Frank Schilling & gTLDs

[neddy]

This a great article on CNET (by Paul Sloan) about the new gTLD's - and in particular Frank Schilling's $60m investment in them. Kowabunga!

Here comes the greatest Internet landgrab in history

Frank Schilling made his fortune in the aftermath of the dot-com bust, buying up thousands of domain names others didn't want. He kept at it, aggressively building a portfolio of more than 320,000 domains that, through a combination of ads and outright sales, have made Schilling a decamillionaire many times over.

Now the 43-year-old domainer is going after what he sees as a far bigger opportunity. He's put up $60 million of his own money to stake his claim on a giant, emerging piece of the Internet -- the opening up of so-called generic top-level domains, or gTLDs, to include pretty much anything. The king of all domain extensions -- .com -- is under attack as never before.

And whilst they are all having their fun over there (some will win, many will lose), the good old com.au is the place to be if you're in Australia. Imho.

What do you guys and gals think generally about this?
.

 

[DavidL]

I have a lot of respect for Frank - I think he came into domaining late when most domainers thought it was too late - all the 'good' domains had gone but gathered up heaps of solid, if not spectacular, domains.

If his 320,000 domains are worth $500M, that works out at just $150 average per name... not much really but shows you don't need to have the category killer .com's to make a dollar.

Something the snoopys of the world (who started early and gathered up a small collection of premium domains) struggle to see..

....

But back on topic, the new GTLDs... I'm not sure how it will pan out, I'm really not. I still think ccTLDs (and .com for the US) will be unlikely to be dislodged as the default extension. If .asia, .me, .co etc can't do it when they have minimal competition, how can a new extension survive and prosper against 1700 competitors?

 

[findtim]

i like the grass on this side of the fence, i don't see australian companies going and changing to .homes , which would you choose . homes or .houses ?

eg: a realestate agent buying melbourne.homes ? dive company buying cairns.tours ? is this going to help them because it all gets back to rankings and having donuts.com doesn't help you if you are on page 5

.co was a good idea, short. .xxx was a good idea as it clarified its target audience and .youtube and .google are good ideas BUT only becuase of their brand awarness

I think this will be one of those "peer pressure" things where companies will buy the string out of fear of missing out but many will not make money

tim

 

[snoopy]

Something the snoopys of the world (who started early and gathered up a small collection of premium domains) struggle to see..

Personally think his model is excellent and have never said otherwise. He has been in domains longer than me so I'd say you have your facts all over the place again.

But......there is a big difference between registering crap (see the appraisal forum) versus registering viable names which is what he did. It takes very hard work to do that, a strong business model and discipline, not just a credit card and a dream.

 

[DavidL]

Personally think his model is excellent and have never said otherwise. He has been in domains longer than me so I'd say you have your facts all over the place again.

Oh I thought (I think from reading that 'The Domain Game' book) he started in 2003 grabbing expired domains that everybody at the time thought was crap and didn't compete for. And I thought you started earlier than that.

My apologies if I got that the wrong way round.

But......there is a big difference between registering crap (see the appraisal forum) versus registering viable names which is what he did. It takes very hard work to do that, a strong business model and discipline, not just a credit card and a dream.

At the time, no one thought they were viable - they thought they were crap too (that why he was able to get 300,000 so quickly). He would have gotten the old '$0' appraisal if he'd posted them on a forum. You often suggest on DNtrade that if a domain is available to register, it's likely to be worthless... however that's what Frank did isn't it?

The thing is, in a rising market, today's 'crap' becomes tomorrow 'gold'. That, to my knowledge, is the strategy he has successfully pursued nand one that is still just as valid today.

 

[snoopy]

Oh I thought (I think from reading that 'The Domain Game' book) he started in 2003 grabbing expired domains that everybody at the time thought was crap and didn't compete for. And I thought you started earlier than that.

He has names that he has registered going back to 1999 from what I recall.

