Supernatural Agency: Online business tales

Here’s a shopping list of ways to earn money from your domains. It’s not complete and I welcome additional suggestions.

1. Parking. No brainer- when you register a new domain, park it immediately regardless of what your plans are for it. We just consider it one of the steps in registering a domain. When you’ve got something better built just move it.
2. Adsense. Put up a one page site, write a few paragraphs of keyword relevant copy and add AdSense code. This is the next step up from parking because you don’t have to share revenue but you do get into the world of servers and development, albeit a simple version. Great way to get your feet wet.
3. Wordpress Blog. This isn’t a monetization technique per se but it helps you get a lot of sites up fast. Set up a server account with someone like Media Temple or Rackspace and build your sites in WordPress using the many free templates out there. You can do this without programming skills but some basic html and CSS skills will make a big difference. We are experimenting with setting up FAQ sites using WP.
4. Affiliate Programs. There are literally thousands of affiliate programs out there and they can really generate money. We have sites that are entirely populated with pages generated by affiliate programs- all we had to do was drop the code onto a web page.
5. Amazon API. Our next big idea. Amazon sells a lot more kinds of stuff than you may think and if you can learn how to use their API (application programming interface) you can autopopulate sites with products, reviews, etc. and earn via Amazon Associates, their affiliate program. The beauty of this is that they dynamically serve up the content into your site, based on keywords, and you don’t have to keep changing things. Automatic baby!
6. Ad Servers. It’s getting easier to get on the radar of the ad servers like DoubleClick. As they run out of traffic on the big sites they are increasingly reaching into the long tail where a lot of us dwell. So you will be able to have CPM (cost per thousand impression) banners on your sites.
7. Lead Generation. Huge baby, huge! We get paid $40 per lead on one of our sites. There is a great untapped potential in lead generation and businesses of every kind are desperate for sales leads. One company we know pays $3 every time someone signs up for their free service. I know a software company that would glady pay $2000 for a qualified lead for their enterprise software app- and believe me we’re thinking about how to do it.
8. Sell Stuff. You can do e-commerce but it means inventory, pick, pack and ship, customer service and returns. Focus on selling digital stuff like #9:
9. eBooks. You write a book, put it online, promote it and sell downloads. Better yet, pay someone to write it- there are a lot of desperate writers out there who unervalue their services. I know, I was one.
10. Sell them. List all your domains on Sedo or somewhere similar. Put a minimum (ours are at $500 just to eliminate stupid offers). Who knows, you may get a ridiculous offer. But remember if a domain is worth that much to someone now it will be worth more later.
11. Sell shares in them. This is coming soon. As domains increase in value and decrease in availability people will want fractional ownership. Check with your securities lawyer on this one though- you need to be very careful about offering shares.
12. Lease them. There is starting to be a leasing market out there so you can lease your domain, get some cash yet still hold it. Very early stage right now.
13. Text Link Ads, etc. There are lots of alternative kinds of advertising to tap into. Read Shoemoney.
14. Find Investors. Get an angel group or a VC to invest in your company.
15. Build a business around a domain or group of domains. This means building a real web business around a good domain, the traditional hard work model that can mean huge money down the road but also means employees, management, operations, marketing etc.
16. Sell services related to the domain. If you’ve become an SEO/SEM expert while developing your domains you will be in demand. Just be careful you don’t get sidetracked from working on your own stuff. For us this is a means of bootstrapping.

Over at Domain Name News they’ve got a story about a private beta start-up called fusu.com. They’re building a domain stock exchange where you could sell shares in your domains, providing liquidity while retaining ownership of the domains.

If this is legit it will signal a huge change in the domain world and may ignite that pricing bubble I’ve been harping about.

The WSJ is reporting that Discovery Channel is purchasing howstuffworks.com for big bucks as a means of jumpstarting their poor web presence. The site, with around 4 million pageviews/month, seems way overpriced to me except…

Discovery plans to use this site as a place to showcase their huge library of content. So this looks a lot more like a domain acquisition than a site acquisition which would mean that a three word type-in domain just sold for huge numbers. There are a number of reasons why this looks like an irrational decision to me:

• Why not spend the money developing discovery.com? They have the content, the brand and the capital. Howstuffworks is really generic in comparison.
• Howstuffworks traffic is down according to TechCrunch so they really bought a large but not necessarily healthy traffic source
• Discovery is admittedly behind the ball in web presence and this seems, from a strategic POV, to be a poorly considered purchase
• Most of Discovery’s content doesn’t fit into the very specific ‘how stuff works’ category. This is a domain with a limited scope (large but limited)
• How do you monetize to offset a $250 million purchase price?

This fits into my bubble pricing theory. When we start to see large companies paying huge prices for domains it may indicate that we’re approaching gold rush territory. Irrational exuberance anyone?

“Internet traffic and domains are the prime real estate of the 21st century. This market has matured, and individuals, brands, investors and organizations who do not grasp their importance or value are missing out on numerous levels.”

- Quote from Steve Forbes‘ press release announcing his keynote at Traffic East 2007

It’s worth registering at one of the domain parking/auction services like Sedo just to watch the bidding action on domains available through their system. If anything, this verifies my belief that we are entering a rapidly expanding price bubble for domains. The current bidding list is filled with nonsensical domains with non dot com top levels that are going for 300 euros and up (Sedo has a UK centric market though they are in the US also). Any 3 letter dot com is in the high four figures to low five figures.

When you consider country codes and languages there are innumerable combinations to buy and sell, however the lack of many dot com type-in domains on this list tells me that the market for them is far from peak. We’re seeing lots of marginal activity and I have no doubt that dealing in these oddball URLs can be very profitable. After all, selling something you bought for a few dollars for $400-500 is a very nice return, especially if you can do it consistently.

This kind of trading is probably the domain equivalent of day-trading in volatile stocks. The value of this kind of trading to the market as a whole is that it serves to stabilize prices over time and create a real market as traders arbitrage small changes in value. Of course we do not yet have a means of shorting domains so the stock market metaphor has limited relevance.

For the areas we’re focused on (dot com type-in and category domains) a longer time frame and more development is important. Every new domain gets parked until we can do something better in terms of content and optimization. The best ones get more serious web presence and more advanced monetization along with PPC campaigns.

As I’ve mentioned before, the challenge here is to know what to sell and when. For type-in dot coms the answer may be never, as long as they generate revenue and retain relevancy. In our case our business plan has a number we are reaching for before we get out but we’ve also discovered that business plans are subject to change!

The big unknown factor is you, the world. When domains become everyman’s (and everywoman’s) game, as I think they are, then everything changes. The pros will face an interesting dilemma called ’stay in or get out?’. Fortunately it is not a zero sum game- we can do both if we manage our portfolios intelligently.