Because Ron Jackson does such a great job reporting domain industry news on DNJournal.com, I think one of the most under-recognized people in the domain industry is Andrew Allemann of DomainNameWire.com. Andrew has been reporting domain industry news since 2005, and he is always the source of great domain information. I’ve met Andrew once in person and had a few phone and email conversations in the past year or so, and I wanted to take a second to give him props. DomainNameWire.com is one of the first domain news outlets I read in the morning, and I appreciate Andrew’s coverage and dedication to the industry.

Thought Convergence, parent company of domain monetization leader TrafficZ, recently announced the acquisition of Name Intelligence, parent company of DomainTools. In a press release issued this morning, the deal was announced, although the price was not revealed. On Jay Westerdal’s blog, Jay added:

“We are going to have more resources at our disposal now to focus on bigger projects, the synergies in this deal were awesome. I would not have signed onto the deal unless it allowed DomainTools to better serve the entire Domain Ecosystem. I will be joining the board of Though Convergence and look forward to working with the entire team in both LA and Seattle. The integrity of our DomainTools data is not in jeopardy with this deal and DomainTools website will remain as a trusted third party to everyone regardless of their affiliations.”

It should be added that DomainNameNews.com first reported that a deal had been reached a couple of weeks ago, although it was publicly announced this morning.

I have seen various blog posts and forum commentary discussing the recent listing of large quantities of domain names by various domain companies and individuals. I can’t speak on behalf of anyone else, but it looks like many domain owners are in the midst of evaluating their portfolios. Companies and individuals have been sifting through their portfolios, choosing names for development, names that are earning their keep in PPC revenue, and trying to sell the other names that aren’t performing well and have little intrinsic value to them.

In the past several months and years, many companies and individuals made large portfolio acquisitions. When a portfolio of thousands of domain names is purchased, there is relatively little control over what is included in addition to the gems of the portfolio. Oftentimes a domain owner will include swaths of unprofitable names in a domain sale, as it will help increase the overall sales price of the portfolio. As these domain names come up for renewal, the buyer has to make a business decision about whether to keep the underperforming names, let them expire, or try to sell them.

A domain owner needs to decide if an underperforming name is worth keeping, as it could be worth quite a bit if developed. There are many fantastic generic domain names that are parked, but they don’t generate a ton of revenue because traffic is light. When there is tremendous competition for certain keywords, parked pages might not yield significant traffic if there aren’t links or type in traffic, but the name might be strong nonetheless. For some companies, a valuable domain name on paper isn’t as valuable as cash in the bank. Therefore, selling these domain names is the best option - especially for second tier names that might be great for a smaller portfolio.

With the cost of full-scale development being expensive, it makes sense to be picky about which names get developed. Some names (like typos) get great traffic and generate revenue, but would be silly to develop. In this case, it’s better to keep them parked and possibly list them for sale at a generous revenue multiple. The worse case scenario is that a link is created on a respected website (like Afternic), which could be of passive value to the name.

With tremendous uncertainty in the domain market as well as world economic markets, many domain owners have been using this time to evaluate their holdings. If a domain name wouldn’t be good for development, doesn’t generate PPC revenue, costs $7.00 per year to renew and may possibly be a legal liability, there really isn’t a reason to list names for sale. One person’s junk could be another’s treasure. I think it is a great move to sell names that aren’t worth the expense.

DNJournal is reporting that Q1 2008 sales blew away Q1 2007 sales in terms of average sale price and dollar amount of domain sales. This is good news for the domain industry and would indicate that the domain economy is in good shape. A few weeks ago, I was one of the people who stated that the domain industry was in the midst of a slowdown. I still feel that way today, despite the positive news.

I believe that it is more difficult to sell second tier domain names than it was just a few months ago. I am not talking about names like NewHampshireCheapInsuranceQuotes.com or something crazy like that. I am talking about very good names that aren’t top tier names like Funding.com or Widgets.com. From my experience, people aren’t spending as much on the second tier names than they were previously. If the name doesn’t fit into someone’s development plans or doesn’t make strong PPC, many buyers are reluctant to spend the money on these names.

I have also found that there are less buyers now than there were a few months ago. Unless a domain name is on the market at a great price, it is likely to not sell without a strong price drop. Many people (myself included) are focusing on developing their domain names rather than acquiring domain names. Sure people are buying names if the prices are great, but I see less people spending large sums on good domain names, focusing on what they have rather than new acquisitions.

One source of high value sales is on the drop auctions. As great as the value of these auctions seem, there aren’t a ton of people spending big bucks on these auctions. If 2 or 3 of the high value bidders decided to buy less dropped domain names, we would see a huge drop in sale prices. As they say, all it takes is two people to make an auction. If one bidder drops out, the result will be a significantly lower sales price.

Although I still believe we are in the midst of a market slowdown, I am bullish on the longterm prospects of the domain industry. I continue to buy domain names for development, but I think it’s important to maintain a strong cash position.

According to the lead in to a paid subscription article in Boston Business Journal, a Massachusetts domain investor sold 800 three letter .us domain names to NameMedia for an undisclosed sum. The article states that “web experts” value some three letter .us names at between $1,000 to $2,000 per name. The article speculates that “his take from the deal was likely in the range of $500,000 to $1.5 million.”

I am not disputing this because his names may have been exceptional, but it’s interesting to note because according to a three letter .us price guide I found (3Character.com), they say the average value of a three letter .us name is just $45. According to that site, .com names are the only three letter domain extension worth more than $1,000 each on average.