At the time, no one thought they were viable - they thought they were crap too (that why he was able to get 300,000 so quickly). He would have gotten the old '$0' appraisal if he'd posted them on a forum.

He didn't just register anything, he registered names with traffic. Doesn't matter what people appraising them would think, the acid test is the "bank balance test". I think the majority of his better names were caught on the drop. Good names with traffic bought for $6. That is how most of the people who did well around that time did it.

You often suggest on DNtrade that if a domain is available to register, it's likely to be worthless... however that's what Frank did isn't it?

The key word is "likely".

The thing is, in a rising market, today's 'crap' becomes tomorrow 'gold'. That, to my knowledge, is the strategy he has successfully pursued nand one that is still just as valid today.

Well you've certainly go that wrong, I don't think he went a day without making money. Like I said, discipline & a genuine business model that works right now, not hoping for the best. The only beneficiary of people registering crap is registrars and drop houses.

However Schilling still had several thousand gambling domains as well as some decent domains in other categories that cumulatively earned about $300 a day. He decided to take a detour and try to scale that revenue higher by building a large portfolio of income producing domains representing all areas of commerce. He believed that growth of the Internet itself would bring more advertisers online making all of the traffic domains he acquired more valuable as time went on.

http://www.dnjournal.com/cover/2006/november.htm

The above doesn't sound much like what you are talking about.

 

[DavidL]

He has names that he has registered going back to 1999 from what I recall.

I'm sure he has, many of us do. But the point was the vast majority of his 300K names were registered after 2003, I believe.

He didn't just register anything, he registered names with traffic. Doesn't matter what people appraising them would think, the acid test is the "bank balance test". I think the majority of his better names were caught on the drop. Good names with traffic bought for $6. That is how most of the people who did well around that time did it.

Yeah... and? I never said he just went and registered 'anything', did I?

Well you've certainly go that wrong, I don't think he went a day without making money. Like I said, discipline & a genuine business model that works right now, not hoping for the best. The only beneficiary of people registering crap is registrars and drop houses.

How is that wrong? All I said is that the names he registered back then that many considered 'crap' (hence he was able to hand-reg or bought on the drop for $6) have risen in value to be worth a significant amount. Dunno why you can't get your head around it.

I also don't understand why you think this increase in domain values will not continue into the future?



Oh BTW http://www.dnjournal.com/cover/2007/december.htm actually seems to backup what I said.

Schilling built his phenomenal domain empire from scratch despite taking the field just five years ago, when almost everyone else thought the game was already over.

How else could he start in 2002 and still build such an empire when everyone “knew” all of the good names had already been taken by those who pioneered the space in the 1990s

He believed that growth of the Internet itself would bring more advertisers online making all of the traffic domains he acquired more valuable as time went on.

...Schilling was convinced the web was here to stay and that the value of those domains would eventually soar ...

but most of the great one-worders remained out of reach. His bread and butter became highly descriptive two-word commercial terms like Chapter11.com, DrugProblem.com and AntiguaHotels.com

Great article actually - everyone should read it!

 

[snoopy]

But the point was the vast majority of his 300K names were registered after 2003, I believe.

That wasn't your point, your point was "I think he came into domaining late". You then claimed I started in domains early. Might be better to just say you were all mixed up.

How is that wrong? All I said is that the names he registered back then that many considered 'crap' (hence he was able to hand-reg or bought on the drop for $6) have risen in value to be worth a significant amount. Dunno why you can't get your head around it.

Who considered them crap? Names like Antartica.com or Beijing.com caught for $6 were considered crap? These names were caught with skill. Ditto for the names registered fresh, these were picked out of the haystack. Money was made straight away, not by waiting for things to change.

I also don't understand why you think this increase in domain values will not continue into the future?

I don't understand why you think beer is overpriced.......You're on a tangent, arguing about something that nobody else is even talking about.

