Morning Folks!!
My JointVentures.com partner Danny
Welsh has got something to share today about the incongruity of the salary of
Babe Ruth versus the minimumleague salary today, and the maximum money
paid to the top guys in the majors today. Who was the better baseball player?
Does it matter? What’s it have to do with valuating the BEST domain names?
Every time YOU fill the stadium with people, how much are you paid? This was
one of the first posts Danny wrote but we’ve saved it for today, for a reason I
think will become clear soon enough.
Rick Schwartz
By Danny Welsh:
The PRICE paid to hire Babe Ruth vs Alex Rodriguez’s salary…and who owns the LEAGUE of a business full of players online?
My mentor Rick Schwartz has taught me that baseball salaries
over time are a great analogy to point to for valuing domain names, just like
Babe Ruth famously pointed into the stands predicting a home run shot. What
does it mean that in 2013 the *average*
salary per player in MLB is $3,200,000 US Dollars-- compared to the
highest annual salary EVER earned by the Great Bambino himself, the MVP of
his age in the 1930s, at $84,000 per year?
Can we chalk it up to “inflation”? Nope. Sorry, but if you
use this lens to explain the value of your best domain names that “inflation”
statement will be a weak answer that weak and/or dishonest people with an
agenda will resort to in attempting to refute YOUR assertion that the times
have changed not only in baseball but in all kinds of commerce as the world has
EVOLVED.
Today I’d like to talk more about how TRUE VALUE is
intrinsic, while “price” is variable with the times and how things unfold. Yes,
it’s the same line you’ve heard from me throughout this series of guest blog
posts Rick has allowed me to make— the truth savvy investors see shown again
and again through a different lens, and if my job is done properly with
each lens shown the bright and blinding truth Rick revealed to me will grow
more magnified as more and more folks in the domain universe “get it” and see
what Rick Schwartz saw long before I was a blip on the radar coming along to
simply articulate these truths we both see maybe a little better than he can.
In my inaugural guest post on RicksBlog I said I’d be
posting in the future to answer this question:
“When exactly in the
maturation of premium dot com category domain name values are we currently
experiencing in 2013 along the scale paralleled by premier baseball player
salaries, Babe Ruth's earning less than $1,000,000 over his entire
1914-1935 career or the $30,000,000 in salary paid for Alex Rodriguez in 2012
alone?”
You see, if we ignore the internet and “domain names” and
just look at the lens of commerce through the lens of just ONE
category/industry, is the BUSINESS of
“Baseball” more or less profitable in 2013 than in 1995? That was when
many of the best generic commercial and social domain names such as
Baseball.com for example were first hand registered by who I feel are some very
smart visionary entrepreneurs.
In case you missed the $250,000,000 contracts paid for a
single player, the “salary cap” attempts of some sports to create parity among
a rich ball-team owners’ game, the World Series ratings and TV commercials
bonanzas, billions and billions in merchandising and endorsements, or the 60,000
person baseball stadiums costing up to $1.5 BILLION to build according to
MLB.com (Yankees)…
That was a rhetorical question.
Of COURSE, the business of baseball
has become more profitable over the years.
The Chicago Cubs play in a stadium built in 1912, costing
$250,000. I love that stadium! Wrigley Field is the past history of baseball
wrapped up in all its splendor and tradition.
But the future of baseball as a business is more and more
going to be about merging tradition with MONEY. Money flows downhill to VALUE,
no matter what people want or believe. How many multiples is it from that $250K
1912 Chicago stadium to the $1,500,000,000 2012 New York Yankees stadium?
Let me do the math for you, since it’s probably really early
in the morning when Rick will be posting this blog post for everyone to read. J
The 2012 investment in a stadium was
6000x the 1912 investment in a stadium.
And those are BOTH buildings meant to accomplish the same
things…give people a place to SIT while they consume a company’s products.
There’s yet another “lens” through which you can see the
true value of a top-tier generic category-defining dot com domain name property
like Baseball.com, as an EXAMPLE.
The most valuable domain names like that one for the most part aren't
in the game at 2012’s Yankee Stadium. They're 'parked' in the lot
outside the stadium, selling hot dogs every day to passersby drawn by just the
HINT that a ball-game they want to see might be going on inside.
I’m not knocking domain parking as a way to make money.
