100,000 Domains Sold for $164 Million

miller60 writes "Here's a news item that puts some hard data on the domain typo millionaires post from a couple weeks back. Marchex Inc. just paid $164 million to buy Name Development Ltd., an obscure company that displays pay-per-click keyword ads on 100,000 domains. It's not a stock swap, either, as $155 million of that was in cash. The seller reportedly built the portfolio by scarfing up expiring domains (including hardware-update.com, previously owned by Microsoft and linked from within the Windows 2000 OS) and replacing the content with pay-per-click ads."

Comments

Price not surprising at all.

[bigtallmofo]

Do a Google search for "web traffic" and look at all the AdWord advertisements. Almost all of them are sites that buy expired domain names or common misspellings of domain names, and for the low-low price of $2 they'll send thousands of people to your web site via such domains.

Also, for anyone that has used the site... www.whatismyip.com was up for an EBay auction that ended at about 11:00 pm EST last night. Last I checked the bidding was $55,000. Not sure what it ultimately sold for.

Re:Price not surprising at all.

[WhatAmIDoingHere]

What's horrible is that the guy who sold it was given the site as directed by the pervious owner's Will. He died and left it to this guy who sold it. Isn't that nice?

$257,000.00

[Mz6]

Just cheked eBay and the final bid ended up at $257,000. Not bad for a site doing 3GB/day of bandwidth.

Re:So do all of these domains point to one subnet?

[mjfrazer]

careerinfo.com has address 83.138.187.18
rentguide.com has address 83.138.187.18
hardware-update.com has address 83.138.187.18

So, i'd say yes...

Re:So do all of these domains point to one subnet?

[Anonymous Coward]

suprise suprise its on rackspace servers, that domain provider has so many spammers on its networks its beyond a joke, perhaps rackspace are THE spammers front

83.138.128.0 - 83.138.191.255

How they do it?

[Civil_Disobedient]

Same thing happened to my old domain, but luckily I was able to snag one close enough not to matter. Still, you have to wonder about all the asshats holding on to "DorothyLSmith.com" or whatever. I guess they're in it for the long haul. In a way, it's like Old West stakeholders -- just stake your claim and you get the property rights forever and ever, providing you keep paying your taxes (registration). Forget to make a payment, and all the jackals come out of the woodwork.

They must be running some kind of automated system that spiders URLs, puts them in a database, then looks up the registration expiration date, puts that in the database. Then you just have a script running all the time. Sort the data in reverse chronological order by expiration date, then when the time comes, run a "register" script that attempts to automatically register the domain.

Thing is, this has to be extremely expensive. I guess the profit margins on people trying to buy back their domains is high enough to offset the loss of all the useless domains you purchase. You could mitigate the cost by going through the database and flagging URLs that don't look like they'd generate any profit.

This is basically your textbook definition of bottom-feeding.

Re:Haven't people learned about google?

[jaguar5150]

"Personally I even type "apple" in the google bar sometimes, its easier than www.apple.com"

Or you could save yourself even more time, by typing "apple" in the address bar and hitting "ctrl-enter"

(inserts the http://www.|whatever-you-typed|.com for you)

Works in IE and Firefox, not sure about the others.

Re:hope they bought title insurance

[ajs]

It's not illegal. At least not by default.

Where it becomes a problem is when you attempt to steal customers in this way. For example, you would be well within your right to put up a site called slashdot.info and have as the main page, "[ad] [ad] [ad] Sorry, you typed slashdot.info [ad] and you probably meant [ad] to type slashdot.org [ad] [ad] [ad]".

You are providing a (questionably useful) service ad deriving advertising from it. Trademark law allows for this. When, on the other hand, you put up a site that looks exactly like Slashdot.org with your own ad revenue, but is at slashdot.info, then Slashdot would have every right to sue.

Honestly, I'm at a loss to understand the anger here. Even if you don't tell the poor sap where to go, this just seems like a silly thing to get upset about. It's not at all a zero-sum game, so relax and take a deep breath.

Something is bogus about Marchex

[Animats]

This is all very strange. Marchex is a small company. In their last reporting quarter, they made only $144,000 on revenue of about $12 million. Then, suddenly, despite their lousy track record, they did an IPO for $222 million and got onto the NASDAQ National Market System.

With the revenue from this, they bought a collection of domain names of marginal value. It looks like they actually paid out only only $24.6 million on cash upfront for Name Development. And even that goes into escrow for 18 months. Name Development's income for 2004 was $4.6 million.

Name Development seems to be one guy operating out of the Virgin Islands who sold click-throughs to Yahoo:

• Name Development currently earns 100% of its revenue through the outsourcing of its pay-per-click listings to one major provider, Yahoo!

Marchex is the target of spyware/adware litigation:

• On February 3, 2005, we received notice of a purported class action complaint entitled Pagniello v. Cool Web Search, Enhance Interactive, Inc., Marchex, Inc., FindWhat.com Inc., Google Inc., Yahoo/Overture Search Engine Co., Microsmarts, LLC, STOPzilla, Inc., PC Tools Pty Ltd., eBlocs.com, and Network Dynamics Corporation, which was filed in the United States District Court for the Northern District of Georgia on January 24, 2005. The complaint alleges that the defendants have exploited web browsers and reconfigured his and others' computers by installing code on their computers without their approval or knowledge and seeks injunctive relief and damages. Based on our initial review of the complaint, we believe that we have meritorious defenses to these claims and intend to contest them vigorously. However, since the litigation is in a preliminary stage and any litigation is inherently uncertain, it is not feasible at this time to predict how this matter will proceed, what the ultimate outcome will be or whether an unfavorable outcome could have a material adverse impact on our business.

I don't see how this adds up to a company with a market cap of $761 million. This looks more like a dud dot-com.