Oct 15
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?