Really, I’m not.
Many times these category-killer domain names make a LOT of
money, just as Rick’s Porno.com has made $1,000,000+ per year without effort or
work, parked and selling nickel-a-pop peep shows by the click to passersby that
more often than not will never come again.
(no pun intended)
But even with 7 figure earnings possible on the higher ends
of the spectrum for a single domain name…and with many other $xxx,xxx to
$xx,xxx,xxx VALUE domain names earning
$xxx-$xxx,xxx per year or whatever …STILL nobody I know thinks domain parking
is the BEST MONETIZATION strategy for a great domain name like that, do they?
Nope.
Just like nobody who gets “inside” after visiting a parked
domain thinks they got their ‘money’s worth’, even spending NOTHING as they
click-and-go elsewhere to find what they were looking for, do they?
We all KNOW that a truly great domain name DESERVES
something BETTER.
Truly great domain
names deserve to be
IN THE GAME and not in the parking lot.
So you witness the search for real, solid solutions by Rick
and others among “the 500” for many years.
The first innings of this game are over. The middle innings
are ending.
We’re in the 7th inning stretch of a 20 year plan
and a ball-game Rick Schwartz predicted how it would end…20 years ago, right
there in his virtual living room before the first strike-out of “.whatever” (of
which there will be MANY more in the coming years, littering the stadium of
business like discarded popcorn boxes filled with kernels of popcorn that were
sold and never POPPED).
So far as I can tell, the biggest “curve ball” Rick swung at
personally and missed was the .mobi fiasco…and he admitted that mistake when so
many self-promoters never tell you the bad, only the good. Personally, I like
that in a guy I’m doing business with. Don’t you?
TIMING IS KEY TO HIT THE FASTBALL OUT OF THE PARK.
A number of people
in the domain community have seen what Rick and I are doing with
JointVentures.com and have brought up this company or that company that has
“tried” domain leasing and failed. Others have been and will continue
to jump into the domain leasing game as we shake the bushes and demonstrate
deals (don’t be surprised to learn many of the domain investors the smaller
players all look up to have been doing this quietly for YEARS).
There may be many variables for the companies that FAILED to
“represent” domain leasing as brokers or 3rd party platforms, and
specific companies could have a most
important factor each for why they failed.
The biggest GENERAL reason if you ask me would be TIMING.
Same reason it doesn’t matter who was the BETTER player,
Babe Ruth or Alex Rodriguez.
It’s not comparing apples to apples, even when BOTH played
in the BIG APPLE of New York City.
Timing is what determined the difference in price of each player’s
salary, not the value of the player.
Hell, Rick himself fought an uphill battle early on trying
to get mainstream business owners to see the value of premium generic domains
in the 1990s. No one listened except for the adult entertainment people, and
Rick made them a lot of money.
The commercial business owners were being told by their
“webmaster” that a 10 digit numerical IP address was a perfectly good online
address for a website, and by their “advertising agency” that branding was more
important than sales.
Today, more and more they
know differently.
And they COVET what
“the 500” have, those of you who like Rick had the foresight to grab
Baseball.com level generic category-defining domain names before companies in
the mainstream had a clue.
They also COVET the best domain properties owned by select
other smart domain name owners—myself included-- to a significantly lesser
degree at THIS TIME-- but the next couple years TIMING and the movements made
in the market by “the 500” are pivotal in whether the end user businessman of
the future pays FULL VALUE to get what they covet ala Alex Rodriguez’s
salary…or “today’s price” in between Babe Ruth and that time in the future when
people will look back and say with disbelief “Baseball.com made HOW little
money per year?”
Rick and I predict that in the next 3 years these companies—
both established companies looking to increase their presence online and small
start-ups looking to get an edge over the competition— will continue striking
out with “.whatever” domains and we believe that it’ll become obvious VERY
quick that .com is here to stay and .whatever is the minor leagues for any REAL
business with REAL ambition.
Others will end up choosing to play only in the minor
leagues using made up words as their business name online, using hyphens and
numbers and modifiers like “My”, “The” ETC ETC cutesy little attempts to get
around the guy “sitting on the home-plate” of the very BEST generic domain name
they’d have and want if money was no object.
Many will build companies (and have) on domains they’ll want to
“truncate” and trade-up from a lead-off hitter to a CLEANUP BATTER.
