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Monte Cahn on Auctions, RegisterFly, Arbitrage, and Domain Valuations

Brett Tabke Interviews Monte Cahn.

8:51 pm on Jun 27, 2007 (gmt 0)

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Monte Cahn on Auctions, RegisterFly, Arbitrage, and Domain Valuations with WebmasterWorld's Brett Tabke

By Lane R. Ellis, SearchEngineWord Lead Editor
and Video interview by Brett Tabke
Posted June 27, 2007

Monte Cahn of Moniker.com, a co-founder and the CEO of DomainSystems, Inc., the parent company of domain name monetization company TrafficClub.com and eleven other ICANN-accredited registrars including industry leader Moniker, has been called the "Six Million Dollar Man", for brokering several of the biggest cash transactions in the history of selling Internet domain names. Brett Tabke, founder and CEO of the popular WebmasterWorld community forums for web and search engine optimization professionals, spoke with Mr. Cahn at last week's "Traffic domain conference" and expo in New York City, and the two had the opportunity to discuss the current state of the domain name trade.

Brett Tabke Interview with Moniker's Monte Cahn
Part 1 of Interview

The History of Moniker and Monte Cahn

Moniker Online Services is based in Pompano Beach on Florida's "Internet Coast", and since 2002 has been providing businesses and individuals with domain name registration and portfolio management solutions. The company, which is one of the most rapidly growing ICANN-accredited domain name registrars, deals with the top level domains (TLDs) .com, .net, .org, .info, .biz as well as various country code TLDs such as .us and .cn, and offers additional services such as the following:

  • URL forwarding
  • Landing pages for parking
  • Web site hosting
  • Domain management
  • Domain traffic monetization
  • Real-time domain traffic statistics
  • Search Engine Optimization (SEO) tools
  • Public relations and press releases
  • Legal resources
  • Domain registrar theft protection
  • Domain appraisal
  • Corporate domain management services
  • Domain name re-sale services
  • Domain name auctions and escrow
  • Expired and dropped domain services
  • Traffic monetization services
  • Brokering
  • Traffic monitoring

Cahn began buying and selling domain names in 1996, influenced by the son of a customer at the cardiology equipment marketing company he was operating at the time. Together they formed a sideline business called NameShop.com that was the first domain brokerage on the Web. With the goal of handling "the most valuable domains on the market", Cahn started the company HitDomains. In 2000 it merged with another industry leader, SolutionHome.com, and became DomainSystems.com, along with co-founder Eric Harrington, who is now the president of the companies.

Capitalized on Dot Com Bust

The company swooped in on what remained after the dot com breakup, finding that "great domain names were suddenly becoming available from companies that were now in bankruptcy," according to an historical account of the company written by Ron Jackson on Moniker's web site. With third co-founder and attorney Joel S. Magolnick on board, Moniker found that the court system trusted them to retrieve the most money from domain names, and since then the company has completed nearly half a million Internal Revenue Service-accepted domain appraisals for its customers. "When many others were stuck, we were hired and that helped fund our business while times overall were tough," Cahn said. Soon the company found itself courted by some of America's largest corporations, including:

  • Lions Gate Films
  • Disney
  • Miramax Films
  • Toyota
  • Proctor and Gamble
  • Bank of America
  • Major League Baseball
  • The National Hockey League

The company's client list currently includes many high profile domain industry figures, partly due to realizing an average retail price seven times greater than the industry standard for domain sellers. In early 2003 DomainSystems began offering web hosting when they launched the business CoolHandle, which is aimed at both small businesses and individuals.

Tabke asked Cahn about the success of live auctions, the increasing prices being paid for desirable domains, the difficulties that can be associated when choosing a domain registrar purely based on low cost, and about what is generating buzz in the domain name industry today. Cahn was first asked by Tabke about the domain name auctions Moniker has been holding recently.

