The now-defunct DNVW.com briefly had a great best domain poll, where industry experts were asked to vote on which recently sold domains will provide the most value for the buyer over the long-term (4+ years).  This was a weekly contest, so domains weren't all high and mighty, but still it was fascinating to see that lots of the experts liked many of the $5k domains more than those which sold at prices several times higher.

I was excited to hear that the first Domain Roundtable Conference turned out well, and that there will be more coming.

1,200 online participants;  300 live audience, what they call the "most viewers of any domain auction ever."  Despite what was clearly a pretty big success, Jay has lots of good ideas for making the next auction even better, including fewer domains, a better live experience, easier to get food & drink, better live chat, and more!  I love the energy and transparency!

First DomainTools Live Auction Results

Total sales were apparently $3,841,528.  Top sales included Invention.com ($500,000), Rebate.com & Rebates.com ($1,000,000), MakeMoneyOnline.com ($95,000), AZ.com ($500,000), Army.org ($99,000), ConsumersGuide.com ($66,750), Cab.com ($110,000), Copies.com ($90,000), FederalStudentLoans.com ($50,750), Event.com ($165,000).

Domain Name Journal reviews the conference.  Sahar at The Conceptualist reviews the Roundtable, too.  And Adam Strong (Domain Name News) makes some very interesting comments in the posting "domain roundtable scorecard."

There are many, many kinds of auctions.  At eBay, for instance, you can choose from several species.

English Auction is the normal auction at eBay, where everybody can bid as many times as they like over a specific period of time, and the highest bidder gets the item.  Historically, an English auction usually happened before a live audience with an auctioneer, but it can also work as a "silent auction" where bids are written on a sheet of paper, and the highest listed price wins (which is more like what eBay does, with the computer efficiently replacing a sheet of paper).

eBay also allows a form of "Dutch auction" (which others might call a "multi-unit English ascending auction") when several of the same item are being sold.  In this case, there are several winning bidders, and all pay the lowest price that was offered by one of the winning bidders.  A "traditional" Dutch auction is actually somewhat different: the auctioneer begins with a high asking price, which is lowered until a buyer steps forward, or a minimum price is reached.

These types of auctions can be mixed with other parameters.  When a seller doesn't want to sell for less than a particular price, a "reserve" is introduced, under which price you can't submit a bid.  eBay also offers a sort of "fixed price auction" (which I suppose isn't really an auction) via their "Buy it now!" button.  eBay allows the seller to specify a price at which the buyer can end the auction by agreeing to "buy it now." eBay also has a twist on this, called "best offer," where the potential buyer can contact the seller with her own offer.      

Some other kinds of auctions include:

• Sealed-bid first- and second-price auctions:  All bidders simultaneously submit bids so that no bidder knows the bid of any other participant.  In the first-price version, the highest bidder pays the price she submitted.  In the second-price (Vickrey) auction, the winning bidder pays the second-highest bid plus one bidding increment.  An example of this auction is the Google pay-per-click system.
• All-pay auction: In this exotic auction, which is often used to model lobbying or other competitions, all bidders must pay their bids regardless of whether they win.  The seller collects from everyone, and only the highest bidder wins the item.

For even more about auctions, including some interesting history, see this Wikipedia entry.

Domain auctions are typically of the "reserve" type, but how the auction is conducted varies.  Most domains are sold in online auctions.  A few physical world events offer domains in live or "silent" auctions, like those popularized by Moniker.

In my opinion, other than knowing how to bid if you're a potential buyer, the type of auction doesn't matter.  Mathematically, it tends to wash out in the end (for instance, people bid more if they know they won't pay the highest bid), unless people have access to unusual information.

The most important detail governing the success of auctions is the size of the market.  If you don't have a critical mass of bidders, the power of the auction starts to break down.  That's why there aren't millions of small online auctioneers instead of one eBay.  If you want to sell your life-size Ronald Reagan cardboard cutout, you need to find people who have the same (or more) interest.  A healthy auction community brings you together;  a too-small auction community doesn't. 

One acceptable proxy for very large volume is a large targeted volume, where the bidding audience is spiked with hand-picked, interested parties for each of the items.  In my opinion, it's the job of a high-end auctioneer to go out and bring those "qualified" bidders to the table.

One concern I had about all of the domain auctions -- which is still a relatively new market -- was "where are the premium domain buyers?"  Secondly, do non-professionals -- who might want to buy a particular brand for their real-world business -- know where to go to find these domains? 

