Moniker’s latest domain name auction is over and pulled in over $10M in domains. How can Moniker take it to the next level?
The past week has been a record-breaker for domain name company Moniker. Last Thursday it sold nearly $11M in domains in its live auction in New York. The silent auction ended yesterday with about $1.5M more in sales.
A lot of domainers think Moniker is getting rich off these auctions. I don’t think it is. The total commission from this auction was about $1.65M. Moniker then pays TRAFFIC’s organizers and the auctioneer. But that pales in comparison to the other expenses of organizing the auctions:
-Sifting through 60,000 domain submissions
-Setting up the back end technology for silent auction
-Managing over $20M in fund transfers ($10M in, $10M out)
-Handling transfers and escrow of hundreds of domains
-Taking on legal risks associated with the auctions
Moniker isn’t doing this for charity, but my point is no one should cry afoul that it’s getting rich. Moniker isn’t in this for $10M auctions. It’s in this for the next $20M auction, $30M auction, and $50M auction. That’s when the company will start cashing in. And that’s just around the corner.
How can Moniker boost the auctions to that level? Here are some ideas to improve the auctions:
1. Limit the live auction to 2 1/2 hours. I saw a number of people who spent a quarter million or so leave the auction early. It was just too long. There are a couple ways to shorten the live auction. First, reduce the number of domains from over 200 to perhaps 160-170. Second, make the bid increments larger. There were countless auctions that received a dozen bids in $1,000 increments. At some point you need to lower the increments, but it was excruciating to sit through some of the lots.
2. Reduce the silent auction inventory to 1,000 domains. Moniker is in a tight spot on this one. On one hand, their customers get frustrated if all of their domains are rejected for the auction. On the other, buyers get frustrated sifting through so many junk domains. I’m sure I missed some good domains in the silent auction because I was sorting through so many bad ones. The silent auction should be limited to .com, .net, .org, and perhaps a few other extensions if they are great domains. But .ws? I own some good .ws domains. Believe me, they aren’t worthy of this auction. By reducing the number of domains at auction Moniker will actually boost the number and prices of domains sold.
3. Reward past sellers for successful auctions. Sellers can argue all day that they set reasonable reserves for domains. But past history tells the story. When selecting domains for auction, Moniker should look at the seller’s past submissions and how they did at the auction. For example, 3 of the 5 domains I had in yesterday’s silent auction sold. That means they had reasonable reserves and were good domains.
4. Create an added mechanism for getting domains into the live auction. Many of the domains that sold in the silent auction would have sold for double in the live auction. That’s how auction fever works. I’d be willing to pay a greater commission or offer lower reserves for domains that are accepted for the live auction. Some of the domains that had no reserve in the live auction ended up selling for $10,000-$25,000. If they would have been in the silent auction they would have sold for much less.
5. Pre-sell high dollar domains to large companies. Let’s face it, the corporations weren’t at TRAFFIC buying domains. Sure, a couple probably buyers were end users, but the majority went to domain investors. If Moniker can get a few corporations to send in advance bids then it can ramp up big ticket sales.
6. Eliminate absentee fees for big buyers. The $500 absentee fee for this auction was applied to any purchase. But if a big bidder wants to place an absentee bid, why make them jump through any sort of hoops? If an absentee leaves a bid of $20,000 or higher, don’t charge them a fee. Even if they don’t end up getting a domain, they’ve pushed prices higher.
7. Eliminate any appearance of conflict of interest or shill bidding. There was some talk after the auction of shill bidding. This means that people bid on domains to boost their prices with no intention of buying. This can be done a couple ways. First, someone could jump into a bidding war on a friend’s domain to bump it up. Second, someone could bid on a domain below the reserve to get it close to the reserve to create a bidding frenzy or to create excitement. Of the $60M+ of unsold bids during the live auction, how many of them were real? The reserve categories were stated. If a domain had a reserve of $5M-$10M, there was no danger of bidding $4M just for fun, even if you had no intention of buying the domain. One buyer even suggested that .mobi fans were bidding up domains close to the reserve just to prop up the image that .mobi had value. Perhaps Moniker could sprinkle in some “fake reserves” so that people are always at risk of buying domains they bid on, even if it appears they’re well below the reserve.
The second issue here is that anyone who has a financial interest in the overall auction shouldn’t be able to bid. I’m not talking about sellers, but anyone who gets a cut of the fees from the auction.
Are these really issues? Was there really shill bidding? It doesn’t matter if there was or not; what matters is that there was an appearance that this was going on. That’s what matters to buyers. Proving one way or another is difficult.
Perhaps Monte should provide a legal warning before the auction begins.
8. Keep doing things right. With seven suggestions for how to make the auctions better, you might think I’m unhappy with Moniker’s auctions. On the contrary, I believe they’re doing an incredible job. This auction included phone bidding, which helped drive up prices. There’s also a good mix of domains, from 4 figures to 7 figures. That keeps all of us interested regardless of spending ability.
Moniker is transforming this industry. I’ll be the first to pat the company on the back when it sells $25M at an auction and starts rolling in the dough. It deserves it.