Oh BTW http://www.dnjournal.com/cover/2007/december.htm actually seems to backup what I said.

Here is what I would suggest:

-Doing some research on his names &
-Reading the article properly not just the bits you want to hear.

Your 2003 claim is clearly poppycock because he was making $300 per day by early 2002 & claims to have found domains in 2000.

By April 2002 his casino dream was in tatters.
However Schilling still had several thousand gambling domains as well as some decent domains in other categories that cumulatively earned about $300 a day."

"In 2000 Schilling happened to read an article in a small town newspaper that would end up

changing his life dramatically. “I was visiting my parents who had moved several hundred miles away and read in the local paper about a guy who had sold a dozen domain names for more than $130,000! I was immediately intrigued and started searching the Internet for information about domains. I stumbled onto GreatDomains.com and later Afternic, but I couldn’t get any good names so I tried brokering names…and that’s how I met Garry Chernoff,” Schilling said. "

 

[DavidL]

Hi Snoopy,

Struggling huh?

The DNjournal story that you posted backs up all my points:

1) namely he got into the domaining relatively late

Schilling built his phenomenal domain empire from scratch despite taking the field just five years ago, when almost everyone else thought the game was already over

2) that he made his fortune with mediocre names

...great one-worders remained out of reach. His bread and butter became highly descriptive two-word commercial terms like Chapter11.com, DrugProblem.com and AntiguaHotels.com

3) that the value of his names have increased over time

He believed that growth of the Internet itself would bring more advertisers online making all of the traffic domains he acquired more valuable as time went on.

I'm not sure why you are trying (but floundering) to dispute each of these points.

Is it:

a) just to be argumentative.
b) because you hate the fact you got into domains well before Frank but missed the opportunity he saw
c) because Frank's strategy (registering mediocre names en masse) clashes with your thinking
d) because you are worried that Australians may view what Frank did and believe they can perhaps apply the same strategy in a more juvenile market such as .au - again clashing with your bearish outlook.
e) all of the above

 

[snoopy]

Hi Snoopy,

Struggling huh?

The DNjournal story that you posted backs up all my points:

1) namely he got into the domaining relatively late

2) that he made his fortune with mediocre names

3) that the value of his names have increased over time

Like I said, you are chopping bits out that suit you and ignoring the rest. He didn't start in domains in 2003, everyone but you can see that I think.

Your point 3) isn't even is dispute, once again you are arguing on your own with that, pretending I am saying something else.

You said the names he was registered were seen "crap", that isn't the case. Back then he was grabbing good names, hand registering, drops, he was picking up profitable names mainly for cash flow, not registering & hoping. One of 2-3 dominant players. The fact that he thought they would go up in value doesn't mean waiting and hoping was his business plan.

To summarise the whole thing I'd say this

$100 X 10 = $1000
$0 X 10 = $0

If the names is "crap" is is not likely to ever be profitable. Frank Schilling's model was not registering crap, he was making money right from the start. Mostly though I think you are talking about someone that you don't really know anything about.

 

[DavidL]

Yawn..

If anyone is still interested (and I doubt it), read my original thoughts, word for word, nopt snoopy's misquotes:

I have a lot of respect for Frank - I think he came into domaining late when most domainers thought it was too late - all the 'good' domains had gone but gathered up heaps of solid, if not spectacular, domains.

If his 320,000 domains are worth $500M, that works out at just $150 average per name... not much really but shows you don't need to have the category killer .com's to make a dollar.

then read http://www.dnjournal.com/cover/2007/december.htm

 

[Chris.C]

But back on topic, the new GTLDs... I'm not sure how it will pan out, I'm really not. I still think ccTLDs (and .com for the US) will be unlikely to be dislodged as the default extension. If .asia, .me, .co etc can't do it when they have minimal competition, how can a new extension survive and prosper against 1700 competitors?

