According to reliable news service reports, dot com companies are currently failing at the rate of about one per day; some 9,000 jobs were lost in the Internet industry over the course of 2000, with most of the losses occuring in the latter half. It is anticipated that at least 30 additional mid-size and large e-commerce firms will shut their doors by the end of the first quarter of 2001, and it is entirely possible that the pace of closings will accelerate over the remaining portion of the year. At one time, start up companies based on ingenious idea had only to knock at the doors of the venture capitalists in order to secure ample funding; however (after the fall) nervous investors now insist that traditional, stodgy performance standards such as return on equity and capital turnover rates be satisfied before committing their cold cash. Near term prospects for profit, a subject not even mentioned prior to the last six months or so, have suddenly come (once again) to the fore as an important basis for buy, sell and hold decisions. It has recently become very noticeable that even the great names associated with viable e-commerce sites are bucking against stiff price resistance and buyer skepticism as they shyly present themselves in the resale market. Blockbuster names such as Orange.com can still command megabucks in the auction ring, but they are the beneficiaries of rare, serendipitous niche positioning. The blush is most definitely off the bloom for domains being offered in the $500,000 plus range; further evidence of slowing can be taken from the fact that mid-cap names ($50,000-$250,000) are experiencing considerably longer dusty shelf stays than a year ago.
Given the above difficult market conditions, why am I advising that the present time provides a good setting for undertaking the sale of dot com web sites and names? Several of my colleagues are advising that now is the time to hold on to good, solid dot coms and to await the turnaround that they anticipate will occur when the dot com inventory scarcity reaches the critical stage. Surely, they reason, dot com names put aside for investment purposes will significantly appreciate in value as the possibilities for valuable generic and creative brand names grow slimmer and slimmer. While I agree to a certain extent with the validity of the above counsel, I do not hesitate to suggest that holding dot coms in anticipation of future appreciation is fraught with a fair degree of risk and that there are compelling reasons why the present is a good time to place dot com names and businesses up for sale.
·Significant dilution of the value of dot com names will likely begin in earnest as dot tv, dot biz and other newly authorized top level domains come on line.
·The presently unsettled conditions of the Internet market are encouraging some investors to conclude that there are good bargains to be had, and, in my opinion, it is primarily bargain hunting that will fuel the resale market over the course of 2001. Those who are banking on scarcity to build value recognize that the present offers a tempting buying opportunity.
·Dot com names are proving their worth in the early competitive skirmishes with the other TLD's; dot com is maintaining its strength and still appears to be the place to be, but not the only place.
·Issues revolving about ownership and trademarks are liable to heat up as entrepreneurs rush in to replicate high profile names in the new TLD's. The AntiCyberSquatting Act will go far toward disallowing blatant, deliberate rip-offs of valuable dot com domains; however it appears that full protection will be afforded only those domain owners who have registered their names as trademarks. The decision in the Sex.com case makes it quite clear that there is a faction in the judiciary which views domain names as something less than property, and this in the face of the commendable efforts of the World Intellectual Property Organization (WIPO). Unfortunately, All of the policing in the world on the part of WIPO will not be enough to protect the entire universe of entrepreneurs unless the court recognizes in a timely fashion that domain names do, indeed, constitute intellectual property. Unscrupulous parties who can come up with novel and alternative uses of valuable names which have not been trademarked may just be able to slither in beneath the limbo. All of these matters will, of course, be normalized and settled in law given time; however, why wait to sell if you can see a way to avoid predictable complications and possible lessening of value?
·There is a discernable trend away from purely generic names both due to their scarcity and high valuation. Names which can be successfully transplanted from one venue to another and which can be utilized as the bases for the building of brands are just now beginning to come into their own. There is also increasing demand for good acronyms and mnemonic names. Domain names that were previously overlooked and undervalued may now have a chance to receive a second look on the part of bargain-minded investors.
·Clearly, there are limits to dot com's reign of exclusivity, a quality which is probably going to considerably lessen or go away altogether within the foreseeable future. Value that has accumulated on the basis of TLD exclusivity would best be liquidated now.
Domain names and TLD's are analogous to the 800 long-distance numbering plan or to a superhighway whose lanes are inadequate to handle the traffic volumes. When the "exclusive" 800 scheme reached depletion, 877 and 888 were put forward as acceptable substitutes. While it's true that the 800 numbers retain some of their old panache, the 877 and 888 numbers do get the job done. And because there is an observable need for the emergence of TLD's other than dot com, it is virtually inevitable that at least one new TLDs will succeed in the foreseeable future. Likewise, while the short generics such as drugs.com and loan.com will always have intrinsic value, we are rapidly moving into an Internet environment where disassociative names such as versitrol.com and primeonebank.com are increasingly desirable because they are excellent vehicles for the building of brand names. In short, I am convinced that there is ample evidence to support my thesis that the present time offers an excellent opportunity for the marketing of dot com names and that there are certain downside risks involved in waiting for hoped for improved conditions in the future. The point here is one that I have frequently made in the past. Creativity becomes an increasingly factor in the recipe for making of new domain names; rest assured that it will remain an exceedingly important factor in the domain mix regardless of the TLD in which one is operating.
About the Author
Joseph Tope provides marketing and branding consultation for owners of domain names and web sites at NamesThe Game. Com. He plans to open his domain name brokerage, MyBrokersPlace.com in March of this year.