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Many in the domain world are pro development, saying time to move from PPC and domaining into developing these parked properties. For years I’ve been saying domain owners are essentially property owners, not web developers. It isn’t simply shifting focus but one has to understand web development, live it, breathe it, and more importantly, fully be committed to it. If all that is not enough, The chances for success are slim and surely there aren’t any guarantees that even the most committed person who develops will make it. If you think of it further, just because one owns a beachfront property does not make one a real estate developer. It is a whole different ball-game putting a hotel on such a property, and yet another ball-game launching the hotel, building the brand, and operate it daily.
To illustrate the other side of success with development here’s a tidbit from a recent announcement by the Russel Beattie, ex-Yahoo mobile evangelist and founder of Mowser:
Seriously… A salary will be a good thing to have again. I’m *thousands* of dollars in debt to my family and friends, maxed out on every credit card (all of which are in collections), on my last chance for my apartment (if I bounce one more check…), had my car repossessed *twice*, electricity turned off, cellphones switched off, landline canceled outright, and on more than one occasion (this weekend in particular) eaten little more than buttered macaroni as I waited for an overdue PayPal deposit to arrive (3-4 days? Come on!). Having a steady income will be a welcome mental break, believe me.
What domainers should do then? I think the better question would be, what beachfront property owners have done over the years? Have they developed, sold, partnered? And if you do decide to develop, how many of your properties can you really develop and develop well? This last question is one I keep asking myself few times a day as knowing what development takes I fully understand the chances of us ever developing 0.001% of our portfolio are slim to none.
Food for thought.
Sahar
I agree Sahar..Develeopment is tough and it’s better to develop just one good domain instead of dreaming of developing hundred domains. It takes lot of time, money and effort and also it causes immediate loss of PPC revenue in the short term until the site really starts making revenue.
Thanks,
Sahar, you’re right. Developements are only for few who can be practice agility and be creative. One this we should all know that it is wise not to be all passive domainers. People are getting too confortable with “parkings”. Whatever happens to diversification? My advice to domainers: think outside the box and get some help in developement. We can’t hide in the “comfort zone” forever. Yes, it not for everyone but those who take the less travelled path could archive more.
If the beach front is good enough use a franchise with a quality covenant
Good sober assessment, Sahar.
Btw, i don’t interpret your post as saying people shouldn’t develop.
But, be prepared for the likelihood of an enormous amount of work and the possibility that you won’t get the profit #’s you are seeking.
My view is do alot of planning in advance, and keep it lean at the beginning.
The upside of developing is you end up learning a heck of alot during the process.
I think this comparison of parked sites vs huge developed sites misses a lot of other opportunity. Certainly, if I own a “Beach Front” domain and want to build that hotel you pictured above, everything you say is true. Big bucks, big risks, big overhead, big profits if it works. Nothing wrong with that, if it’s what you like to do.
However, what if I do the domain equivalent of buying some cheap lots a couple miles back from the beach and putting up a few duplexes for the hotel help? I can still pick up long tail niche domains for registration fee. Hosting is almost free. It takes time to write content, but since I only need to outrank a bunch of parked pages to rank in a given niche, it doesn’t take that much time.
If I pick timeless subjects to write about they will produce income for a long time without additional work. I have no leverage, no debt service, & no employees. They won’t ever make big bucks but that’s OK; I’m after annuity type income
Diversification is the keyword with the domain industry, too many place all their eggs in one basket in the industry.
Rob Grant said it best in his recent DNJournal interview; “Development is just one of many ways Grant has financially diversified in recent years to protect himself from shocks in any one category. “In addition to our real estate brokerage, we operate a self storage business, we have a big vacation rental business, I operate a 23,000 square foot office building, so we have both commercial tenants and residential tenants. One of the lessons I learned early on was that it is very important to be as diversified as you can be. You can’t rely on any one business model because if you do you will be taken out. I’ve seen it time and time again and I’ve had it happen to me. So anytime I see an opportunity to create a business, or even just another revenue stream, I do it.”?
With that being said, development is not for everyone, however, there is nothing stopping you from partnering with someone who has the time, skill and experience to build the business for you. Everyone is too focused on 100% of the pie, vs reaping bigger rewards with owning 50% and letting someone else do all the work and build larger revenue streams.
You can accomplish so much more in your online domain portfolio businesses if you abandon these terms from your way of thinking. “My business is all about me, I want 100% of the revenue, Development is not for me, and lastly, PPC is doing fine, no need to develop.”
Strategic partnering to develop domains is the future for many in the domain industry. Makes perfect sense to align with someone/a company who does this well. Another revenue stream in the end. The best thing about development, if one plans fails, another goes up. It really is that easy.
The key is to learn from this if it does happen, and prevent it from occuring in other developments by emplacing effective systems and strategies.
Life’s lessons are never free. There is nothing to fear, but fear itself. In the end, you gain nothing if you never take the risk to strive for excellence and stay complacent.
Steve Morales
Sahar:
Development doesn’t kill domains. People kill domains.
I don’t care if you have Computers.com. I don’t care if you have ReallyCoolComputers.com. Just like real estate: if you build it and don’t do it properly, you’re going to lose whatever income potential it had.
Imagine if I had a downtime prime New York property and put cardboard hotel boxes on it expecting people to pay me to spend the night. Or if I had this incredible land on the beach, threw heaps of trash on it and expected people to pay me for access.
Development doesn’t kill domains. People kill domains!
There are two things that make me cringe when it comes to domains. The first one is when a seasoned domainer is selling a name and they don’t want to mention the stats. They will often respond: “I don’t know…just got the name”, or they will say that they have had it pointed somewhere and don’t know. Outright lies.
The second is when someone is appraising a name. My hair stands up when the appraiser says: “this name is worth low xxx, more with develpment”. This is insane.
A good name will generally be easier to develop, but a name is a name, is a name. The value is in the name. If you are selling a functioning website then you are selling a business….not a name.
And why do people keep saying that these names are selling for millions of dollars when it is actually the business that is selling? Any developed name that is sold where the new buyer keeps any of the previous development is NOT a domain name sale. It is the sale of a business.
Well said Tia!
Well said, Tia!