Many will dislike the guy they see as blocking anyone from a
grand slam score without paying what they feel is an exorbitant sales cost to
get past…
But it only takes ONE
PLAYER IN EACH LEAGUE to see what we see, one business in each niche that knows
the true value of NICHE.com, and soon every great domain name that deserves to
be a part of a great business CAN be the MVP of a great business.
So long as that guy sitting on home-plate where
he knew everyone would want to be one day sets up a toll-booth instead of a
cash register because he REALIZES that one day he’ll be recognized as a
visionary business leader and not a “cyber squatter”.
So go ahead, we invite all businesses looking to do big
things online with either big ideas and talents OR big resources to point to
the fences and “call your shot”.
Hit a homerun, start-ups!
Hit a grand slam, established companies!
The more you win, the more we win.
Rick Schwartz and the 500 domain name league owners will be
waiting patiently at home-plate where the crowds are going to be showing up
daily no matter what else may happen in the next couple years.
Meet you there!
Danny Welsh
JointVentures.com
DomainShane
Great article but I would like to point out a few things. Baseball brought in 6.6 Billion dollars from Tv contracts and licensing. In Babe Ruth’s day it was in the hundreds of thousands. Major League Baseball has more ways that ever to monetize their players and that total is growing. Domains have buildout, park, or lease. Of which, the growth rate has been stagnant. I applaud you for adding one more form of monetization but for a domain value to grow it actually will require two things. Scarcity and the businesses that are going to be buying them have to be flourishing, or at least have the opinion that they will flourish with that domain. Just my opinion
John
The Sports Industry has collectively over years created and marketing a product that for the most part has become one of the largest industries in this country. The League, Owners, Advertisers, The Players, The Media all played apart in growing the industry. I don’t see the Domain Industry collectively working toward that goal with it’s current lineup of industry personnel. More education and ease of buying and selling names geared at the mainstream and end users needs to occur before we can begin to have a conversation about the domain industry having the riches of the sports industry or even the financial markets. When Someone pulls off a $100 million sale on just a domain name alone then the conversation begins …
Lawrence
Lately there has been a lot regarding, dot com, dot net, dot org and all the newer extensions like dot info, dot us etc. vs the newest round of coming extensions like dot eco etc.
That prompted me to do a survey last weekend in my City of Toronto, Canada.
My goal was to get 1500 people to complete a quick 1 minutes test.
I hired five students to help me accomplish the task, so each of us would need to get 250 completed. The students where from my Daughter,s class and submitted the results as part of their required Marketing assignment.
We went to a very busy, fairly upscale street called Bloor Street.
We asked people if they would take a quick”One minute Quiz regarding the Internet” for market research.
The Quiz page had a simple question with eight boxes to check. We received 1062 filled out Quiz over a period of approximately 6 hours.
Question:
Place a check beside any Internet address you know exists.
NOTE: Not all listed actually exist.
1) .org [ ]
2) .ca [ ]
3) .biz [ ]
4) .com [ ]
5) .eco [ ]
6) .net [ ]
7) .info[ ]
8) .free[ ]
Results:
1) .org [426]
2) .ca [1058]
3) .biz [36]
4) .com [1062]
5) .eco [134]
6) .net [1026]
7) .info[129]
8) .free[27]
Based on my unscientific, yet real results I can not see why more businesses are not using the .net extension. Clearly from my Quiz results, the public readily recognizes it.
The .org recognition would be higher in the USA where Government uses that extension. The Canadian Government uses the .ca.
It is also interesting that quite a few people thought that .eco existed, probably a guess on most peoples parts as it seems logical there probably is one for .eco.
Lawrence
Sorry for the typo (hired) should have read (had)
Danny Welsh
RE:”Great article”
Thank you, Shane. Rick tells me you’re a guy with ideas that many people listen to, so I’m going to objectively discuss my beliefs here in this forum where I have Rick’s blessing without attacking anyone. See if we can influence the INFLUENCER to see what we see. Fair enough?
RE:”But I would like to point out a few things. Baseball brought in 6.6 Billion dollars from Tv contracts and licensing. In Babe Ruth’s day it was in the hundreds of thousands. Major League Baseball has more ways that ever to monetize their players and that total is growing.”
