It’s been over 10 months since Rick Schwartz has sat down and written his thoughts on domaining. I contacted Rick to ask him if he was up for an interview and he graciously obliged. Below is what I consider a post to bookmark and read a couple times over.
I wanted to touch upon China, Parking, and the new gtld program. The last question will hopefully be a big help for new investors entering the industry.
In the following 5,000 plus words Rick talks about .web and why he thinks it’s the only extension that could possibly challenge .com. He talks about a $10,000 offer on a 2016 .us hand registration, and a whole lot more.
1) How has retirement been treating you ? Do you spend time each day on domaining related activities ?
I actually retired in 1998. I came out of retirement to do TRAFFIC in 2004. I did that for 10 years. It took a lot of time, dedication, effort and work, but I loved trying to move the space forward. It was in my best interest and it was in everyone else’s best interest as well.
So my life today is not much different from how it’s been for the last 18 years. Other than all that time that I used to devote to the show, it’s now time that I just got to do what I normally do. Eating, cruising and enjoying life. Life IS short! And of course my domain hobby.
I mean habit. I mean disorder. I mean addiction. I mean disease. I mean, I am a recovering domainer that has a bad habit of falling off the wagon with every passing word seeing if a .com would be meaningful..
If you dissect the 24 hours of the day you will realize that most people only have 0 to 3 hours a day to enjoy. The only reason that I worked so hard then, was that I would have the entire day to enjoy now. And my enjoyment is having to be nowhere at no time with no commitments and no obligations. NONE!
Domains are in my blood. It’s a 24/7 adventure. My ears are always open for new phrases or anything else that could be a domain name.
This year has been very satisfying. I bought a number of domains in my sweet spot which is around $2000. Great domain names, names that can be worth six and seven figures. Names with meaning.
I also had registered nearly 200 domain names this year. I started buying political domain names very early on back in the 90’s. Most of them have not done that well, mostly because it’s really taken until now for politicians to completely embrace the Internet.
And for those that don’t believe you can still get type in traffic from hand registered domain names, they are just dead wrong. Even today I register domain names and the next day I look and I have type in traffic. Sometimes it lasts, sometimes it evaporates. But don’t ever think human nature is going to turn the switch off. I’ve been telling folks for 20 years that type ins validate a domain name. It’s not everything, but ZERO is tough to work with.
2) One area that got hot after you stepped away, and has now since cooled was the Chip phenomenon. What do you see ahead for those invested in domains that rely solely on Chinese demand ?
This is business baby. These are markets. Markets go up, they go down, they go sideways, they live and they die. The key is to make hay when the sun shines. And that saying is true no matter what industry you are in. Now or ever! Yes, there are sectors inside the Chinese market that are a bubble, it’s pretty easy to see.
Many domain investors are always chasing shiny objects. They see someone sell a domain for big bucks or even a modest amount and they start registering all kinds of domain names that they think are similar, but in fact have no relationship or even value whatsoever.
That is how bubbles develop.
The Chinese market is just like any other market. The vastness and how quickly it developed was a gift from the heavens. What happens in the future? We will see. It is far from dead and it may be a Pigeon Shit Bubble. The dollars are real regardless and with 4x as many folks as the USA, that may mean 4X as many fools as well as opportunity.
In other sectors like NNN.com domain names, there is no bubble. Those domain names have been increasing steadily for 15 years not overnight. Yes they had a nice pop in the last couple of years, and even with those domains going down slightly it’s still one hell of a market.
I bought my NNN.com domains for $100. They peaked at a $1MM valuation in 2014-2015. But even with the slide, I get offers all the time for $350,000-$500,000. That is not a bubble, that is just a weaker market. Here’s a tip: DON’T SELL DURING WEAK MARKETS!! Buyers want you to the fear the future. Knowing the difference between a dip, a bust, a crash and a bubble helps a lot.
More importantly, knowing the difference between valuable diamonds and worthless broken glass is something the vast majority of “Domainers” have yet to achieve. Many will be caught holding the bag because they got caught up in a frenzy. Quality will survive even in a weak market. That determines what is truly premium.
