WSJ Blog Rips Buyer Of Color.com: “We Expect That Domain Names Will Be Taken. We Just Don’t Care About Them Anymore”

In a blog post today the on WSJ.com, they rip into the buyer of color.com and colour.com who spent $500K to obtain both domains:

“The founding team, regardless of their previous successes are showing a general lack of creativity and a misunderstanding of the marketplace in which we currently live.”

“This is evident most clearly in the fact that they paid $350,000 for the domain name color.com and another $150,000 for the domain name colour.com. That’s right, half a million dollars for two domain names.”

“It’s 2011 where people know, understand, and expect that domain names will be taken. We just don’t care about them anymore, and if your product is awesome we’re able to find it.”

“I just registered two domain names over at GoDaddy: http://mycolorapp.com and http://mycolourapp.com. I paid $24.37, including tax, for both of them.”

“Are we really to believe that color.com and colour.com justify spending an extra $499,975.63?”

Interesting.

So following the advice of the author a company raises $41 million and then should go out and hang register a domain for $24.37, a domain like mycolorapp.com.

How many people would remember the product as mycolor.com or colorapp.com and what if another company came along and did buy color for $350K and had a different app or a competing product , how much traffic would mycolorapp lose over the next 10 years to color.com?

A lot.

How many sales would be lost.

A Lot.

Moreover how much FREE publicity has the buyers of color.com received from their purchase?

A ton.

A quick check of the Google news feed or color.com found around 500 articles written about the purchase of the domain, the app, the company.

What is a story in Google news worth on average?

$500? each $250 each $1,000 each?

If there is a number that can be attached to the number of Twitter followers and Facebook Likes there is  certainly is a number that can be placed on stories published about a product, about a company.

Of course not just publications like “john’s blog” wrote about the purchase and app, but TechCrunch.com and WSJ covered it too.

There is an  old expression when it comes to getting a lot of press to cover your story that goes something like

“you can’t buy that kind of good coverage”

But in 2011 you can.

You just can’t get it by spending $24.37 at Godaddy.

Yes its 2011 and the best expenditure that company will ever make is the  1% of funding they just shelled out to buy the domains they will do business under forever.

 

 

 

Comments

  1. Josh says

    “The founding team, regardless of their previous successes are showing a general lack of creativity and a misunderstanding of the marketplace in which we currently live.”

    Ironic.

  2. .com says

    There is a reason that the WSJ blogger is writing about other people doing stuff rather than doing it on his/her own.

    As MB says, this will be the best $500K the company spends. That is not to say the domain name alone will lead to the company’s success. Ultimately, that will be determined by the quality of the company’s offerings. The branding value of the name will more than pay for itself while the name, of course, will retain (and, almost surely, rise) its value.

  3. MHB says

    Kevin

    Understood but when an author cites an article and by saying:

    “A great post by Andrew Wicklander on Project Idealism draws attention to some of the worrying things this project revealed, and perhaps gives some evidence to counter the suggestion that you can never be too rich.”

    Then the author of the WSJ post says he agrees with everything in the post, by ending the post in his own words:

    “”have the investors in Color made exactly the wrong move? If lashing out half a million dollars on the domain names is anything to go by, it would appear so.”

    So if you publish another’s words and then basically says I agree 100% with what the guy said and he said it better than I could, then the author is saying it too.

  4. says

    Venture Capital firms rarely throw money around anymore and not have a hand in where the money is going. I have no doubt the VC’s knew this $500k was going to acquire these domains and were smart enough to understand why it was a smart use of the capital.

    They made a wise decision. If this company didn’t work out…what is color.com worth to a hair care company that manufacturers mens and womens hair coloring products? At least what they paid for them and probably more.

    This wasn’t a case of wasteful spending…it was simply a case of founders and investors who understood the power of generic domain names and the power they have in the marketplace.

    Now, this guy spending about 37% more for his hand registrations at GD than he could have if he knew how to buy them…that is a waste.

  5. .com says

    Just because I find the blogger’s comment annoying, I think it would be awesome if the Color.com people go after him in a WIPO action since it is pretty clear based on the content/tone of the article that the name was registered in response to Color.com. That could be enough to suggest bad faith.

  6. Your Wrong says

    @MHB who says

    “There is an old expression when it comes to getting a lot of press to cover your story that goes something like

    “you can’t buy that kind of good coverage”

    But in 2011 you can.