Others seeem to share the same worries.  In his fascinating post "domain roundtable scorecard" reviewing the Domain RoundTable conference, Adam Strong at Domain Name News says:

"In his predictions, Jay [Westerdal, CEO of Roundtable organizer Name Intelligence] expected heavy bidding and higher prices as the names were ran up, but the reality wasn't like that prediction. Nearly 3/4 of the names he wrote about simply weren't sold. The total results at the auction were 167 out of 450 domains sold, meaning 37% were sold. As was the case with the other recent Moniker auction events, many of the domains at DRT sold right at the reserve prices. Sellers are being encouraged by Moniker andDRT to lower reserves in order to "get more bidders". Getting more bidders shouldn't come at the cost of the person selling the domain though, should it? That's the job of the auctioneer or event producers. The game plan to lower the reserves to stimulate activity certainly doesn't seem to be doing that. In many cases names are selling at their reserves with only 1 bidder."

Adam points out that Moniker's Traffic auction, which was probably the most successful large-scale domain auction (by revenue, and % of domains sold), only sold 54% of its inventory, so there's obviously still not a huge amount of liquidity out there.

Says peter_stargazer on the domaintools.com site:

"If i would go ahead and set the reserve to the minimum $1.000 in order to maximize the odds for making it into the auction as so often is recommended, i could in theory recive lots of bids and in the end selling it for more than $20k. But from personal experience with other high profile domain auctions. I have learned the hard way that as a seller, i MUST Assume that my domain will only receive one bid thus selling for the minimum reserve. And therefore i need to set a reserve price that wont make me cry. And if this means that no one will bid on my name... So be it. In the end a domain is only worth what someone is willing to pay for it. It's the eternal debate of setting the reserve to high or to low..."

The Sheboyan Press reports on 8/6/07 that "A 41-year-old Sheboygan man was charged today with selling his employer's domain name and using corporate credit cards to finance international trips with a stripper girlfriend, according to complaint filed today in Milwaukee County Circuit Court."

The domain name was sofa.com.  It would be interesting to know how he managed to sell it, and to whom!  This DN Journal article about late 2005 domain sales may contain a bit of that information.

And, given the not entirely up-and-up nature of the sale, it seems like he got a pretty good price.  So, er, congratulations?

I've gotten two requests from Moniker to lower the reserve for table.com, the first from my sales rep, and the second from Monte Cahn, their CEO.

It was fun to correspond with Monte, who's sort of domain space royalty (between his companies and the Domain Masters online radio talk show).  But this reserve lowering stuff is a disappointment -- I chose Moniker in part because I felt Domain RoundTable was pushing me towards too low a reserve. 

I'm beginning to  get the uncomfortable feeling -- from my experience and anecdotal evidence -- that everybody does this.  Reserve lowering may just be a consequence of the form of the domain market and how the major auctions do business. 

Domain sale information is asymmetric.  Above and beyond the possibility that the auction house may have better price expectations that the average seller, they certainly know more about the number and quality of potentially targeted buyer prospects who will be attending the auction than the seller does, which is not in their interest to share.  They know more about their negotiations with multiple sellers than the sellers know about them, so they are in a better position to negotiate their wishes into reality.

The auction house has several incentives to ask everyone to lower their reserves (regardless of whether the price is right), so that it can get credit for any "bidding wars" that occur, and so that it can market its auction to more paying attendees.  Secondly, a lower reserve minimizes the risk that the auction's domains won't sell.  That's a big risk for an auction that limits, but less so for a seller who is willing to wait for the right buyer.

On the other hand, domain exchanges probably do know more about the most likely sales prices than many domain sellers, who from first-hand experience I can say frequently have unrealistic or inaccurate expectations, so in some cases this is really a valuable service for all involved!  Since domains don't typically sell a bunch of times in quick succession, it's hard to say.

What do you think?

This isn't entirely relevant to the matter of selling domains, but it is a question that is interesting to me...

I was discussing the relative value of a couple of similar generic domain names with someone who runs a big domain auction house, when he talked about domain's Google pay for placement results for the keyword in the domains, and how that might affect those domains' values.

I've been a long-time AdWords user, and not heard anything about PFP in years, so I was surprised to hear that Google was even in this business!  Can anyone describe how Google's "pay for placement" service works?  Can one tell how much people are paying for placement in a similar way to how you can use bid tools to get a sense of Adwords bidding?

(Updated September 21, 2007)

I believe, once again, that table.com is going to be included in Moniker's T.R.A.F.F.I.C. Miami auction, though we haven't received any real official notification.  It would be nice if Moniker were a little more transparent!

Finally got confirmation today that table.com will be part of Moniker's live auction at the T.R.A.F.F.I.C. Expo in Miami on October 12, 2007.

In the same email, my salesperson was urging me to transfer my domain to Moniker prior to the auction.  The idea is that this will allow them to Moniker any sale more quickly (I know from sad experience that it sometimes can take a week or so to transfer names from one registrar to another).  That makes for a happy buyer (they get their domain more quickly) and a happy seller (who gets their money more quickly).

Moniker is willing to pay the transfer fees, and even if the domain doesn't sell, we'll get a free year of domain registration out of it.  I like having all of my domains in one place, but I'm inclined to do it.

Thoughts?  Has anyone had an unusually positive or negative experience doing something like this?