Folks want to make their fortunes like others have, but they leap too fast and too hard. The Tulip bulb crash happened nearly 400 years ago. I have met way too many domainers and others in business that are not familiar with this story and they always seem to have to learn the hard way by ignoring history.
The Chips market is not dead. What is dead are the domains that were mismarked as “Premium” that may belong in the “Pigeon Shit” pile. Downturns have a way of shaking things out.
3) The new gtld program has been a source of division for many in the domaining community, have you purchased any, and what are your thoughts on where new gtld’s are going ?
The GTLD question has never been an easy question nor is it an easy answer regardless of what many lead you to believe or want you to believe or need you to believe.
I started writing about them a year or more before it was popular to do that. I was wrestling with their viability early on. I wanted to be on record. Clearly on the record! It was obvious that many were over estimating the potential numbers and the demand and they were not very accommodating when being challenged. In sales you overcome the objection, you don’t call your potential customer an idiot for questioning things that should be questioned. That thin skin was my first read flag. It’s born from weakness not strength.
When I look down a road and consider a business opportunity, my time horizon is 3 years to start. Where is it in 3 years ? Right path ? Wrong path ? What success should look like after that time. The trajectory for the next 3 years after that. By the 5 year mark it almost always reveals itself in whole and maybe in the hole.
As things developed I would post updated articles on my blog and as I look back at the two latest posts, which are the “Rick Schwartz Equation” and my “20th Anniversary Post” (part two) these posts really do sum it up. And of course there is Schwartz VS Schilling from 2013. That was an epic discussion of GTLD’s. I have not watched it since it was recorded but I plan to watch it as we approach the 3 year mark.
Believe me, nobody got it 100% right. We all come up with assumptions and conclusions. Time is the true validator. The one thing I remember most is the debate with .Kiwi and how many registrations they would get. I seem to remember it was several million. 3 YEARS later, they have barely broken 10,000. I am a numbers guy and 3 million registrations for a tiny sliver of the population was absurd. I wished them luck, but in my eyes they were dreaming, there is nothing wrong with dreaming. Buying into somebody else’s dream is what this entire debate is about. At this pace they will reach the 3 million mark in 900 years!
Now the number of domains registered may have no bearing on domain value. Then again…….
What could have impact is utilization and by whom and for what. But until you see many millions and the billions of dollars spent on TV ads, even utilization won’t move the needle. You need a massive spend and that will be for just ONE GTLD.
If you added up all the .com advertising in just one day in the world, the numbers would be staggering. All together there has never been more money spent branding one item (dot com) in the history of man. Not even close !
Chances are not one new GTLD will see that one day spend in the lifetime of that extension. Anyone want to place a bet on .Horse?
The keywords I have used are consolidation, collapse, die on the vine. No need. No want. No desire. No value. I used those words YEARS ago. Now you see just how those words fit.
I’ve been in sales for nearly half a century (ouch) and I think I have a pretty good handle on marketing. I just believe it’s too much, too fast and the demand at the end user level is mostly defensive mostly registrations as opposed to what is being utilized.
So between the names that have been held back and the defensive registrations, there really isn’t much left that has meaning. It’s all about meaning. They suffocated their own markets too early. They did not follow the .com success playbook.
So many extensions are either ass backwards or the availability of meaningful domain strings are limited. If there was a .Best, Best.Lawyer may make sense and have some value. Lawyer.Best makes no sense and has no value.
So I do go out and register GTLD’s at times but I have never focused really on a specific extension. I have focused more on something that fits naturally. I address that further in question #5.
I think people only look at half the equation ignore the other half of the equation at their own peril. So let’s say you spent the last two or three years strictly focusing on the Niche GTLD extensions, all day everyday.. Well in most cases you’ve lost your ass. You can’t afford to hold onto the registrations propelled by the earnings of the other ones that you have bought.
If you were to ask yourself what if I had spent those years just focusing on the tried-and-true .com extension ? Turning them into making more and more money and then every once in a while grabbing a GTLD, I am sure you would be in much better shape.