I think Frank is more on target than most people registering these gTLDs, ie the business model will only be viable if you get people keen to register domains off you, and he has bought a few who I can see legitimate end users from - .game, .hosting, .news, .pics, .realestate, .store etc

With an extensions like .blog or .news I can definitely "envision" a day where someone might part with real world money to register the domain australian.news, marketing.news, sports.news etc or chrisc.blog, marketing.blog, domain.blog, etc...

And with some of these extensions there is probably potential to get 200 interest buyers paying $1000+ for good domains straight away (ie I could see all the news companies being will to part with at least 4 figures for world.news on day one)... but at least 90% of these gtlds won't have ANY interested customers, many of them will only be able to be used for their own in house projects (in which case I see it as a waste of money).

If you look at just a random sample of 23 domains, you start going through the list and think "who would buy a domain with this extension":

AFRICAMAGIC - ??
AIGO - ??
AIRBUS - inhouse only - ie no value add
ALLSTATE - ??
ALSTOM - ??
APP - I think their could be potential here
ART - The obvious end user doesn't jump out at me but lots of people wanted this one
AUTO - The obvious end user doesn't jump out at me
BARCLAYS - inhouse only - ie no value add
BEAUTY - The obvious end user doesn't jump out at me
BLACKFRIDAY - ??
BNPPARIBAS - inhouse only - ie no value add
BRIDGESTONE - inhouse only - ie no value add
CALL - The obvious end user doesn't jump out at me
CAREMORE - ??
CATALONIA - ??
CHAT - Potential for chatroom owners?
CLICK - The obvious end user doesn't jump out at me
COMPANY - If .co didn't work why will this...
CORSICA -
CREDITCARD - The obvious end user doesn't jump out at me
DAY - The obvious end user doesn't jump out at me
DESI - ??

For me the only one from the random sample above that I can see an enduser going "hmm... I think the .GENERIC extension might be good, if not better extension for my site" would be .app ie I can see someone being willing to register fart.app rather than fartapp.com or if fartapp.com is already taken...

For all the others in those niches .com still makes more sense.

Then of course we aren't thinking about the elephant in the room... it's all for naught if Google don't see them as worthy of their index without penalty.

What is more interesting for me is that those that stand to gain the MOST in the short term from additional extensions given their current infrastructure and ability to sell are the current registrars - yet they haven't bought many themselves.

GoDaddy - .casa .home. godaddy
Namecheap - .online (I think this might be a decent one given loads of people want "online" in their domain)

So if the big boys don't see value they are either blind, or what is more likely, they don't see a short term ROI.

Personally I think Namecheap is on the money with the purchase of .online, and that might pay dividends ONE DAY, and the domain registrars might be prudent and spend a couple of million buying extensions of common site types like .blog, .news, .forum, .chatroom, .club, .shop etc... on the unlikely chance these do take off over time, in which case they will become a license to print money.

These have "potential" end users who could derive real value from the domain...

Outside of this I really just can't see many of them taking off in the next 2 - 5 years.

I'm not saying they won't, ONE DAY, be valuable - but I'm an "investor" which likes to buy assets with present day value, not a "speculator" which is someone who is projecting "unrealised future profits" so obviously I don't see value in buying at this stage, but a big part of that decision is that my capital base couldn't suffer the hit that Frank's could.



... potential DNTrade syndicate?

 

[Blue Wren]

Interesting read; thanks Chris.C.

 

[snoopy]

If you look at just a random sample of 23 domains, you start going through the list and think "who would buy a domain with this extension":

I think most will not go far from a registration point of view & personally think there is no scope to bring in any new extensions from a consumer point view. If .xxx failed to get much market share (200k registration versus expectations of 2-3million) what is the chance of anything else doing well? To me .xxx was about the most logical new extension one could think of, (in terms of need for this extension & the logic of the string) but it has gone nowhere in terms of usage. Even the 200k it seems a big chunk is defensive.

