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July 16, 2007

Comments

Sahar Sarid

"Get a good domain and seal your fate. Don't get a good name and do the same. :)"

Can't say I agree with that. Many top brands were built on made-up words, brands such as Microsoft, google, comscore, sysco, qwest, publix, coca cola, etc etc etc. I think it can work either way, made-up or generic. Each has their own advantages, and disadvantages.

Javier Marti

Promoting your blog in British newspapers...
I sent this comment
""You forgot to mention the blog of reference in the highly profitable and promising domain industry:
Frank Schilling's blog
http://frankschilling.typepad.com""

to this article
http://business.timesonline.co.uk/tol/business/industry_sectors/media/article1923706.ece?Submitted=true

I don't always agree with all your views Frank...but overall you write probably the best blog on domains and the more people read it, the sooner they'll become "educated"...
Keep it up!

Regards

Javier Marti
Trendirama.com

***FS*** thanks sincerely Javier!

Jack

Das alota of money mang.

***FS*** You got dat right mang. This internet is really something. If only Tony knew. ;)

Fantasy Futures Exchange

i guess that's the new record??? old one $7.5 million for business.com ??---and your explanation illustrates what a huge difference a name makes------time for me to let a lot of crap expire!!! pk

Bill

I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it dseno't mtaetr in waht oerdr the ltteres in a wrod are, the olny iproamtnt tihng is taht the frsit and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it whotuit a pboerlm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Azanmig huh? yaeh and I wlyas tghuhot slpeling was ipmorantt!

***FS*** Wow.. myabe msipsellnigs cluod be good if you get eonugh of thme

Joe

Frank. This is an amazing price…here’s why.

Lets apply a 15x multiple to Lexico’s $3mm in EBITDA. 15x is roughly where Marchex trades and would also be considered a very good multiple for a company with high margins, good growth prospects, and a strong, defensible market position. So using the 15x multiple, you get $45mm for the value of Lexico’s cash flow. With only $7mm in revenue and $3mm in EBITDA, this is already a very high margin business. It’s a simple business that probably doesn’t have a lot of headcount associated with it, so I cant imagine the high price tag being justified with a lot of cost-cuts.

But the company sold for $100mm, which places a $55mm value on the great domain names and B value you speak of.

So essentially, the domain names were worth $55mm to this company!

***FS*** And they are probably worth it.

IPTV

Thats wild bill...

I read your post faster with the words messed up, than I could have if the words were spelled correctly.

I don't think I want to know what that means...LOL

Thanks for the post its very interesting.

Best,
Dan

***FS*** You know.. I had the same thought.. I read faster that way too

Snoopy

This CNN article linked below has some great info in it Frank, benefits over a reliance on search engine traffic. Sounds like maespecially in terms of "direct" traffic and management's awareness of the nagement is very switched on about traffic quality issues.

"Direct Traffic: Over 85% of Lexico's traffic is direct from end users or people searching specifically for the term "dictionary" in search engines. The resulting shift in traffic mix should significantly reduce Answers.com's current reliance on search engine algorithms."

.......................

"Lexico's suite of popular brands, steady direct traffic and loyal users are valuable assets that we believe will reduce our products' reliance on search engine-driven traffic. Post-transaction, we estimate that over 70% of our total traffic will now be direct from end users or people searching specifically for the term 'dictionary' in search engines."

............................

"Dictionary.com's success is built on its unique, descriptive domain name and simple, straightforward interface," explained Bruce D. Smith, Chief Strategic Officer."

http://money.cnn.com/news/newsfeeds/articles/prnewswire/UKM06616072007-1.htm

***FS*** great link... Thanks sincerely.

Josh/Swerve

I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it dseno't mtaetr in waht oerdr the ltteres in a wrod are, the olny iproamtnt tihng is taht the frsit and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it whotuit a pboerlm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Azanmig huh? yaeh and I wlyas tghuhot slpeling was ipmorantt!

======

***FS*** Okay... after reading that, I need an Advil.. or maybe it was the ching ching ching ching sound that did it.. bah, who can tell.

Snoopy

"But the company sold for $100mm, which places a $55mm value on the great domain names and B value you speak of."

They give the impression that dictionary.com was being under monetized. That might be the reason for the high multiple. It looks like answers.com stock price has fallen heavily on the news (15%) so the market perhaps thinks they are overpaying.

***FS*** Wisdom of crowds.. it's often late snoop. You see it today.. mkt sees it years from now.. after you (smarter money) has soured on it

David Wrixon

On name values, I doubt if Dictionary.com will be officially recognised by DNJ.

Same arguments applied to Rent.com, which I still believe was the most expensive domain ever sold.

D

Well you wrote "Get a good domain and seal your fate" - the problem is all good domains are taken, mostly by guys which do not sell (I call them "Frogs on the spring"). So HOW exactly are people supposed to get "Good domain" ? Because money does not buy it, these frogs simply do NOT sell, period...

***FS*** Some frogs are sellers.. and other non-selling frogs may be sellers at some point.. Then there are the the millions of frogs who have just one or two names who would sell if the price was right. Those are the same folks I buy from., not everyone can mine all veins. There is opportunity out there, just different opportunity than there was 10 years ago.

ian

I use dictionary.com quite often, amazing site, amazing domain, not a bad price. You could completely ignore what its earnings are, the amount of traffic that sites currently gets and will always continue to get as a great more importantly well developed domain, that traffic and loyal visitors could easily be leveraged to create many other multi-million dollar assets, something people sometimes overlook when they just look at earnings figures.

steven emery

too much ching. im slobbering. this aint no bubble. premium strategic generic vertical location is, and will forever be, everything in the land of cyberblah.

reference.com- 2.8 million
thesaurus.com- 1.1 million
dictionary.com- 52.1 million

Dot com is King.

David Wrixon

"Dot Com is King"

How often do we hear this? And how many of really understand what it means? Certainly not most of those that actually use this as a slogan.

Dot Com is a truly global brand that transcends cultures and languages. It power far exceeds the narrow linguistical base in which it was originally forged. The true power of this brand will become apparent to all over the next twelve months or so, yet the true disciples are those that will probably miss out as they have been blinded from the truth.

Why? Well it difficult to explain, but much of the non-English speaking internet community, Dot Com is synomous with Website in a way that just isn't in English. Paradoxical maybe. Nevertheless, this truth is almost indisputable.

Take Japan for example. It is just about to exceed 1 Million dot JP including all those non-transferable .co.jp. Yet, its economy is half as big again as Germany, which has over 11 million dot DE. Japan has faster internet speeds and the Japanese spend more time online than many of the rest of us. So where do they go and which domains do they register?

Yes,Dot Com is not so much some tin pot King as a Global Dynasty.

joecotai@yahoo.com

Good point Snoop. I saw those revenue optimization comments after I posted, but ive got to wonder how much upside there really is. It looks like they're currently using banner ads and the new buyer wants to use adsense.

Think about why people go to dictionary.com. Probaby just to get a quick definition then move on with what they're writing or reading. They're not going there to buy something or learn more about something like most sites.

Even if you were to assume that the buyer can double revenue (which is a very, very, aggressive assumption), then EBITDA goes from 3 to 6, which gives you an enterprise value of $90mm, leaving $10mm for the domains. Thats of course if you assume they really can double revenue.

I guess what i'm saying is that dictionary.com is what it is - a great quick reference site, with maybe one of the all-time great direct navigation domains on the net. And thats why the buyer paid so much, because they have the greatest barrier to entry of all.

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