Posted by: alok | February 4, 2006

Money Money Money….

How much can an idle domain like http://www.cellphones.com get you? $100, $1000 or Millions?

Welcome to the world of domainers..!! If you thought that these mavericks disappeared with the dot com bust, then you are here for a big surprise.

Traditionally, the domainers used to come up with some names like http://www.billgates.com and sell it to someone on lookout for this domain name. The domainer made handsome money in this deal. With the advent of cyber laws this is not allowed, and then the dot com bust busted this easy money minting machine. But at the same time, when the world was panicking with falling shares of dot coms, garage companies disappearing, and no-buyers for domain names, there were few like Yun Ye who were buying these domain names, which were expiring everyday as the companies were going bust, or had no money to keep the name registered. These names were available at dirt-cheap price.. but why was Yun Ye buying those?

Circa 2005, the net-surfing habits of people haven’t changed much despite the advent of google and yahoo. If one is on lookout for cellphones, instead of using google, he uses http://www.cellphones.com. The web-page owned by Mr. Yun Ye contains nothing but ads of various cell phones providers. So what does the net-surfer do? Clicks on one of the ads to browse some cellphones, clicks here and there for sometime and closes the browser. Behind all this, the domainer directed the traffic to an aggregator, which creates page with links, google/yahoo serves up the ads, and when the user clicks on the ad, the click-through revenue is channelled to google (50%), aggregator (25%) and the domainer gets (25%).

In this whole episode if you thought, Mr. Yun Ye was a fictitious character and http://www.cellphones.com was a made-up name, then you are for an even bigger surprise…. Yun Ye is a real character in California, who owns thousands of domains like http://www.cellphones.com making an average $2Million a month, sitting at home. Yun Ye is considered the oracle of this industry, but there are many more like him owning 5000-7000 domains, piling enormous money, driving the Porshes, crowning Rolex, and living in the penthouses of Palo Alto. Needless to say, Private Equity firms never miss out on such deals. For instance, Stuart Rabin a private money manager of Marchex shelled out $164 Million for a single domainer’s portfolio.

Hats off to these Visionary people…!!!!

Money, get away.
Get a good job with good pay and you’re okay.
Money, it’s a gas. Grab that cash with both hands and make a stash.
New car, caviar, four star daydream,Think I’ll buy me a football team.

Money, get back.
I’m all right jack keep your hands off of my stack. Money, it’s a hit.
Don’t give me that do goody good bullshit.
I’m in the high-fidelity first class traveling set And I think I need a lear jet.

Money, it’s a crime.
Share it fairly but don’t take a slice of my pie.
Money, so they say Is the root of all evil today.
But if you ask for a raise it’s no surprise that they’re Giving none away.

This song is courtesy Pink Floyd – “Money”. I wonder how could ‘Roger Waters’ compose this lyrics when there were no domainers…!!!!!

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Responses

  1. Interesting. I too thought that cybersquatter’s business were over. But this Mr. Yun Ye is smart. But still the model is like buying a lot of similar naming websites. I think he would also be owning mobilephones.com, mobile-phones.com, cheapcellphones.com, etc etc. meaning that he has spread his bets & wait for one of the URLs to click. Do you think that there is any art or science in booking that particular url which will click in future. I think thats pretty difficult. Its like betting on many many plots in a city & betting that one of them will become so costly in future that it will pay for others.
    What say?

  2. Probably, you missed out on the finer point. The business model is NOT based on the idea that you buy a domain name, and wait for someone eager to pay a hefty price for the domain.

    The idea here is that the person always holds the domain name is not in the business of selling the domain. He makes revenue from aggregators like yahoo and google who channel in the advertisement.

    Why would someone sell a hen laying golden eggs for few ounces of gold…????

  3. Here’s a little quiz for you.
    This article at best is
    1. full of inaccurate and mixed up facts
    2. full of asumptions and conjectures based on these facts
    3. discusses things which the writer obviously knows nothing about
    4. worthless
    5. all of the above

  4. all of the above.
    for starters: Yun ye sold his portfolio for $164m; he does not own or never has owned cellphones.com

    A name like cellphones.com is purely generic, a goldmine, and is valuable because of the money it earns on a daily basis from people looking for cellphones typing in cellphones.com; hoping to get a page like the one that is displayed where they can find information about purchasing cellphones; or just looking for general information about cellphones.

    Domain Names at this point in time are such an innovative investment; the multiples that buyers are paying for revenue at this point are making them tough investments to justify, but still.

    The concept of domain name investing and parking generic domain names is genius.

    The concept of buying a domain name to sell in order to exploit that specific party; ie. trying to sell BillGates.com to Bill Gates would be gutless, cybersquating, and most definitely inappropriate and should be condoned. Similarly, profitting off of another person or comany’s name or brand; ie. making money off of Yaho.com (typo) or GoogleMaps.com (non-existant site that would get typeins) is just as bad.

    Let’s not pretend that there aren’t problems like this is every single industry out there, but those are some of the problems that the domain name industry faces at the moment.

    But let us not confuse that with DOMAIN NAME INVESTING; there is a lot to learn from the efficiency and growth that such a market has to offer.

  5. Hi Jordan,

    Thanks a lot for your comments, and appreciate your detailed description of the “Domain Names game”. The facts written in my post, might be wrong as you pointed out, but the intent was not to pin-point any particular person or domain name. I would have read about Mr. Yun Ye somewhere, and may be “cellphones.com” in some other context.

    The intent of the post was to depict one possible way, some genius out there is making money. Nothing wrong with that, Infact, I salute to the people like these who find out easy-way of making money without doing anything illegal (atleast till the time, the cyber-laws change to classify ‘owning cellphones.com’ as illegal )

    Thanks once again for your comments and correcting me.
    ~Alok

  6. Please elaborate on this:

    (atleast till the time, the cyber-laws change to classify ‘owning cellphones.com’ as illegal )

    on what premise would owning cellphones.com become illegal?

  7. I don’t know – its just a conjecture. If my limited knowledge of patent/trademarks laws is correct you can’t register/get a trademark for dictionary words. So you can’t get the word ‘computer’ or ‘mobile’ registered for you, and claim a royalty for anyone who uses these words.

    In the same way, who knows in future the law making and governing bodies pass a bill stating — generic names like these ‘cellphones.com’ or ‘computer.com’ or ‘mobilephones.com’ can’t be registered. Its perfectly legal to have domain names like these AS OF NOW, but I am just making a conjecture and there might be a law like that in future.

    ~Alok

  8. Please sir,

  9. Dear sir,
    Please note that i would like to get e-mail contact
    of world richer Mr.Bill gates as we have opened a orpenage. If u have e-mail address of this great person. Please help me.

    Thanks & Bests regards
    Anik/imtiaz/rozy

  10. i need to money,please help me.

  11. i want to work in your company

  12. Dear sir,

    i want u to read my message and give me to work with the worls richest person i will be graceful to u for this act.
    Thank You
    Yours Friend
    Aarjan Adhikari

  13. i have a great idea………

    i think i goin to be rich same like you…………

  14. Hi there!

    I’m new to this forum and just wanted to say hi. So Hi!

    bye!


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