"We've actually held seven auctions altogether. Five live auctions at Traffic and some various other conferences," Cahn said. "We always felt that domain names were assets, and that's how we got started in the business. I got started in 1995, investing in the domain aftermarket, and back then there was no traffic monetization, no search. Nothing that generated any monetary value for domains, other than brand, and the future of what a piece of a virtual property would provide in terms of an aftersale, so establishing values now based off of traffic, revenue sales, searchability, web presence, future brands, commercial value, are now establishing themselves in a live auction format, and we're selling millions of dollars," Cahn continued, and went on to comment on his biggest domain sale yet, for the domain porn.com which Cahn noted "ended up selling for $9.5 million, the largest cash transaction in history thus far."

An even larger domain name sale may be in the works, as Cahn noted that Moniker is "currently working on poker.com, which is going to be almost three times that. It's not a done deal, but we're working hard at it, and that would establish a new plateau on a domain name sale." With Moniker helping to sell domain names at such astronomical amounts, it is not a stretch to picture Cahn soon being re-labeled as the "Sixty Million Dollar Man.

Domain Registrar Moniker's Monte Cahn Speaks with WebmasterWorld's Brett Tabke

Tabke spoke with Cahn about several other aspects relating to the current state of affairs in the domain name arena, and their revealing and insightful interview continues here.

Tabke: Even after the government's action against gambling in the U.S. - processing credit cards can't be done on-line for gambling, do you still think it [poker.com] would go for three times that?

Cahn: Yes, as a matter of fact the gambling domains in general, we held our first casino affiliate domain auction in Amsterdam in May, and it validated that even in a world like that, where the U.S. had turned off domain names not only that are valuable, but are actually increasing in value. Poker's not going anywhere as you know. Now poker's on television - the poker tournaments, the poker tours - it's huge business, not only for the American casinos but also worldwide, and I think what's happening is that the U.S. was turned off for a short period of time, due to some pressure from the U.S. based casino consortium, but as soon as they catch up a little bit, people will be gambling online again in the U.S.

Tabke: The auction is also going to be broadcast live by our good friends down at webmasterradio.fm, are they not?

Cahn: Yes, they've broadcast every one of the live auctions so far, and that way listeners can come and listen to our version of 'Domain Masters', which is a radio show that I produce every Wednesday. It's going to be a live broadcast of the auction. Hopefully we'll have over $10 million worth of domain names change hands.

Tabke: In fact, speaking of the auction, we're going to do one at PubCon in December in Las Vegas, so we're definitely excited about that.

Cahn: Very excited. We're bringing out the auction into niche markets, and we believe that various markets, such as the adult industry - we do an auction at Internex, focusing on the adult-specific domain names. Traffic [the conference] is more of a generic premium domain offering. We're going to the Affiliate Summit, to do some of the affiliate type names, the mortgage, refinance, and the debt consolidation. WebmasterWorld [PubCon conference] will be focused on some of those names as well as some of the search engine optimization type domain names. So, we're hitting various industries that are the foundation basis of the Internet, the ones that are treating domain names like assets from the very beginning, building portal sites, search strategies, traffic buys, and keyword purchases; all around the domain names. So those are the types of names we're offering at each of the venues.

Tabke: What's hot right now; are we back to dot coms again, it sounds like?

Cahn: Well, .mobi [domain name suffix designating mobile] did well in the last auction, and actually did much better than the first time they got reintroduced. Dot mobi did something smart - they were able to pull back some of their premium domain names and offer them in a format like this, so they can maximize value and also set a new valuation for a new extension, like .biz, .info and some of the other extensions were able to do. We're going to have about ten .mobi names offered in this particular live auction, and several more in the silent auction. The .com domain names will dominate this particular auction. There are some really good .net names. There is one very hot .tv name, which is stockcountry.tv, and there are a couple more country code extensions that are single letter country codes that will be offered that are very rare, and some two letter domain names of course, that are very rare as well. But it's a .dot com dominated auction with very high values. There are over 22 domain names officered at seven figures or higher. It's the first time that we've ever put that many high quality domain names up at an auction.

Tabke: What do you think the sales rate will be compared to last time?