I think Google could spend millions promoting google.search, and they'd still eventually have to change back, ditto for everything else. For the average guy on the street I think it will be totally confusing, just like .info, .us, .mobi, .co was confusing. Doesn't matter much if football stadiums are renamed or what is done marketing wise, it will still be confusing.

Every single application has the same old flaws as in the past. Even the corporate extensions. What use is .facebook or .hp aside from some internal corporate email address? It is not something customers will understand in my view.

This process is potentially the end of new tlds, if nothing works out well here, then it is all over in my view, business will know it, domainers will know it. It is basically throwing the whole pie at the wall and hoping something sticks. At least there was limited numbers of junky extensions in the past, limited enough to create some kind of market for the really strong terms, now it will be a flood, a race to the bottom in terms of values of new tlds I think.

For the registries they are on the right side of the fence though, selling this junk rather than buying it.

 

[Chris.C]

For the registries they are on the right side of the fence though, selling this junk rather than buying it.

Indeed I can't believe they didn't invest more themselves seems like easy money to me even if they only get 20,000 sales per extension, when you consider the landrush fees, resulting auction fees etc, some of the really generic gltds could net registrars a tidy upfront windfall as well increase increase their portfolio size.

Sometimes its better to be selling the picks and shovels then doing the mining.

With that said, what I think might be a potential development that many might no have foreseen is who is to say these gtlds have to be sold like past domains.

What happens if whoever gets .blog decides to say "I'm charging $500/year renewal fees". I'm backing that there would still be at least 1000 domains bought (if not many more) even at $500 renewals, which complete changes the business model.

In addition to this charging a premium may actually incentivise development rather than flipping and also be a quality indicator to Google.

I'm just saying, new innovations bring new business models, I don't think this race is run yet, I just think that 99% of the runners have tripped at the starting line...

 

[snoopy]

What happens if whoever gets .blog decides to say "I'm charging $500/year renewal fees". I'm backing that there would still be at least 1000 domains bought (if not many more) even at $500 renewals, which complete changes the business model.

In addition to this charging a premium may actually incentivise development rather than flipping and also be a quality indicator to Google.

I'm just saying, new innovations bring new business models, I don't think this race is run yet, I just think that 99% of the runners have tripped at the starting line...

I don't think a registry can be run profitability on this kind of numbers. They still have to have to deal with registrars and their margin has to come out of that $500. Then they have marketing, hiring technical staff, paying icann fees, office space etc.

 

[helloworld]

Slightly off topic and I realise this is a forum primarily for .com.au but .com in my opinion still reign supreme. Whenever I discuss a website project with a potential client the question of what domian to use always comes up. I wsould say in at least 90% of cases the client always prefers the .com. The times I suggest a .com.au are when the .com is taken and/or it's a very local business.

Anyway, back on topic. I honestly don't believe anyone registering this extension could ever stay profitable the fees are just outrageous. I don't think it will have much effect unless you say oh yeah this is our extension, go to that, it's a whole re-branding exercise which is just painful...fast forward 50 years and there will be something new as well.

 

[snoopy]

Slightly off topic and I realise this is a forum primarily for .com.au but .com in my opinion still reign supreme. Whenever I discuss a website project with a potential client the question of what domian to use always comes up. I wsould say in at least 90% of cases the client always prefers the .com. The times I suggest a .com.au are when the .com is taken and/or it's a very local business.

If the customers are Australian then I'd say it is a mistake to use .com.

 

[Chris.C]

If the customers are Australian then I'd say it is a mistake to use .com.

Agreed.

 

[neddy]

If the customers are Australian then I'd say it is a mistake to use .com.

Absolutely agreed.

Obviously there are some variables, and they have been discussed on here before.

If you were catering to an international audience for a tourist destination, I would love to have both the .com and the .com.au

e.g. PortDouglas.com and PortDouglas.com.au; SydneyHotels.com and SydneyHotels.com.au
.