Elliot wrote an interesting article on his ISP redirecting mistyped domains to a page selected by the ISP. In this case it appears to be the ISPs home page.

While I’m not here to discuss whether I think the practice is legitimate I am here to suggest a better solution for your DNS. Depending on how technical you are this might throw you a off a bit at first, but I assure you it is your DNS that poses the problem. By default most every user will use their ISPs DNS; however, it is not required and you have the ability to specify your own DNS servers. The only requirement is that you will need your own router, which at this point almost everyone already has.

Steps to setup OpenDNS
1. Register for an account
2. Enter the IP you are wanting to setup OpenDNS on. OpenDNS will detect this for you if it’s for the network you are on.
3. Login to your router admin and set your DNS severs to OpenDNS, which are 208.67.222.222, 208.67.220.220
4. Now you can setup your OpenDNS account for the features you are looking for.

When you login to your account you will see the settings available, such as Content Filtering, Customization, Stats and Logs(good for parents), and Advanced Settings.

Content Filtering
This allows you to filter out content that you don’t want to be available on your network, perhaps porn or malicious sites. I think this is a really useful tool if you’re a parent. How many devices do your Kids have these days that get internet? Trying to install filters on all of them is not realistic, so you with this you can just block it at the source.

Customization
This allows you to customize the different error pages both with text and a logo.

Open DNS Customization

Stats and Logs
This is another really cool feature as you can see what sites users on your networks are using.

Advanced Settings
There are 2 important parts of this section. The ability to update your dynamic IP automatically. Most users are on home networks which don’t have static IPs, so this will prevent you from having to manually update it. Another one, which I think is interesting for domainers is the “Domain Typos” section. Not only will it correct a “.ocm” typo, but it also specifically has a section for “.cm” corrections.

Enable filtering of .cm wildcard

By turning this filter on, if you enter .cm at the end of a domain, the URL will be corrected to .com except for the known registered .cm domains. Important: you must enable typo correction for this feature to work.

It will be interesting to see how this type of feature effects the .cm. It’s already been widely criticized as a type extension which would only lead to the use of this and similar filters. That could lead to a devaluation of the extension.

OpenDNS Avanced Settings

I wanted to share a simple domaining strategy. This is a strategy that I saw work well for several people who purchased expired domains during my tenure at GoDaddy.

GoDaddy offers the ability to list domains within any GoDaddy account as Premium. Premium domains are offered during the purchase path based on the domain name search.

In the event of a direct match the domain will show the following:

Having a person doing a search for a domain you have listed is by far the best scenario you could hope for. Premium Domains are also available through several other areas on the GoDaddy site as “Related Domains” as well as on the WHOIS search.

Potential Premium Domain Customers:

1. The original domain owner. It may seem unreasonable that someone would ignore (their email may have changes as well) the 7 notices GoDaddy sends before a domain expires. Furthermore, then allow 42 days to go by before addressing the fact that their website is no longer active, but it happens more often then you would think. Many of these previously active domains are bought buy large domain buyers whom typically just list the domains for sale after acquiring the name. One mistake they make if they are GoDaddy expired domains is listing them for sale at Sedo or a similar domain auction service. Had they listed it with GoDaddy Premium Domain service they may have sold it. The reason for this is that the domain owner is inclined to call GoDaddy to find out why their site is down and more then likely get the GoDaddy Billing Department. They then are advised that the domain is now owned by another registrant. If the domain was listed as a Premium Domain the billing rep would more then likely offer the domain at the listed price in order to secure a commission. What better scenario could you ask for then a motivated buyer and a motivated sales rep whom is able to sell your domain? I know this as I once was a billing rep for GoDaddy

2. A current or new end-user business. People are starting to realize the marketing power that a good premium domain has, so they’re buying them. Businesses are budgeting thousands of dollars to secure their web identity and GoDaddy is a widely recognized and used company by the end user. End User’s are typically hesitant to contact a domain owner directly or utilize auctions houses, such as SnapNames or Bido.com. They like the “security” they feel by using a well known company, so the ability to buy a domain for a fixed price and have it transferred directly to their account is value added.

3. Another domain investor. It seems unlikely as GoDaddy Premium Domains are typically priced, IMO, on the high side. That said it’s not very uncommon for a domain investor to pick up a domain through Premium Domains.

So what the cost? GoDaddy’s Premium Domain fee is high relative to the industry standard at 32%; however, there are no listing fees, so you have no risk if the domain doesn’t sell. Also, it’s a great way to get exposure on your unused domain inventory. If you bought a domain for $10 and sold it for $500, you’d net $330. That’s a 3300% ROI, which is not bad

This strategy will certainly not work for everyone, but if you have the appropriate budget and a good monetization plan it should be considered. If you have any questions please feel free to contact me at lee (at) dotinvesting.com or give me a calla at (480) 463-4533.

