In this article I’m going to propose an idea that could be very unpopular amongst domain speculators but wildly popular amongst domain investors. Yes, there is a difference between those two camps and it’s this difference that needs to be highlighted.
If we are to look at the domain aftermarket, there are really two major and a host of second tier (not second rate) marketplaces. If I was running either Afternic/Godaddy or Sedo I would look at two things:
1. How I could remove the garbage domains from my marketplace.
2. How I could make more money from brokerage.
The garbage domain problem is a real issue. When a person searches for a domain they are often presented a host a trash that covers the real gems that should be highlighted. How would I solve this problem? Easy, tax the domains.
I would charge some nominal fee per month per domain (eg. $0.10 per domain) with a minimum subscription of say, $50/month, to have your domains in the marketplace. All those with good domains will happily pay the fee and the speculated trash gets washed out. There could be a sliding scale depending upon volume, but I don’t think this is even necessary.
In fact, the marketplaces could take it to the next level and have 0% commission, don’t get between the buyer and the seller and just charge a $0.20 per month for a domain to be in the marketplace. This greatly simplifies the business model, which reduces costs and provides a good steady subscription-based revenue stream to build upon.
Domain investors that baulk at the monthly fee will quickly do the maths and reach the conclusion that without all the garbage domains they will sell more of their own domains, with zero commission and have direct access to the buyer. Not a bad solution really.
Domain speculators that pay the fee….well, you’ve just increased your expense line because you’ve decided to keep trashy domains. Eventually, as the cash dries up and you still do no sales, your domains will get washed out.
There will always be someone that will start up a new marketplace (or one of the tier 2 marketplaces) and offer the commission only model to compete against Sedo and Godaddy.
For a start, Sedo and Godaddy have made serious investments into controlling the registrar channel….so good luck with that! Secondly, the new markets pitch will essentially be, “Bring your trashy domains over hear….we’re cheap!” I’m pretty sure this isn’t going to succeed with buyers.
So there you have it.....one possible way to increase sales, clean up the marketplaces and provide a steady subscription based revenue stream for the marketplaces.
In my next article I will attempt to solve the problem of the brokerage model….which in my opinion is also in need of an overhaul.