Agreed. Which part of my post topically ABOUT the business of baseball growing more profitable over time did not give you the impression that I had *fully thought through* MY commentary and facts about…the business of baseball growing more profitable over time?
I used one EXAMPLE, and an example the end user can understand as easily as the domainer. Baseball is irrelevant to non-Baseball related domain names, other than a useful lens through which to make valuation metaphors like these here.
Business and profit for a given business category that is growing (not receding) over time, however, are NOT irrelevant to domain names that match that CATEGORY.com.
I could just as easily have written this same post about TIMING and the intrinsic VALUE of an example domain like say Artist.com viewed through the lens of artist Vincent van Gogh’s parallel, who IIRC died in poverty in the late 19th century despite his art in the 20th century having sold for more money than the GDP of entire countries.
More money probably than the top domain names so far combined, though I’d research that before saying so definitely.
And art is something that’s both business and tradition, too. Just like baseball. As well as an example for values the end user might”get” (idea: maybe we can do a blog piece on that parallel too).
No matter what the category of product or service, though…over time money increasingly flows to value.
What is the value of a Van Gogh in the 21st century?
Some artists’ work isn’t appreciated fully or valued appropriately until many years after they die.
In the information services economy we’re in today, YOU choose the price of your value offered to the world.
A talented sales guy can ply his trade dealing used jets from a big government to a small one and make millions, or sell printer cartridges on telemarketing cold calls. It is NOT skill that determines income for most players of any game. It’s the LEVEL OF GAME you play.
Domains in the coming years will be no different. The guarantee of daily pennies or the promise of a possibility for lifetime millions. YOU have the choice as does Rick Schwartz.
As a domain name owner of one or more of the very best masterpieces on the planet, which future would you choose if the power to choose your own destiny was in your own hands?
I assure you…it finally IS.
Danny Welsh
JointVentures.com
RaTHeaD
Mr. Cultra, what you’ve just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone on this site is now dumber for having listened to it.
Danny Welsh
RE:”Domains have buildout, park, or lease.”
As the value of the domain name goes up, so too do the uses. When applied to the very BEST of .com domain names in 2013, that’s a very simplistic view.
Sorry, the very BEST .com domains do NOT just have ‘build out park and lease’ and that’s the problem with how so many otherwise VERY smart domainers think about real BUSINESS outside the small circle of what we affectionately call ‘domaining’.
So I’ll assume you simply are generalizing (which can be useful at times, but in an attempt to communicate clearly generalizations hinder our ability to be PRECISE…and precision in the details is often the only difference between a $10,000 commodity and a $100,000 work of art. Just ask Maserati. Between a piece of junk 50 years from now and an antique that acquires premium pricing even when aged).
May I give a concrete example? For VistaPrint.com, the value as a domain itself NAKED and not paired with a business and branded name, is minimal. It’s a made up brand that don’t mean anything to Joe Consumer til a company spends effort and money to MAKE it mean something. The value of BusinessCards.com, however, is not dependent on anything external to continue going up. Not a cent of branding needed for a customer to know EXACTLY what they’ll find when they go there, and one day a SMART printing company that uses business cards as a loss leader to get the customer in the door will want to get BusinessCards.com as well as CheapBusinessCards.com and FreeBusinessCards.com.
One day in my lifetime I believe 80+% .com domains of that quality will belong to and/or be used by a category leader as things unfold. That day, clearly as you can see by visiting some of those domain names and then the first branded one, has not yet happened.
But it’s getting closer by the day and happening one deal after another, and some deals will go to a category end user company that later gets BOUGHT OUT by another end user bigger business that mostly will buy the company to GET the domain name. Advertising Expense? Ha! It’s an ASSET! :)
Many, many, MANY more uses for a top tier domain name than those simple answers alone.
Danny Welsh
JointVentures.com
UFO
Awareness of a gtld is one thing, actual remembering the correct URL and extension of an advert is another.
A follow up marketing exercise would be to give people a list of names with extensions as part of a series of adverts and then get them 1) To remember the URL and 2) See if they get the gtld right (Throw in some .net’s org’s etc with a weighting of 90% .com’s).
Also, getting customers to state their trust value in .com holders versus all the others.
Lawrence
UFO..All good ideas for a followup, next semester.