And that has allowed me to grab some bargains. Bargains that in another time would not be available, nor would it be available at the prices I paid for them. And of course I still hand register most of my domain names for eight bucks. I try to be on the cutting edge. And I admit it is like playing the lottery many times. And what’s wrong with that? That’s a damn good lottery. I just prefer the .com lottery because it pays much better, it pays much faster, it pays much higher and I see it as much less risk.
In sales you only have one chance to make a first impression. And a lot of those first impressions have now been made. There are a lot of dead extensions laying around.
There are very few new registrations. The natural combinations are very limited. And worst of all in many cases the keyword is on the wrong side of the dot. Will the top 10 GTLD’s now be the same in 3 years from now? I doubt it. There will be an avalanche of drops.
Some that appear strong may get weak when the largest players realize they can’t make it with the thousands and thousands they registered. Those renewals can be financially painful. Folks have to decide if that is the BEST use of their hard earned money or to double down each and every year.
Some say the right side of the dot, some say the left side of the dot. I think most of the GTLD’s have just been on the wrong side of the dot with limited meaningful strings.
My views still stand and common sense still says there will only be a few of those GTLD’s that may have meaning in our future and there will be lots of.mobi counterparts. Those counterparts like .Horse and HUNDREDS of others will never ever do the business that .mobi has done and most domain investors agree that .mobi is the worst extension investing wise that you can get. But the new king of course is .Horse. But even worse, as I write this I count 125 extensions that are doing even less than .Horse!
And then we have to ask an important question… Are the best days of the GTLD’s behind us.? I think for the extensions that are coming out that are weak their party is over before they begin. On the other hand there are extensions that could have meaning.
.Web is obviously the biggest choice with many possibilities..Blog has been doing well and will find a place in the ecosystem. But without heavy duty advertising it’s never going to happen for the majority of the extensions. Most of them are meaningless to begin with and are going to die on the vine as I have said for a very long time. Now that you look back you can see that my words match the reality a lot closer than many of the others. Just look at all the ones that are just dead. DEAD! Others are hemorrhaging in non-renewals and others will soon fall to a similar fate. Sorry, but it was all so predictable and so I did!
There isn’t any extension that I dream about at night and say well if I could have this or that one I would be very happy and blah blah blah. Not a one. On the other hand, if any extension has any shot at all it will be .web in my opinion.. Either one or two things will happen when .Web comes out. It will either suck all the oxygen out of the room and those other GLTD’s will start to collapse or it will breathe new life into them. I believe it will suck the oxygen out.
I believe .Web will suck all the oxygen out of the room and I believe a lot of domain investors that are weak financially won’t be able to participate in that game at all. I wrote many times that the big winner for the GTLD’s may not be a GTLD. I am on record as saying it gives folks another reason to take a look at .net, .org, .TV, .info and others BEFORE you get to the new extensions. You have seen dot net prices go up, not down.
I am also on record as saying that I am going to keep my powder dry, wait for the dust to settle, wait for the handful of extensions that could be meaningful to emerge and then go from there. I am sure many a domain investor would trade all their GTLD’s today for the CASH they paid and call it a day.
The majority of registrars and some of the registries will do fine. Domain investors not so much.
If you go look at my post from years ago now you will see one key word. That word is “Consolidation”. Before they took their first registration I could see how many of them would be consolidated by others because on their own they would not have the legs or the strength or the ability to survive. Consolidation is here and there will be much more of it coming. There is no escaping it. There are hundreds of very weak extensions that cannot support themselves.
.Webcam that had 97,000 registrations is now down to 44,000
.Party that had 250,000 now has 64,000
.Guru 85,000 to 60,000
Even .Club which I think is a stronger extension and has done great marketing, is struggling to keep their numbers up. They have flat lined the last 90 days. They have fallen far short of their 7 or 8 million predicted registrations. If it was not for their aggressive marketing the numbers would be far worse.
These WERE high flyers! But my friends there is a CEILING and you are witnessing it in real time. Most of the others will have similar fates. It was all very predictable. It may hurt the ones yet to come online. The domain investor community will be long gone by the time some of them have their roll out.