    You just can’t get it by spending $24.37 at Godaddy”

    Sorry Mike, you are WRONG. The proof lies in your own words. You and many other blogs, news outlets are mentioning the $24 dollar domain purchase along with the 500K purchase which means that they are getting just as much exposure for 1/210000th of the price. Not to suggest that alone will sustain them but if you think the exposure they got fro 500K was worth it then getting that same exposure for 20 bucks is well, PRICELESS

  7. SL says

    Remember that WSJ is owned by Newscorp. The same company that took a bath on Myspace (by letting it languish). And thought that a highly restrictive paywall on their UK content wouldn’t drop their traffic by 90%+. Guess what, it did. Duh.

    Murdoch and crew are clueless and only equally clueless and irrelevant old people consume their content (Daily News, Fox News, etc.)

    Bottom line is that buying colo(u)r.com was a good business decision.

  8. Alex A says

    What is $500K to a well-funded company? What’s the total yearly salaries of just 4-5 engineers? Seriously, $500K is chump change. Just because most people in the world don’t have that lying around, and therefore think it may be an “obscene” amount to pay for “just a name,” doesn’t mean there are some out there who don’t. And those same companies also don’t think it’s a lot of money when compared to what they spend on normal business operating expenses like employee salaries/benefits, building leases/purchases, equipment and utility costs, etc. Those things are far more expensive, so why settle for a second or third-rate name at a cheap price?

    If you have a good domain, don’t be afraid to price it accordingly. At the very least, pricing higher gives you room to negotiate, if you’re desperate to sell. Pricing low doesn’t.

  9. LS Morgan says

    Domainers drastically overestimate the importance of domain names.
    The public drastically underestimates their value in marketing.

    It’s true that so many of them “don’t get it” when they think whatever they can register at Godaddy is comprable to what costs a great deal of money on the aftermarket.

    Conversely, so many domainers are a million miles off base when they asses all eCommerce situations as beginning at the domain name and going from there. It’s like judging an entire car based on the color of its electrical wiring.

  10. John says

    So you registered mycolorapp.com, who owns colorapp.com? as color.com, and colorapp.com are both cloaked under domainsbyproxy, and colorapp.com shows 1 offer on the name recently?

  11. Rocker says

    Color is the light of life, it is everywhere to purchase two spellings of the name for $500K, is a great deal, and instant boost to any company. The people who thought domains were a waste for $100 in 1995, are the same fools who say $500K is a waste now, they will just never get it. Sad but true.

  12. says

    “The people who thought domains were a waste for $100 in 1995, are the same fools who say $500K is a waste now, they will just never get it.”
    ===

    For people who really understand DNS & how things work, it is hard to imagine anyone (no matter how wealthy) writing a check for $500,000 for access to a CLOUD-based Registrar-Registry system that has serious stability, short-term and long-term.

    It would be like paying $500,000 for a Floating.RAFT in a scenic harbor in Japan near a nuclear reactor and calling that RAFT a YACHT.

    Compare that to buying a domain you hold in your hand.

  13. says

    “it is hard to imagine anyone (no matter how wealthy) writing a check for $500,000 for access to a CLOUD-based Registrar-Registry system”
    ===

    By the way, there ARE people in the world who doubt that Domainers are Real.
    People wonder if “The Registry Cabal” has made up Domainers and sales to inflate fake markets.

    The Registry Cabal has such a tight control on the “Juicing of the Market” that skeptical people would wonder if they also control the Spin Machines which could prove to be fake.

    Bernie Madoff claims: “Everyone had to know”

  14. says

    writing a check for $500,000 for access to a CLOUD-based Registrar-Registry system that has serious stability, short-term and long-term.
    ===
    writing a check for $500,000 for access to a CLOUD-based Registrar-Registry system that has serious stability CONCERNS , short-term and long-term.

    Writing a $185,000 check for vaporGTLDs would be equally foolish.

    Spending $12,000,000 on a .XXX “Industry” ?….Price-Less

  15. Aggro says

    @ LS Morgan

    ************************************************************
    Domainers drastically overestimate the importance of domain names.
    The public drastically underestimates their value in marketing.
    ************************************************************

    DON’T FORGET: Domainers have never let the facts get in the way of a good fantasy.

    Problem is, domainers ALWAYS utilise the “Irishman’s fallacy” to further their agenda:
    If the website succeeds, it’s because of the domain name.
    If it fails, well, it was something else..

  16. Tom says

    How is it that a $100 domain registered in 1995, has paid for my house, cars, lifestyle, and continues to do so, if it is all mist, how do I continue to pull in 7 figure pay checks a year?