It would be interesting to see which names were sold to NameMedia and if this will have any impact on the value of three letter .us names, of which I do not own any, nor plan to buy any time soon.

Although I don’t always agree with Francois’ industry viewpoints, I think he started a great website with Domaining.com. The site makes it very easy to see when domain blogs/news outlets have updated, and it’s very easy to navigate to those sources. I have a few industry resources in my RSS feeder, but Domaining.com makes it much easier for me to get domain industry news quickly from sources that I don’t necessarily read daily.  Thank you to Francois!

In a press release dated July 24, 2007, CADNA announced the launch of “its national campaign against Internet fraud.” The press release also publicized that “CADNA’s membership includes such leading brands as AIG, Dell, Eli Lilly, Hilton, HSBC, Marriott, Richemont, Verizon, Wyndham, and Yahoo!.”

More recently, when CADNA announced it’s support of the proposed Snowe legislation (S. 2661) called the Anti-Phishing Consumer Protection Act in a February 26, 2008 press release, they stated that its membership includes “American International Group, Inc.; Bacardi & Company Limited; Compagnie Financière Richemont SA; Dell Inc.; Eli Lilly and Company; Hilton Hotels Corporation; HSBC Holdings plc; Marriott International, Inc.; Verizon Communications Inc.; and Wyndham Worldwide Corporation.”

Strangely enough, Yahoo! is no longer listed as a member of CADNA. Interesting. Did Yahoo! decide they were no longer interested in fighting Internet fraud? I am sure that’s not the case. Why then is Yahoo! no longer a member of CADNA (or at least a publicized member)?

In the financial trading world, there is a term called good news/bad action, which means that good news causes a bad action for the price or market. An example of good news/bad action would be the orange crop report scene in the movie “Trading Places,” starring Eddie Murphy and Dan Ackroyd. With the crop report expected to be bad due to the weather, the price of orange commodity futures rise tremendously. Once the report is released, and the crop damage is less than expected, the good news causes the price of futures to rocket down.

The domain world can also offer a similar phenomenon. Yesterday in Britain’s Guardian, a positive domain article was published, called “Trade in Web Names Worth Millions.” The article cited the story of domain investor Neil Stanley, former banker at Goldman Sachs, and now owner of the domain names bridalfashion.co.uk, onlinecareers.co.uk, schoolguide.co.uk, sendingflowers.co.uk and impotency.co.uk. The crux of the article was the amount of money Stanley and other domain investors earn from parked domain names, and the relatively little work that is needed to profit in this manner.

From my viewpoint, the article’s purpose was to tell people the good news about how easy it is to make money by owning domain names, and it would seem to be good press for domain investors. The idea is that savvy “dotcom entrepreneurs” earn plenty of money because of the clicks of others, and if the dotcom entrepreneurs want to cash out, domain names are like liquid gold and can be sold for hundreds of thousands or millions of dollars.

The bad action from this and other similar articles that make domain investing seem easy, is that domain investors will become even more of a target. People want our domain names and will do what it takes to get them. Scammers will continue to pop-up, attempting to steal or sell stolen domain names. Laws will continue to be proposed in an attempt to take our domain names. Now is the time need to support the Internet Commerce Association more than ever.

Our industry isn’t a get rich quick scheme. The people making good money with pay per click advertising on great generic domain names either spent a considerable amount of money acquiring them, spent countless hours in front of their computer screens researching domain names, or went out on a limb and invested in domain names when few even knew what domain names were. While a domain name may make a mint in PPC advertising, buying these domain names wasn’t and still isn’t a simple task. I love the domain industry, but there isn’t any truth to the stereotype that this is an easy business.

The really good news is that if you do your research, you will be rewarded.

Congratulations to Clark Landry and his team at Hecta Media on their recent portfolio acquisition. According to a news release on Forbes this morning, publicly traded Hecta Media (AIM Exchange) purchased a portfolio consisting of approximately 60,000 domain names for $1,450,000. They also retain the option to purchase two additional portfolios for $1,900,000. According to the release, the company expects revenues of $750,000 annually, which is important because the renewal fees will be over $400,000 per year (assuming they are all .com names). Based on my back of the napkin calculations, this is just over a 4 year revenue multiple.

I had the chance to meet with Clark Landry, CEO of Hecta Media, several months ago in New York, and he is a dynamic person, with an entrepreneurial spirit. When we were initially speaking, I had thought most large portfolios for sale with good names were significantly more expensive than what Hecta was able to pay for it. My advice to Clark would be to get pare down the portfolio of non-producing, poor names to save on the renewal fees. Sometimes you have but a bucket of rocks to find some gems.

Congratulations to my friend Jessica Bookstaff, who was recently elected Chairman of Associated Cities, the premier organization that represents over 100 city .com domain names. Jess spent time on the Associated Cities Board of Directors, and she follows in the footsteps of former chairman Dan Pulcrano, founder of Boulevards, whose company owns one of the finest geographic domain portfolios assembled.

Jess has a history of leading successful geographic domain businesses. Two of her main websites, PigeonForge.com and Durango.com, have tremendous records of growth. In fact, since acquiring PigeonForge.com in 2000, the site has grown an astounding 1,400%. Jess has always graciously given advice to fellow geo domain owners, and she is one of the brightest individuals in the industry.

I wish Jess luck as she takes on this well-deserved position.