Cahn: Last auction we had an unbelievable sales rate of 68 percent of all the domains presented in the live auction sold in live auction.

Tabke: They are reserved?

Cahn: They met or exceeded their reserve, and that's the only time we do so, is if the domain meets or exceeds its reserve price. That was more than we anticipated - twice as much as we anticipated, so unfortunately, that is good and bad. That's good in that we did a great job selecting the right names, making sure the reserve prices were appropriate for those names, and then they drew a lot of interest. On the short side of that was that we never got through the whole list, so we had to push those names into the silent auction, and the silent auction caught on fire because of it, so it actually ended up good. In this particular auction, because we have such high value domain names in the mix of the names, I expect a much lower sales rate to occur, however, I expect more dollars to be generated, and as a result, the silent auction will be on fire, because many of the names that would normally sell in the live auction in the $5 thousand to $50 thousand range are now put into the silent auction, so there are some great opportunities there on some gold in the silent auction.

Tabke: Well it is New York, and it sounds like there is a little more money in the exhibit hall this time walking around than was out in Las Vegas last time?

Cahn: Yes, and we spent about $175 thousand of our own money this time, marketed to the corporations of Madison Avenue, and did some very strategic corporate marketing. We had full page ads in BrandWeek, AdWeek, eMedia - also Crains, and did several interviews, with the Los Angeles Times, the [New York] Daily Post, and some of the other media vehicles. There are some agents coming in this time for corporations to buy domain names, which is great. And that is just the start of what's going to be happening with this live domain auction format.

Tabke: What do you think is hot right now in domains? What's the buzz, or kind of the undertone of this conference, other than Wall Street being here?

Cahn: The domain industry in general is very hot, due to the fact that direct navigation is proving out to be a very valuable click. So, you have search clicks and search traffic, and then you have this direct navigation traffic, which is someone actually typing in a URL into the URL line. When they do that, when a person goes through that behavior, they kind of know what they're looking for automatically, and there are studies that are coming out now that are showing that those particular customers convert twice as much as a general search customer does. So the key is to know how to capture that customer, acquire the customer, and then sell them products and services. Part of that is pay per click (PPC), and landing pages, but really what a lot of people are starting to talk about now is microsite development, looking into affiliate networks, building out certain domain names that they can see lots of traffic - lots of conversions through PPC, and really produce content and volume in products are services they can sell.

Brett Tabke Interview with Moniker's Monte Cahn
The Arbitrage Mess...
Part 2 of Interview

Tabke: Recently Google kind of changed, or enforced, their terms of service (TOS) on AdWords and AdSense, dealing with arbitrage - buying and reselling traffic through AdWords and AdSense - and there were a couple of heavy players in domains we heard that got hit pretty hard - lost a ton of traffic, and then we were just talking a little bit ago with Joe Caselli, and he thought that there might have been a little uptick in his traffic. As a result it seems like some of the ad networks seems to have picked up, like Burst and even DoubleClick. How do you think all of this is playing out in the domain market?

Cahn: Well, arbitrage is just that, it's arbitrage. So it changes, it comes and goes at various times. Those companies that were able to take advantage of arbitrage did well and capitalized, but the whole domain market in general - the traffic that is being generated, can be monetized in various ways, and so we talked about microsites and full page development, and PPC is still on fire and still aggregating. A lot of the PPC companies are putting a lot more content in search engine relevant sites together. Some people are making their money from buying and selling traffic. Buying low and selling high, and some are making money from CPA and CPN, and some of the traditional ways that we used to make money back seven or eight years ago. I think there will always be arbitrage opportunities in various aspects of the market, it's just that that particular market is closing up, and some other markets will open back up.

Tabke: I see Moniker come to all these conferences - PubCon, you're at the SESs. Do you still do AdTech?

Cahn: Yes. We're the only registrar that actually goes to WebmasterWorld, goes to SES, and of course we're here at Traffic where there are other registrars.

Tabke: What's up with that; why don't these other guys get it.