Some of the extensions with 1000-2000 or flat lining. They are going nowhere. They are the ones I call DEAD ON THE VINE. Way too many for me to count or list. I mean .Horse is strong at 2665 registrations compared to most of them. And I have called it DEAD.HORSE since day #1.
There are 300 new extensions with less than 10,000 total registrations. Many with no hopes of increasing where they are now.
There are 100 new extensions with less registrations than one of the weakest, .Horse at 2665 (down from a high of 4576) It seems one investor bought a shopping cart full in 2015 and let them expire in 2016. Dumb for buying in the first place. Smart for learning and cutting their losses. Had that person read my blog they would have saved a lot of time, money and effort. It’s GARBAGE!! It always has been, always will be. Even Pigeon Shit can be used as fertilizer. Horse.Manure would at least have value! 🙂 Some extensions are just worthless. Absolutely worthless.
The job is picking the best extensions out of 1000. That in an of itself is a very tall order. A 1 in a 1000 chance of getting it right. I just think it may be wiser for all the caucuses to expose themselves and then begin to focus on what may be meaningful.
Personally, I think .web will walk away with the crown and they will register 1 million or more domains on the first day of General Availability.
A bitter pill for many to swallow. Many domainers will not have the resources to play in that game. And that game is still a big gamble. But a gamble that may be worth taking. It may be a day of reckoning for all other GTLD’s. Many will do whatever to delay the inevitable, There is only one possible rival to .com and it is pretty obvious to all the top domainers I have spoken with 1 on 1 regardless of their public stance.
But even if it is a huge hit, and you register meaningless .web domains, you will have the exact same success rate. The attractiveness of a .web is that you can put any name, word or brand in front and it will make sense. Most others are limited. Only a certain limited amount of meaningful strings. The next .com needs to at least start with the characteristics and appeal of .com
When you go down the list there are only a handful that meet that threshold and the way I look at things, all others are eliminated. Love them or hate them, objectively, .xyz is one of a small handful that meet the criteria. That does not mean I would invest in .xyz. It just means it meets the basic criteria that about 995 other extensions don’t meet.
Now…..you are free to disagree and many will. If .Horse is what you believe in, so be it. That won’t make you right. It won’t make me wrong. It may very possibly make you broke. And when you get broke, just don’t blame me. Don’t take your anger out on me. I am simply the messenger. Folks can listen before they go broke or after they go broke. Acceptance or rejection is entirely up to the reader. I have a 20 year path of people that said one thing. “Rick, I should have listened to you back then.”
Now some still may be profit centers for the registry, it just may not be for anyone else.
I don’t tell anyone how to think. What I do is explain how *I* think and how *I* see something every single step of the way. Folks can draw their own conclusions. I just include and share all relevant information important or not important until I decide it’s information to be discarded or considered in the weight i would give it. I will come at it on the same subject from a variety of viewpoints pro, con and in between. In other words every possible way.
My process is very methodical and very thoughtful and I consider everything and then come to an assumption. Sometimes it’s stronger than just an assumption. Sometimes it’s a conclusion. And sometimes it’s an absolute conclusion. And it’s absolute when I spend enough time on something to find the exact answer. It’s hard for me to water down an exact answer and settle for a lesser answer.
Folks have the freedom to disagree and they have the freedom to be wrong. And so do I. All I will say is I have spent hundreds if not thousands of very thoughtful hours thinking about this subject. It may be years before we know what the top 10 gtld extensions are.
The most important extensions. The extensions that will be advertised widely on TV, radio, billboards, social and every other medium you can imagine. It must have unique content. To me that is the true test. The race, to me I see no evidence that that race has begun. This is something that may happen overnight or it may take 20 years, 40 years or never to materialize.
4) When it comes to parking domains, where do you see that going especially with so many more visits coming from mobile and a lower cost per click coming from mobile ?
We have seen payouts go down and hemorrhage since late 2008 and early 2009 and it has never stopped. I always believed as businesses became more savvy online they would understand how valuable traffic is. How valuable targeted traffic is. How valuable and how much more valuable type in traffic is.