The .biz single character auction over at Sedo.biz will commence today, so I’d thought I’d give my 2 cents on the event. And even though the title of this post might lead you to believe that I was asking a rhetorical question, I’m not. Why would owning a single character domain in a horrible TLD matter? While I do think they have some value due to their brevity, I still wouldn’t put my money there. The .biz domain for some time has been one of the worst performing extensions in nearly every category, sales, development, etc… While I was at GoDaddy and helped manage hundreds of thousands of domains I never worked with anyone that did well or had even heard of a .biz sale. It’s not to say they don’t happen, but it must be on such a small scale it might as well not even happen. Ask yourself the last time you went to a .biz domain?

Most of the people who bought .biz domains were either “stacking”, buying all the extensions, or just had no clue what they were doing. I really hate to have to be so down on the extension, but it truly just isn’t a winner and for that matter most likely never will be. This gTLD just doesn’t have the same mojo that the .com or .net have. Furthermore, I see the auction as a last ditch attempt for the registry to publicize itself and put a few bucks in the bank. The extension became available in 2001 and since then is still floundering in regards to usage. I’m sure it has been a profitable venture for NueStar, which now owns and operated the extension, but I doubt .biz registrants have experienced the same. According to Domain Tools there are currently 2,033,687 .biz domains registered and there have been 1,889,719 that have been deleted. Keeping in mind that some of the the deleted domains may have been reactivated and some domains were registered for more then 1 year, NeuStar easily makes more then  $15 million a year just on the .biz (registrars pay about $6 per year). That said, can someone take  .us away from NeuStar, so it can be marketed properly and even better put to some use already?

According to Verisign’s Domain Name Industry Brief there are 184 million domains registered.

Although, this is an incredible number it still shows a sobering year-over-year decline of 15% in the same quarter last year. Verisign suggested the decline is season and economy related. This does make some sense since the summer is typically a slower time for domain registrations. I experienced this over the 3 years I was at GoDaddy.

The largest TLDs in terms of base size were .com, .cn, .de, .net, .org, .uk, .info, .nl (Netherlands), .eu (European Union), and .biz.

Total Domain Name Registrations

At the end of the 2nd quarter of 2009 there were 74.4 million ccTLD registrations in total. It is also interesting to note that of the available 240 ccTLDs the top 10 make up 66 percent of the ccTLD market. Some interesting highlights included the .ar (Argentine) domain name which experienced 8% growth and the .br (Brazil) and .ru (Russia) which increased by 7%. The .cn (China) experienced an 8% drop after seeing strong growing the past few quarters.

Top 10 ccTLD Domain Names as of the 2nd quarter of 2009

1. .cn (China)
2. .de (Germany)
3. .uk (United Kingdom)
4. .nl (Netherlands)
5. .eu (European Union)
7. .ar (Argentina)
8. .br (Brazil)
9. .it (Italy)
10. .us (United States)

The bulk of domain registrations still .com and .net

The second quarter of 2009 ended with 93.5 million domains registered. This represents only a 7% increase from the same quarter last year. The renewal rate for .com and .net domains also had a slight decrease to 70% from 71%. Verisign also estimates that 89% of the registered domains resolved to a “site.” That said it counts parked pages and one-page web sites in that percentage. This definitely skews the statistic a bit as most registrars by default will put up a parked page if no DNS is set. Additionally, many large domain holders utilize parking while waiting for a sale or development.

Conclusions

I find the reported results to be a mix of good and bad. It does show declines in some areas, such as overall registration; however, it also shows increases in other areas such as ccTLDs. The staggering 93.5 million registered .com and .net, which is mostly .com and leads me to maintain my confidence in the .com. It’s certainly going to be the dominant extension for years to come regardless of what new TLDs are offered. As a result I would be wary of new extensions and would only buy them with speculation in mind and would not recommend an entire portfolio of other gTLD or ccTLDs.

One interesting statistic is that the .us extension still lags so much behind other ccTLDs. It would only seem to make sense that their would be a huge increase in use of the .us extension, but for the most part it is still few and far between. The .us offers a great alternative to the .com for US based businesses. We’ll have to wait and see if advertisers start to use it in their marketing efforts. This may indicate a buy signal as it is truly a logical direction for the market and should at some point gain some momentum. Once caveat is that the registry in an effort to expand the extension has been allowing registrars to run some pretty crazy promotions, such as $2.99 .us domains offered by GoDaddy. This price bastardizing could lead to a .info phenoma and dilute the extensions value.

