Does A Domain Auction/Catalogue/Hosting Platform Co-Op Make More Sense?

[Chris.C]

A couple of weeks ago I was chatting with Snoppy about liquidity risk being the biggest issue for AU domains names, which got me thinking, there is no real reasons for AU domains to have no liquidity ie there are three popular AU domain name auction platforms (NetFleet, Drop and DomainShield) that could could easily offer an aftermarket auction service...

So it seems whilst an aftermarket auction platform would be a very positive development for the industry as a whole, it is being held back by the reality that none of those privately owned platforms have enough of a vested interest to invest in the development to make it happen.

This got me wondering if one of the platforms was "owned by the industry" (or at least owned by enough stakeholders with different interests) would this lead to the development to the development of platform features that were very valuable to the industry as a while, but not as valuable for an individual stakeholder?

For example, imagine if NetFleet/DomainShield/Drop (or a new platform) offered to do a capital raising (issue new equity) where anyone with over 100 domains was entitled to buy equity in that company that would be put towards creating a platform that offered a full service platform for all industry stakeholders, ie one that offered expiry and aftermarket auctions, a catalogue to list domains for sale, AUDA compliant parking pages, reasonably priced domain hosting and COR services, industry focused marketing campaigns and any other services or features that would help the domaining industry as a whole.

I just figured if I was a part-owner in any of those platforms I'd obviously host/park/list/auction my domains with that platform as well as bid on and promote the platform to other domain owners and buyers.
I thought if a couple of dozen domainers got on board that would brings tens of thousands of domains to the platform straight away helping to give it the critical mass to get momentum as well as spread the ongoing costs of running/marketing/growing the platform.
On top of that the capital raised from the additional owners would allow for increase investment in development that could be spread across a larger number of owners who all had a personal stake seeing the industry as a whole advance even if individual features didn't directly benefit them.

And maybe best of all you'd also have a couple dozen VERY motivated and incentivized advocates for the platform.

What do you see as the pros and cons of this sort of thing?

And do you think a Domain Auction/Catalogue/Hosting Platform Co-Op makes more sense the a number of privately owned platforms?

 

[geodomains]

Who's Snoppy Chris

 

[Data Glasses]

He meant to write sloppy

 

[Chris.C]

Who's Snoppy Chris

This fella who chats on this other domain forum I frequent. He has a very similar way of thinking to Snoopy on these forums. Uncanny really...

 

[snoopy]

I think the main issue is there is just very little money in it. The drops work to a degree because the names are just forsale for whatever (seller has no emotional connection to the names, indeed they are other peoples name), but how big is the market for people willing to just sell a .com.au domain for whatever it can get?

Once you factor in that most names aren't worth anything it leaves a small pool of names and a much smaller group of people willing to just sell them at whatever the highest bidder will pay. Even .com whose market is 100 times the size doesn't have particularly great auction options.

 

[findtim]

you make some good points and you asked for opinions.
so in no specific order:

And do you think a Domain Auction/Catalogue/Hosting Platform Co-Op makes more sense the a number of privately owned platforms?

they are not going away and there will be more IMO
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as for dropping domains, i can't see anyone having enough money to join the que, with all due respect the only reason the 3rd entry "DS" was able to enter was because of "A P" in my opinion.
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hosting: to fickle, a worthless venture as you would need to compete on price and service and STAFF
landing: as above, and landing doesn't really bring the results until you reach critical mass which is a longggggggg time down the road.
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so i see auction or escrow as the only avenue to entry, escrow is complicated as i am presently programming one for a client and now and i'm thinking of just using a 3rd party ?
auction, not so bad, but whatever you chose i believe it should all happen whilst you sleep/ on a cruie/ on an island sipping beer.......... anything other then that and your workload will go 24/7
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then you have to brand it ! $$$$$$$$
you can't rely on dnt members, its going to have to be RESULTS based, thats when you gather momentum.
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a couple/dozen domainers: LOLLLLLLLLLLLLLLLLL , how on earth will 12 domainer egos work in the same room LOL
you've been to meetups " my portfolio is bigger then your portfolio ...................."
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well , its a nice idea, but i think the idea needs a lot of work.
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what i do think is a good idea is just a website that you can list your domains on for sale and then deal direct with the owner, BUT, thats already on dnt as a category so whats really the difference.
I've purchased domains via dnt members posting names or sending portfolios. i'd say i've spend @ 20-30K because of those dnt listings.

no escrow, no auction, and often not even a phone call.......... just email, and dnt didn't get a penny ( sorry) and thats why netfleet don't regard it as a priority compared to the drops.

tim, just my opinion as always

 

[Chris.C]

Firstly thanks for the feedback guys. Just spit balling at this stage.

I think the main issue is there is just very little money in it. The drops work to a degree because the names are just for sale for whatever (seller has no emotional connection to the names, indeed they are other peoples name), but how big is the market for people willing to just sell a .com.au domain for whatever it can get?

I agree.

I think this is probably the main purpose for the thread, ie I can totally understand why existing platforms haven't pursued the development of things like aftermarket auctions, parking services, catalogues when these projects would appear to be twice the effort for half the profit.

However, I honestly believe that the prices achieved at the expiry auctions would be higher if the Au domain industry didn't have "liquidity risk" (ie indirectly justifying the investment).

So whilst it makes rational sense for individual platforms not to make the investment if they don't think it would make a good return, especially if they can't be certain they will be the primary recipient of the benefits of their investments because they won't want to give their competitor a free ride (ie if DomainShield invests in an AfterMarket Auction, which remove liquidity risk of holding domains, which pushes up domain expiry auction prices, both Drop and NetFleet also greatly benefit for no investment on their part).