We have become a society that doesn’t understand the value of one single customer coming through the front door of any store in the world. How selling that one customer something has more value than 1 million customers buying nothing. One feeds the stomach, one feeds the ego.
Payouts are low because they were able to get away with it. But that has long-term consequences as that traffic that used to go to parking evaporates and starts going to more productive places. Parking is stale and has not innovated in many years. It is what it is. It probably won’t get any better. And like everything else you will keep seeing more and more mergers and consolidation. I went from parking almost 100% of my domains to less than 5%. I can’t sleep at night giving away valuable traffic for a fraction of a penny. I would rather spit it into the ocean first.
Now I utilize that traffic myself sending it to DomainKing.com where I can share my vision with an even larger and broader audience. Before the end of the year I will be announcing my 2016 domain sales, leases and new partnerships. As it looks now, I think I can sneak up and get a few entries into Ron Jackson’s top 10 for another year! I earned “Poll Position” along with 3 other Top 10 spots in 2015.
PPC still has great value in measuring a domain name in terms of value and importance. EVERY domain name I acquire ALWAYS goes to parking first. That is how I learn about the domain name. I could not imagine not going through that process. Lots of valuable information may come to light. Of course if you have no traffic, then you have no stats and there is not much to learn. I still get a kick when I hand register a domain name and it receives SOME traffic. I want to know that out of 7 BILLION people, at least one other person thinks like I do. That is one of the factors for me that validates a marketable domain name.
5) What advice would you give a brand new domain investor with $1,000 budget in 2017, where should they allocate that $1,000 ?
Well if a person had $1000 to invest they would be able to buy more than the 10 names I was able to buy back in 1995 for my $1000. They could buy over 100 hand registered domain names. They could go out and search very hard and buy a single domain name for $1000. Or they could do the same and get two for $500. Or they could get four for $250 each.
Point is there are many ways to parlay $1000 into much more. But you have to be thoughtful, methodical, logical and prudent. You have to know about domains! I had no guidebook. There were no peers. There was no domain history. Today there is a guidebook and folks have the choice to educate themselves and be deliberate or waste $1000. After 21 years of doing this I see people coming in EVERY year and making their mark. They work hard and make money. No previous experience required. But it is not every one’s calling.
Before a person does any of those things they need to understand what makes one domain have or possibly have value and another domain worthless. If you were with the top 100 domainers in a room, the one thing that they would agree with is that most people investing in domains don’t have a clue what they’re doing, or why they’re registering stuff. I look at the drops, some of them are just ridiculous. Let me correct that, most of them are ridiculous and the rest are worse. Every once in a while there is a gem. A gem should stick out like a shining diamond if you know what you’re doing.
I can look at a list of 100 or more domain names and pick out the gem, if there is one within seconds. Less than a minute. It’s still weighs on me the most when people send me their list of domains that I know they worked hard to get and they are all just absolute garbage. They are worthless. And the longer they keep buying before they understand what makes domains have value the more money they’re gonna waste and the harder it’s going to be for them. The folks that do understand, make money!!!
There was so much information and misinformation out there. There are a lot of ways to be successful with domain names. More ways than in any other business I have ever seen in my life. But if you don’t know what a noun, a verb and an adjective is, you cannot be a domain investor. If you don’t know how they relate to each other you can’t be a domain investor. You can call yourself anything you want but you won’t be selling anything. If you don’t understand word of mouth advertising. If you are more worried about your needs and not looking at it through the lens of that 3rd party.
People go to school to educate themselves before they practice law or perform surgery or become an accountant, etc… That takes many many years to achieve. Lots of hard work and effort. With domain investing you can take 2 or 3 MONTHS and be completely educated.