I created this list as more of an example. I’m a big fan of geo keyword domains as that is where local search is headed. Think about it, when you search for something local you typically will type in what your looking for and the location. For example if you were looking for wedding portraits in Phoenix you’d probably type in “phoenix wedding portraits” or “wedding portraits phoenix.” As a result, owning phoenixweddingportraits.com would be a great domain.

Additionally, if you were interested in focusing on domain reselling as apart of your strategy then buying local domains would also make a lot of sense. You probably have more connections locally then you do nationally, so finding an end user would be a whole lot easier. You might even have a store or company down the street that you could pitch it to. I would recommend setting up expired domain monitoring of your city, surrounding cities, and state.

So I thought it would be important to touch on why I feel that expired domains provide some of the best value in the domain name aftermarket.  I feel this way primarily due to my experience as an Executive Accounts manager at GoDaddy. Our department helped the top 7k domain holders in the world and the reality is that by and large the highest percentage of successful portfolios were built buying expired domains.

There are primarily 4 ways to acquire domains in the aftermarket: Member-to-Member Domain Auctions, Direct Domain Sales, Private Domain Sales, and Expired Domains.

Member-to-Member Auctions
These can be found at almost all the auction houses: GoDaddy, Snapnames, Afternic, etc… While it is possible to find a good deal, for the most part people have unrealistic expectations on what their domains are worth. Here’s a worthy example, right now you can buy mmyyyspace.com for $20k. This is the extreme end of it, but for the most part that’s what you will experience unless you’re dealing with an educated seller.

Direct Domain Sales
These can be some of the best deals and I have personally gotten some of my best domains this way. I believe the biggest challenge people have is the awkwardness of calling or emailing someone out of the blue to purchase their name. There are some pitfalls. Similar to the m2m auctions, the domain owners will typically ask for outrageous prices or just refuse to entertain a sale. It pays to be shmoozer when trying to do this. The other issue is that it’s time intensive with a small close rate.

Private Domain Sales
This is primarily utilized in high value domain sales and performed by companies such as sedo.com and ricklatona.com. Certainly not the place for a newbie domainer to buy domains, but interesting to track as you can pick up trends in the market by watching the domains that are sold. If SEDO sells Server.com, then it might be worthwhile to pick up a few domains containing the word ‘Server.’ Just like in finance you can use the past to help indicate the future aka leading indicator.

Expired Domains
Unfortunately the companies that sell expired domains, GoDaddy, NameJet, SnapNames, and a few others, don’t report their total sales volume, but I would have to assume this is the largest sector in the aftermarket by volume. That said it also provides the most value.

There is one important distinction I must make, which is that there are 2 ways to capture expired domains.

Drop Catching – These domains have gone through the 45 day allotted auto-renew period (if the registrar utilizes it) and the registry redemption period. This typically lasts about 75 days. The domain will go to a pending delete status and then be added back to the registry as an available domain. There are many services that allow you to capture these domains through backorders. The downside to these types of domains is that the creation date is reset. Additionally, search engines will remove all past data held for the domain. Any indexed pages, PR, etc… will be dropped. In my opinion this drops the value of the domain.

Pre-release Domains - These domains are being auction off by the registrar. Since the individual did not renew the domain the registrar has the right to auction the domain off to the highest bidder during the 45 day auto-renew period. In this instance the creation date is kept the same and it is possible to maintain the PR and typically some of the indexed pages.

I highly prefer pre-realease domains over dropped domains. The valuable development prospect is what draws me to this conclusion. Granted there are different techniques in handling maintaining the PR and indexed pages and plan to address this later.

The other reasons why expired domains are so valuable is…

- your not dealing with the emotions of a domain seller that may skew the domain’s value.

-there available everyday in the thousands.

-someone else potentially built value into the domain by maintaining a site on it.

-the creation date stays the same giving the domain age. Age is one thing you cannot create on the fly. Age is age and it requires something to have existed over time. This is regarded as important especially by you SEO nuts

-not utilized by the masses. Expired domains are typically overlooked by most and is utilized primarily by individuals within the domain industry. Granted some highline domains are going to go for outrageous money, there are still thousands of deals you can grab for as cheap as $13. GoDaddy has a fire sale section with $5 domains (you have to pay the domains renewal fee, so it ends up being around $13)

Obviously I wouldn’t overlook other opportunities in other domain channels, but to me expired domains can be used on day-to-day basis to build quite an amazing portfolio.

The list goes on and on and I will spend more time outlining many items discussed in this article in the future. As always if you have any questions or comments feel free to email me at lee@dotinvesting.com

People’s biggest mistake is buying domains in a space they know nothing about. Seriously, if you’re a finance guy, be weary of buying real estate domains. I think this seemingly simple oversight is most people’s first big mistake.