Yet if no one makes the investment because it's not as profitable and higher risk, the don't people think we as an industry are worse off?

So if there was a platform that was owned by 25+ domainers, wouldn't the PRIMARY benefit of the investment, ie reducing the liquidity risk of domain name portfolios, outweigh the secondary benefits of making money via AMA auctions and netting higher expiry auction prices?

On top of that, the development cost (and risk) would be spread across 25+ domainers, so it would be a relatively small investment for a large benefit.

ie if I was one of 25 equity owners in a platform and it cost $25,000 to develop that feature and $25,000 a year to manage it, I know I'd invest $1000 in a heart beat for the development of streamlined AfterMarket auction service and would be happy to pay $83/month to have it continue to operate (and that's only assuming it wouldn't make a profit, which I think it would)?

You other people be willing to invest?

The same would apply for things like domain catalogs, parking services, etc.

Once you factor in that most names aren't worth anything it leaves a small pool of names and a much smaller group of people willing to just sell them at whatever the highest bidder will pay. Even .com whose market is 100 times the size doesn't have particularly great auction options.

Again I agree.

That said, NetFleet was averaging over 200 AMA sales a month back in 2013 when it had a functioning AMA and I think those numbers would be higher if they offered an AMA on their new blind tendering auction system, because it achieves a better result for sellers.

Do people think that would be a big enough market for at NetFleet or DomainShield to offer an AMA service (Drop might not get the same success with their English Auction system)?

Also I'd imagine if a platform was majority owned by domainers, as equity owners, they would have no incentive to sell their domains on other platforms even if new competitors emerged, because any fees and charges they are paying on their own platform would eventually be coming back to them as a profit (less the costs of operations). So that platform would essentially "capture" the AMA and remove the economic incentive for a rival to even setup...

they are not going away and there will be more IMO

I hope not - it's annoying enough bidding on three expiry auction platforms as it is...

as for dropping domains, i can't see anyone having enough money to join the que, with all due respect the only reason the 3rd entry "DS" was able to enter was because of "A P" in my opinion.

Even if someone did have the money to invest in developing another expiry auction platform it's a zero sum game anyway - ie for one person to win marketshare the other parties have to lose.

My thinking was if most of the major domainers in the AU domain industry had an equity stake in the platform (or could easily acquire some) the incentive to create a competitor wold be reduced. Thoughts?

hosting: to fickle, a worthless venture as you would need to compete on price and service and STAFF

I meant domain hosting.

All of the mentioned platforms already offer this.

As for actual web hosting, I guess you'd make a business decision about it when you came to it.

landing: as above, and landing doesn't really bring the results until you reach critical mass which is a longggggggg time down the road.

You don't think if 20 - 30 domainers brought each bought there 1,000 premium domains each (ie 20,000 to 30,000 domains in total) that there wouldn't be enough traffic to at least get some branding benefits?

Ie, what Flippa has done recently.

auction, not so bad, but whatever you chose i believe it should all happen whilst you sleep/ on a cruie/ on an island sipping beer.......... anything other then that and your workload will go 24/7

Of course.

Also certain features could be "batched" if it didn't make commercial sense to run them daily, ie Aftermarket Auctions might be only run once a week, the benefit of the platform to the industry would still be the same (ie removal of liquidity risk) and because it would be the only platform with the service.

then you have to brand it ! $$$$$$$$
you can't rely on dnt members, its going to have to be RESULTS based, thats when you gather momentum.

I agree.

Though I assume NetFleet, Drop and DomainShield are already spending dollars on that right now. I thought that is where someone of the money raised from the capital raising might go.

And don't you think platforms like DomainShield (who is the latest) would fast track the growth of their brand if they had another 20 - 30 domainers, who were equity owners, were helping to promote it and use its services?

a couple/dozen domainers: LOLLLLLLLLLLLLLLLLL , how on earth will 12 domainer egos work in the same room LOL
you've been to meetups " my portfolio is bigger then your portfolio

Public companies listed on the stock market manage to function in-spite of having thousands of shareholders... so certainly not impossible.

well , its a nice idea, but i think the idea needs a lot of work.

I'm only floating the idea because I was interested to hear people's thoughts on its potential and how to improve it.

Does anyone have some suggestions on how the idea could be improved?

Or potentially any problems they foresee?

I'd love to hear them.

what i do think is a good idea is just a website that you can list your domains on for sale and then deal direct with the owner,

That's an interesting idea.

How would this website make money though if the person could contact the owner direct? Honour system of commission payment?

 

[Data Glasses]

A cctld market auction would be very hard to justify in a world/country where half the people do not even know what a domain name is? Some folk who "stumble" onto domains are just looking for a cheap web presence and wouldn't understand the values

 

[James]

Just start your own platform if you want to be part of something like this would be my advice. It is too hard to take on multiple stake holders for something like this.

 

[Chris.C]

Just start your own platform if you want to be part of something like this would be my advice. It is too hard to take on multiple stake holders for something like this.

In what ways do you think multiple stakeholders would make it more difficult?

Also If I was the sole owner of platform I would likely do exactly what NetFleet, Drop and DomainShield have done.

I think a fourth platform owned by an individual (or small group) with the same business model wouldn't improve auction results or domain liquidity and would just exacerbate the tragedy of commons effect further, ie numerous platforms focused on stealing marketshare off each other rather than growing the pie. What do you think?

 

[petermeadit]

Hear what you are saying Chris. It would be no small undertaking and not for the feint harted. The concept makes sense in some ways but can't imagine the shape it would need to be for it to be a success rather than just competitive in an already established marketplace, so to speak.