I am very glad that I was able to make it. There was an announced crowd of about 200 people, and there was never much down time during the day and evening prior to the show (there were a couple of private parties and random get togethers). I don’t usually attend panels and speakers at conferences, and last week’s conference wasn’t much different. I spent the sessions just outside the ballroom catching up with friends and colleagues.

The Expert Networking session in which I participated was well done. It lasted for two hours, but it didn’t feel like it was that long. I had the chance to meet with several people whom I had never met, and also met with a few people who read my blog, which was very cool. I know others who were less interested in this were in private meetings or were talking outside of the ballroom.

The live auction is usually a highlight of a domain conference, and although CNN and the New York Post were in attendance to write articles, it wasn’t as exciting as usual. A couple of big sales I heard were going to be made never materialized, and it seemed like many of the names were far overpriced. The auction houses are keen on bringing new inventory to market, but many of these names are still priced unrealistically, probably a reason why they weren’t in auction previously. Knowing Monte and his team, I will not be surprised at all if a couple big deals are announced in the next few days or possibly weeks.

One thing that was most impressive to me was the diverse turnout. Many of my friends from outside the area didn’t attend, yet there were still 200 people who showed up. Not only were domain investors and service companies there, but others were there as well – many of whom are only somewhat involved with domain investments.

This morning, CNN posted a video article with auction coverage, so you might want to have a look when you have a chance.

All in all, this was a great conference.

In no particular order, here are some of the reasons I believe domain auctions haven’t been successful recently.

• Lower PPC payouts and poor economy affecting domain investors’ spending ability

For a few years, live domain auctions were dominated by some of the wealthiest domain investors. Many of these people and companies were spending money that they earned from PPC revenue. With payouts down across the board, there is less money to reinvest.

Likewise, with the economy in the tank, there is less financing available for domain buyers. People can’t refinance their homes or other property as easily, and ultimately it means less money to spend on domain names. In addition, people are more reluctant to spend money on domain investments, favoring a stronger liquid position to stay protected.

• The same domain names continue to be offered for sale.

There are a limited amount of top quality domain names that are openly available for sale. Many domain investors don’t wish to list their names for sale in a public venue and/or don’t want to set a price for their prized assets. Domain names are on the market longer, and consequently, even good domain names are allowed to be placed in different live auctions with the hopes that someone bids. Oftentimes, these domain names don’t have lower reserves, and they just sit on the shelf like day old milk. At one time their inclusion made a splash. Now it’s just embarrassing to see the same names at the same prices being auctioned in different venues.

• People have ridiculous sales expectations.

Let’s face it. Everyone thinks their names are hot shit. No matter how many times Monte or Rick will hammer their sellers asking for reserve price reductions, many people are reluctant to do so. Gone are the days when a bidding war will ensure a domain name sells for what it’s worth or more. People don’t want to lower their price to a point where one bid will lead to a very bad sale.

Domain owners have lost faith that buyers will show up, and they are unwilling to drop their reserve prices. Auction houses are either desperate to keep certain names in auction with the hopes of drawing some interest (while locking down exclusivity) or they are praying that the needy end user just happens to show up, with all senses lost after being hit in the head with a bag of money.

• Long exclusivity periods.

People like myself like to sell domain names quickly. I buy as low as possible and sell as high as possible, as quickly as possible. If I have a $20,000 domain name, I can’t/won’t take a chance and lock it up for 60 days because I need to move my inventory to generate much of my income. If the name doesn’t sell, I can sell it on my own, but I am obligated to pay a 10-20% commission. Some people may opt to not honor an agreement, but that’s certainly a reputation killer if not a legal problem. With lower sales rates, it’s not a guarantee that a domain name will sell at auction and it’s more difficult to justify a long period of exclusivity.

On the other side of the business, auction houses need to lock down these domain names. They can’t afford to spend time and effort selling a domain name if the name isn’t committed to them. I know for a fact that the auction houses work hard to sell domain names before and after auctions, so it’s not fair to not commit.

• Too many auctions and lists not revealed until just before the auction.
  

There are so many auctions these days that people wait until the last minute to decide where to submit their domain names. This causes domain auction houses to scramble at the last minute to find buyers. Domain buyers have very little time to review their lists. I know the first live auction happened when people simply put names up on a white board, but times have changed and more money goes into buying a domain name.

• End user buyers aren’t showing up.
  

Perhaps this is due to the above issue where lists aren’t finalized until the last minute, but it doesn’t appear that end users are showing up as much as they should (has always been an issue). I know that the domain auctioneers spend time contacting potential buyers, especially when it comes to high ticket names, but as any domain investor knows, it’s tough to get end users to buy. They have to want a specific domain name at the offered price at the time that it’s auctioned.

In addition, end users may not trust domain auctioneers as much as they would trust other auction companies who are more well-known. This industry is still young, and end users may not be  familiar or comfortable bidding at a domain auction held by a company whom they’ve never heard about. The registration process (and maybe previously a fee at Traffic I think) could also be a deterrent. Further, Snapnames still doesn’t allow remote bidding from a Mac (unless it has Windows).

• Cronyism and friendships can impact auctions
  

In the domain industry, there aren’t thousands of active investors. There might not even be several hundred – I really don’t know. Compared to other industries, this one is pretty small and there are a lot of people who are well acquainted with each other. Many auction participants are both buyers and sellers. Auction companies want to accommodate their best clients, and sometimes that means accepting domain names that shouldn’t be in auction – or should be priced lower.

• Too many domain names in auctions.
  

There are far too many domain names accepted in the live auction, and even more in the silent auction. I know a 4 hour auction isn’t unusual in the car world, but with sales down, it seems to drag on forever. Likewise, it’s difficult for buyers to wade through thousands of silent/extended auction domain names. People don’t want to put low reserves on domain names that might get a couple of looks and maybe one bid.

• Automatic entrance into silent/extended auction.
  

It seems that most domain names that are submitted to the live auction but don’t make it are relegated to the silent/extended auction. IMO, these auctions are stuffed with bad domain names, and it makes it difficult to find good ones at good prices. Truthfully, I barely even look at the extended/silent auctions, and I am sure others feel the same way. As a result, domain owners are reluctant to put low prices on domain names that might end up seen by just a few people.

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Ultimately, I think people really lack confidence in live domain auctions right now. As a result, there are lower quality domain names with higher than acceptable reserve prices. In an effort to stem the bleeding, more (lower quality) domain names are being auctioned in the hopes of a sale, and buyers and sellers are frustrated. I don’t think most of these issues are new, but they are exacerbated by other factors.

Tomorrow, I will post some of my suggestions for how to improve domain auctions, but I would like to hear what you think about the current problems with domain auctions.