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 I just received a notice that in the middle of all of the various corporate manoeuvring that is happening between Photon Group, Dark Blue Sea (DBS) and others that GoDaddy has just terminated its Domain Directory Network (DDN) agreement with DBS.
The official statement to the market is as follows:
Dark Blue Sea advises late yesterday that it received a notice from GoDaddy that they will be terminating the “Domain Name Sales Distribution Agreement” effective
13 August 2009.
The company has contacted GoDaddy to seek further information regarding the notice and is awaiting a response.
Dark Blue Sea will assess the effect of termination going forward, but believes that the impact of this may have a material adverse affect on future revenue and profit. GoDaddy is one of a number of partners with whom Dark Blue Sea makes domain sales. Management is actively seeking to increase sales through existing channels as well as fast tracking a number of other channels already being pursued. The company has it’s own sales channel that, whist it makes a material contribution to overall sales, is one that the company has not aggressively pursued due to our GoDaddy agreement. Management will immediately change the emphasis on our own channel.
This is a real blow to DBS as they were pinning a lot of their hopes on a diversified income stream via the DDN and away from PPC revenue. The DBS strategy was to treat their owned portfolio as stock and to increase the stock turn from 1% to 2% over the next year or so. A major contribution to this increase was the distribution agreement with the world’s largest registrar GoDaddy. Now that this has been terminated I would imagine that there must be a lot of scratching of heads at DBS.
As pure speculation it makes me wonder if NameMedia, which is a direct competitor of DBS for the distribution channel via GoDaddy had anything to do with the contract termination. Since NameMedia isn’t a public company I don’t think that we’ll hear any official announcements if this is the case.
What is clear is that with DBS losing out it means that either someone else has put a better offer on the table or the revenue generated by the DDN was only noise for GoDaddy. This is potentially a severe blow to domain owners as without networks like the DDN it will become that much more difficult to monetize the long-tail of domains that we all have.
I wish the management at DBS all the best as they must now be considering making some quite difficult decisions. I’m confident that although this is a blow for DBS they will recover and in some ways I wouldn’t be surprised if adversity becomes the mother of innovation for them. The challenge will be to find the right direction to innovate that provides the best return for investment while they are being constantly distracted by corporate issues.
In the meantime....part 2 of the series on Dark Blue Sea, Photon Group etc. will continue in a couple of days time.
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