Another huge pitfall is the lack of strategy. I highly recommend whether its part time or full time, create a strategy that works for you and your budget. Be realistic about what you can afford and how much time you can invest. A person with less to spend will need to spend more time. A person with a lot of money will also need to spend a reasonable amount of time, but can compound his efforts by paying people to do the dirty work. I can tell you after working with 7k of the top domain holders, both ways work. That said, not all 7k are making it big. This is why taking a premeditated approach will mitigate your bad investments and increases your chances of success.

It’s a business, so treat it like one. Before you get all fired up and spend 5k on domains, you have to start from the beginning. Domains are a business and as such require certain filings. Domains also carry potential taxable gains and/or losses. It’s best to consult your tax professional and see what recommendations they have for you. Keep in mind many accountants are still unsure on certain tax laws that may or may not apply to domains, so you may want to ask if they have any experience with domains. We may think of domains as an investment, like a stock or bond, but it’s widely considered to be inventory, so that may affect how you handle it as well.  Also, you never know what liability lurks in the dark. Having the good ole corporate veil between you and the complainant is very comforting, which will require filing for and maintaining a corporation. We’ve all heard of the guy sued by the trademark holder or for some other potential infraction, so don’t be ill prepared

I highly recommend you check out the Dot Investing Strategy page. We’ve listed some important principles you should incorporate into your own strategy. If you have questions or just want to bounce an idea of me, feel free to do so. You can email me at lee@dotinvesting.com.

Domaining, as it’s come to be called, is one of the most popular way of investing domains. Many people build large portfolio purely for the prospect of buying the domain at a premium. Typically, the premium is significant, 100x, 1000x, and even higher initially investments is not uncommon. This can even be broken down further, but this will suffice for now.

Parking domains was a common way of making passive income on your domain portfolio while you awaited domain buyers. It used to be very lucrative, but there has been a significant decline in parking revenues forcing people to new way of monetization. The inherent shortfall of parking is that direct type in traffic is really the only way to get traffic to the domain. This was due to click arbitrage whereby traffic is driven to the site from lower cost ad in hopes to get a higher payout when an ad was clicked. (Pay $0.05 for an add, get a $0.25 click, you make $0.20) This was eventually banned and is specifically in violation of pretty much every parking company’s Terms of Service (TOS).

Mini  site development has become a whole new industry within domains. Many people are realizing that domain parking and other minimal investment strategies have become insufficient. As a result many people are switching to keyword rich domains for “mini” site development. There have been a wave of individuals rushing to setup WordPress and like content management systems in order to provide usually 3-5 pages of unique content. Wrapped around the content are ads and affiliates in hopes to monetize the domains for effectively. By and large it is working and is a reasonably effective way of monetizing a domain. Also, by developing the domains there is a greater chance of selling the domain and getting a higher price.

Buying undervalued domains directly is an intimidating, but also a very effective way to profit in domains. There are many domain owners who have domains that are either underutilized or the owner lacks the understanding of its value. This creates huge opportunity for the calculated investor. It usually takes a bit of due diligence in the form of researching the domains history, but once you understand this it opens up a very valuable door. Domains with a history in the search engines provide its owner a great deal of benefit. It will be much easier to get indexed and it is possible it has deep backlinks that will create Google page rank and traffic to the site.

Expiring domains is another key component of the domain aftermarket. Buying expired domains can brings you many of the same benefits as buying existing domains from the current owner. Additionally, you can many times buy at a huge discount since end users usually don’t scan the lists as frequently as domain investors. Another common event is that the previous owner will want to buy the domain back as they may not have intentionally let the domain expire. I usually recommend to be reasonable with the owner. It’s not to say you shouldn’t make a good profit, but keep in perspective a 100% return on your money is better than most business and it usually many times more than that.

Full scale development is probably the least taken route of domain owners. The main reason, it’s EXTREMELY difficult. This requires being the visionary and having the ability to create it or have the ability to pay someone to bring it to life. If it’s not knowledge it’s usually cost that prohibits many from taking this step. If I impress anything on you its that this is surely the most difficult, but it is also the most gratifying. That said, all of you are experts at something. Whether it’s plumbing or advanced number theory, I want you to take that experience and make a website out of it, because I and many others want to hear from you. I promise you that is the case.

There are a few other areas that domains are utilized, but these are by far the most common.

Many new domain investors get themselves caught in the “domain lottery.” I call it this because of the perpetual phenomenon that occurs when some event happens and people rush to buy every possible version of the name, location, or other possible characteristic. There are certainly much better ways to invest your money.

It all starts with understanding the possible ways to make money through domains. If you don’t understand the full scope of what’s available to you, then you purely speculating. It’s not that speculation shouldn’t be a part of your portfolio, but by making educated purchases your domain venture will be much more successful. I’ll go more into this aspect in detail later on.