Robert Haastrup-Timmi says
Moniker did very well at this Auction and congratulations to them. However the remarks or perspectives by domainers is suprisingly parochial to say the least. This industry has a very long way to go indeed. I mean there are about 120 million domains out there and my guess is over 50% are pretty much doing nothing in a very illiquid market. What should happen is for other bold auctioneers to enter the fray, like the art market of which I’m quite fond of, you have Sotheby’s and Christies as the main global auctioneers with offices in New York, London, Paris and other major cities worldwide. These auctioneers hold auctions every month in different art genres e.g modern art, african art, old masters and so on. What Moniker ought to be looking at is auctions for .com, .mobi and perhaps international extensions like .cn, .co.uk .de etc bunched together in a seperate auction. I’m extremely suprised Sedo or Afternic have not entered the live auction market, it almost feels like alot of these people have a lot of money but no long term strategy to exploit the opportunities in this huge industry. Finally what will eventually bring liquidity to this industry is the full development of a Domain Stock Exchange that will provide liquidity and bring this market to the common denominator. After all everyone can trade cars, property stocks and even art…but domains is just highly speculative game at the moment until some real common sense liquidity comes to this market. It makes absolutely no sense to have 120 million domains with hardly anywhere to go, therefore this industry is extremely vunerable. I sold one domain at this auction which feels quite nice, but we need to have auctions taking place every month in different locations by different players. Right now all our eggs is in one basket! I have the blue print to develop DomainShareExchange.com if there are any interested investors out there willing to take the plunge, then please contact me.
Cheers!
Editor says
Robert, I think we’ll see more companies get into the live auction game. Domain Roundtable is coming up this August and I know it will include an Auction (although I’m not sure who will run it). Sedo’s purchase of GreatDomains means it will run a web-based auction once a month, and there’s no reason this can’t eventually be a live auction to coincide with a certain event.
Robert Haastrup-Timmi says
That’s good news! I’m confident we shall see more momentum one way or the other going forward.
Rob Chandler says
Very good points and ideas by both the editor and Robert. There needs to be professionalism and additional players in future DN auctions in order for others to take the DN industry seriously and hence keep it growing.
Rob
Scott Neuman says
Moniker did a great job. I was suprised some of my better names were not in the auction but autoclassifieds.com and printercartridge.com were and autoclassifieds.com got higher bids this time around over Las Vegas.
Scott Neuman says
One more thing, I’d like to see Moniker set up the silent auctions so that you can see the bids. I don’t like Silent auctions. But as they get bids you can see, the clock would keep ticking for an additional 5 minutes to allow overbids. Scott Neuman http://www.recordweb.com
Harry says
Here are my suggestions for the Silent-Auction:
I had two domains at the Live-Auction: laptop.net sold for 40k, and for pda.net I´ve got an offer for 25k. My “min. take home price” was 25k, but the domain was not sold because the minimum sale price was $29,412.- (including 15% fee). Without the 15% fee my “min. take home price” and the price for the bidder would match. During Live-Auction I had no chance to lower the “min. take home price” because I´ve not attended the auction. That means everybody lost. I lost because I´ve not sold the domain, Moniker lost because they have not got the 15% commission, and the bidder lost because he has not bought the domain.
We could improve this system if we could transport this last bid (25k) to the Silent Auction as the first silent bid and the domain-owner has the chance to say until the end of the silent auction that this bid should be the new min. sale price – that means that it should be possible to lower my “min. take home price” to fit the highest bid from the Live-Auction.
This new system would result that the bidder from the live-auction could get the domain after the silent-auction for 25k, Moniker could receiver 15% commision and I get a little bit lower take home price as I selected. All parties could win with this new system – now all parties lost.
A lot of domains got a very high bid during Live-Auction but did´nt sold because the min. sale price was too high. With the new system it would be possible to sell a lot of more domains in the Silent auction if you just set the highest bid from the Live-Auction to the lowest sale price for the Silent-Auction if the domain owner would accept this.
Andrew says
Harry, good idea. The only problem I see is that when someone in the live auction doesn’t get a domain, he can reallocate that budget to other domains in the live auction. If he found out later that 5 of his bids that didn’t meet the reserve were accepted, he might not have the budget to buy them.
Generally, if a bid is within 10% of the reserve (with commission), Moniker will go ahead and accept it.
Harry says
I understand what you mean, but you can solve this problem if you ask the bidder if he is willing to accept his latest price for the silent auction. Probably some people are only interested in one domain and don´t want to bid for another domain.
For pda.net the problem was, that my take home price was exactly the same price as the bidder was willing to pay. The next time, perhaps I have more luck.
Andrew says
Harry, good idea. The auctioneer would just have to get the paddle number of the last bidder. Granted, Moniker may have another suggestion: If you were willing to take $25k before fees, you should have lowered your reserve 🙂
Congrats on your sale of laptop.net. If I recall correctly, this auction was moved up in the order during the auction. Perhaps a bidder had to leave but was interested in the name, and Moniker bumped it up so he could bid on it.