speak of geodomains that are worth a considerable amount of money, and what I blog about (unless previously specified).
1) .com only
2) City with 100,000 population, a large tourism industry, a center of business activity, or a US state
3) Domain name must be the exact spelling of the city
There are plenty of other geodomains, but these are generally what I consider geodomains when I talk about the industry in general.A few weeks ago, Sahar provocatively wrote a blog post entitled “Are Geo Domains Overrated?” He evaluated his thoughts on what to do with geodomains other than PPC, and the answer is either development or resale. The gist of the discussion on development is that it is very difficult (and I agree), and regarding resale, Sahar said, “To me looking for end users is an extremely tough proposition. I would not consider that a viable option.” Ultimately, Sahar’s concludes, “It is my personal opinion that while today Geo domains aren’t an attractive proposition (and we do own a few), in the near future, possibly 2-5 years, they may be.”
To address this topic, I agree that geodomains should be developed to yield their full value. They are expensive to acquire, and if the owner wants to generate revenue, development is the way to go. I do disagree that looking to sell the domain name is difficult, as I have received significant offers on Burbank.com – which I have rejected in favor of development. I know it wouldn’t be difficult to sell this name or Lowell.com, based on the response I’ve received in the Lowell area when speaking about the domain name and website.
A few days ago, Sahar wrote another post about geodomains titled, “The Other Side of Geo.” Sahar cites my blog and Rick Latona’s newsletter as sources of geodomain discussion, in addition to Associated Cities and Castello Cities press. Sahar believes, “majority of the people who promote Geo domains are doing so not because Geo is doing great but because they are invested in Geo.”
I am a bit insulted by this in respect to the reference to my blog. I talk about geodomains because I happen to be developing two of them, not because I need to increase their value or increase recognition. If anything, I would like the value to decrease so I can buy more of them – as I have tried with my $100k offer for a large east coast city .com domain name. I paid what I was comfortable with paying, and I would pay the same price in a heartbeat without so much as a second to contemplate it – as I am sure many others would agree. Also, geodomains are hot and in demand because supply is very limited for decent ones – because most good geo domain owners won’t sell it.
Additionally, Sahar wrote what most people would agree, “In terms of cashflow performance, in comparison to other domain categories, Geo domains are extremely over rated.” Yes, I agree that Lowell.com would only make $2-3/day in Adsense revenue, but I am making more in hotel/job revenue, and the traffic and revenues continues to grow. When I finish with Burbank.com, that will make even more money in hotel revenue, as that is more of a business/tourist center than Lowell, Massachusetts.
Today, Sahar followed all of this up by concluding, “Truth is, after thinking more about it, Geo domains, in term of Domaining, are extremely overrated.” Although I don’t own any parked geodomains to offer a factual assessment, I do agree that geodomains aren’t a great investment vehicle if you plan to only use a PPC model on them. However, saying that they are overrated in terms of domaining is like saying that undeveloped oceanfront property on A1A in Palm Beach, Florida is overrated.
For those who know the area, this is some of the most exclusive property in the country, and there is barely any undeveloped property on A1A in Palm Beach. The property that is undeveloped is generally not for sale or may be for sale at astronomical prices. This property is also some of the most resilient property in all of Palm Beach county, and it hasn’t taken much of a hit when other areas of Palm Beach County has.
So in terms of domaining and simply buying a geodomain name for PPC, yes, they may be overrated, but I think most domain sales would be considered overrated if you just looked at them based on the PPC value (numerics, LLL.com, .mobi….etc). However, I would certainly be willing to pay overrated prices for geodomains. Hopefully when Bido launches, they will be able to offer some great geodomains for sale
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