    Ask yourself how many hours a day you, your kids spend on a computer, doing what they do, clicking, going, seeing, living online, face it, domains are the engine that drive the internet.

    You can speak out of your ass all you want, I am living it.

  17. says

    “How is it that a $100 domain registered in 1995, has paid for my house, cars, lifestyle, and continues to do so, if it is all mist, how do I continue to pull in 7 figure pay checks a year?”
    ==============================

    Why is that the Main-Stream Press and/or FORBES does not catch on to this population of Zillionaires and showcase them each year ?

    Is the Domainer King-Pin Industry really about 50 people ? (too small to matter?)

    Are the Domain High-Rollers selling $500,000 domains like cotton-candy aware of something normal people can’t seem to ever see ? (even real estate experts)

    Why is it that people with what appear to be really cool domains can’t get more than $50 on an auction site, yet some special club takes the same domains and flips them for $500,000 ? Are the buyers channeled like diamond markets?

  18. Tom says

    My domains are generic, and they are built out, no need to name then don’t need a bunch of whois monkeys trying to emulate what I have done. It is not hard people, anyone can do it, but with the right domain it just makes it easier.

    People like the biglie are always to afraid to go out there, put their neck on the link, so what if you lose, you will gain experience, do not let naysayers keep you from expressing your thoughts.

    They are just mad, like the rest, they were late to the feast, and still to this day, they are simply, older, fatter, and a lot more lamer.

  19. says

    “My domains are generic, and they are built out, no need to name then don’t need a bunch of whois monkeys trying to emulate what I have done.”
    ====

    Don’t worry, the Internet is filled with PPC and eBOOK offerings to tell people the details about how to “Make Money While You Sleep”. Traffic Traffic Traffic

    Unfortunately, people who try it come away with 76 cents for their annual fortune.

    When they deduct the 76 cents from the $99 eBook and the thousands of hours invested, they come up disappointed.

    Many conclude, there must be an element of luck. Others conclude there is a lot of hype. A very few conclude the Registry Cabal fabricates the markets.

  20. says

    “It’s 2011 where people know, understand, and expect that domain names will be taken. We just don’t care about them anymore, and if your product is awesome we’re able to find it.”
    ====
    “It’s 2011 where people know, understand, and expect that domain names will be BRANDS …if your product is awesome …you will have your own BRAND…as part of the product”

    .TRUMP

  21. Louise says

    Good article! Persuasive logic in favor of investing in a great domain name! MOST brands benefit from that direction! Only there are a couple of exceptions – and I mean, only a COUPLE! – Google being one, and Flickr being another one, that I’m sure did better from a misspell. Google is a misspell of Googol – that’s what the founders were aiming for, and they didn’t know better, and built their brand on a misspell, but noone knows the difference, and it became a verb, to Google someone, so it is fine, and Flickr has more punch dropping the “e,” IMO. It’s shorter and quicker, like a flicker of light: Flickr. Plus, the artists did a dynamite job with the red R at the end of the logo, to imprint it on your memory. I viewed Flickr online before I heard the name. Outside of those two, there are likely many great examples where the investment would have made the difference in the branding, but we don’t hear about them, because we don’t know their name.

  22. says

    wsj totally miss the point, it’s not about the name it’s about the massive ammounts of traffic these domains already get. He show general miss-understanding of HIS marketplace. Fool. Utter fool.

  23. ioctl says

    it’s painful to see old organisations with such strong reutations so absolutely clueless.

    why does wsj have *blogs*? these “bloggers” are churning out absolute garbage. it just degrades the reputation of the publication they ostensibly represent.

    why are these publications starting their own url shortening services?

    it just looks silly to see them imitating every new trend, when clearly they do not know what they’re doing.

    why does every website have a facebook and a twitter button and promote this “like” nonsense?

    if in the opinion of the journal (it’s sad to think these “bloggers” represent the wsj), domains are not smart investments, then why are they giving attention to them?

    surely there must be other more worthy investments to cover.

    the internet is not radio and it’s not tv. it’s more like millions of monkeys tapping away at typewriters. as the meme goes, eventually they may produce the complete works of shakespeare. some otherwise capable investors will just refuse to get involved with domains until that point, until there is some sort of order to all this, until things start to “make sense”. meanwhile, others who have invested in domains are doing quite well, in spite (or perhaps because) of the chaos. that’s “domaining” in a nutshell. it doesn’t have to make sense. it just works.

    if you don’t understand it, then just ignore it.

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