I have said for many years that your FIRST purchases may end up being the most important. There will always be a sense of urgency in domaining as with any other great investment. Use your time and money wisely, start slowly, don’t quit your day job. Domaining can be the most rewarding hobby you will ever have and a great business if you nurture it and understand it. (Guess that gets me back to question #1. I still pursue my #1 hobby. I used to collect stamps, then coins, then vanity 800 numbers. Today my hobby is domains and it will be until my last breath)
And the one thing that $1000 has to have, is patience. Or decide to find one domain name for $1000 that you know you can sell for $2000 or more and then go out and bust your ass selling it. And when you have $2000 you do exactly the same thing. And when you have $5000 you do the same thing. And when you have $10,000 you do the same thing multiplied by 10. And when you’re done with that you just keep repeating, repeating, repeating, repeating and you will become a millionaire. But you have to have time, patience, energy and you have to know what makes one domain have value and one domain have nothing.
I started earning a dollar a day online. Then I went to two dollars a day. Five dollars a day. $10 a day. Every dollar a day up that ladder. And that was long before there was an aftermarket. There was no aftermarket when I started buying domain names. There was no pay per click. It was a collection that I believed someday would have value. So at the end of the day I would advise you to put a small collection together that someday may have value. But when you’re doing that you have to target large audiences with some degree of wealth or disposable income. Having 1 million people coming from Bangladesh will not help you. Having 1 million people from a metropolitan area like New York or Paris is a completely different animal. You have to target the masses. Or you have to target a very interesting subset.
But like I say there are very many ways to climb this mountain. Everyone has a different story. READ THE STORIES!! But it will always come back to dedication, knowledge, time horizon, circumstance, and a host of other issues. Like, can you sell? Do you understand the very basics of business? Do you understand need, want and desire? Can you look at the needs, wants and desires through the eyes of a stranger? Through the eyes of different people with different needs, wants and desires? Can you make the distinction between those groups? Are you a student of human nature? See, your needs don’t count if you want to make money.
The one thing I do know is there is more opportunity inside of the domain industry than any sector I have ever seen in my lifetime. I hope folks see, understand and embrace that. A blossoming world wide industry that totally dwarfs the real estate and other traditional markets. For over 20 years I have preached that domains names were the real estate of the future. Welcome to the future!
One day in the not-too-distant future from here, there might be more domain sales going on than real estate acquisitions. That’s called an assumption. I work with assumptions based on things I deem important. That assumption was not born today. It was born years ago and the direction only gets closer.
In our domain investment world there are hundreds of millions of parcels and growing by the day. We are already at a point where I believe more domains are being registered on a daily basis than occupancy permits and/or sale of real estate throughout the world.
How do I know this? I don’t. But I can come to a conclusion before a fact happens and act on it. And I do. And that is how you get out in front. By the time it’s recognized it’s too late. Then you are just chasing another shiny object. You have to recognize a fact AND ACT ON IT before it becomes a fact. That is the birth of an assumption and why it is important to utilize assumptions. When folks would laugh at me for making such an absurd statement, they never even thought about it or considered it before their knee jerk laugh. When you look at it through a simple lens it might be absurd. When you look at it DEEP and HARD through the lens of the future, it’s called a sure bet!
Whatever path anyone chooses, I simply wish them the very best. Successful people usually learn from other peoples mistakes. They find it much more rewarding and satisfying. Not to mention all the time, money and energy one can save. That gives you more time to play and an opportunity to experience more of what life has to offer. Plus you get to focus on what actually works. The dividend is making dollars as opposed to losing dollars. Once you learn the universal formula for success, you apply it to everything and never turn back.
So you have a choice with that $1000. Turn it into $2000, $4000, $8000, $16,000, $25,000, $250,000, $1 million or turn it into nothing. My best advice, take a deep breath and get the best domain or group of domains you can afford that you truly believe would be important to a 3rd party.
I hand registered Rigged.us in April and got a $10,000 offer recently. For somebody reading this that could be life changing and I truly understand that. When it comes to extensions. I want .com first. But if not, I want something meaningful and natural. In this case .us served that purpose. THAT my friends is how I look at ANY extension. Does that mean I invest in .us names? NO. Does it mean I don’t own any .us names? NO. There MUST be a rhyme and a reason and that rhyme or reason should be obvious. Great domains come in many flavors. Pigeon Shit comes in one flavor.
Thank you for your time Rick