Cahn: They don't get it.

Tabke: We're at a domain conference and GoDaddy is the only other registrar I've ever seen here.

Cahn: Right. And that's at Traffic, but GoDaddy is not at SES, they're not at WebmasterWorld. Moniker has always believed that the foundation group of customers that believe their domain names are assets are the ones that build web sites, that buy keywords, that own inventories, and that want to protect their brands. All those folks go to the conferences that we go to. Moniker it going to be at 32 trade shows this year. We're traveling like crazy, but that's the way that we get our brand out. We don't run Super Bowl commercials or Indy car ads, and we don't sponsor drivers. We spend our money meeting and greeting our clients, building relationships with folks like you that run the conferences. I speak at your conference. We give back content and valuable information about what's going on in our industry. We try to help everybody - we share competitive information, because we want everybody to work together, it's all about coopatition, and helping our clients maximize their value and increasing the value of their portfolio. We're the only true domain asset management company. We help people acquire, secure, keep safe, and then increase the value of their domain names. GoDaddy is a registrar, and everybody else is kind of a registrar. They help you get a name and then, hopefully you host with them, and that's it; we'd rather help people grow their portfolios and values.

Tabke: We recently had the fallout from the RegisterFly mess. What were the consequences from that on your side of the table?

Cahn: RegisterFly for a long time has been undercutting the market in pricing, and they suffered as a result of that, and eventually went out of business. I would advise that everybody not look at price alone and try to make asset decisions based on who's the cheapest. Close to 1.2 million domain names were stuck at RegisterFly as a result of people looking at $5.99 pricing and pricing that was under cost, not even at good market value, but under cost. They were trying to do that as a giveaway to acquire more services and it just didn't work. You want to go with somebody that you can count on, that's going to be here for a while, and that has shown and demonstrated that they have a secure system - that they protect your assets, that you can see them, touch them - that's why we go to the conferences - to validate that we're real. You don't want to go with somebody just because they're the cheapest, because you do get what you pay for, as the saying goes. There are a lot of companies out there that provide very good value. You don't pay five or six dollars, you pay seven to ten dollars for your domain names, and you get a lot of service and a lot of support and a lot of security, and you'll be protected long-term.

Tabke: Monte Cahn of Moniker, thank you.

Cahn: Thank you.

Moniker Live Domain Auction Coming Up at WebmasterWorld's PubCon

Moniker is recognized as one of the largest privately-held domain services on the Internet, and Cahn notes that the company is unique for being "the only ICANN-accredited registrar that also has a thriving aftermarket business, as well as hosting and e-mail services. No other registrar is offering all of that and best in class service in one spot today. It would undoubtedly be interesting to hear Cahn speak at any of the various conferences he will be attending during the remainder of this year representing Moniker and DomainSystems, even more so at a conference such as WebmasterWorld's PubCon in Las Vegas this December which will also feature a live domain name auction where Cahn and Moniker may reach new heights in the premium domain reselling race.

Other Recent Videos:

(c) SearchEngineWorld/WebmasterWorld 2007 all rights resevered.

9:25 pm on June 27, 2007 (gmt 0)

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Nice interviews and info. Crazy amount of money getting thrown around!

One little suggestion I learned from experience with video interviews: remove your conference tags from around your neck. :)


1:29 am on June 28, 2007 (gmt 0)

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Great stuff Brett!
Since you don't already have a million things to do at PubCon, would be great if you had some similar videos this year with some of WebmasterWorlds finest. Webwork, bhartzer, graywolf, engine, would all be picks I'd like to watch/listen to.

Keep the videos coming.

1:35 am on June 28, 2007 (gmt 0)

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Good videos, thanks. But from my experience most Moniker domains are overpriced. Whatever combinations of two keywords (sometimes totally unrelated) they want to charge at least hundreds of dollars.
7:20 am on June 28, 2007 (gmt 0)

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In the middle of the second one there was a few seconds where the Search Engine World logo covered over the video, and on the fade out the branding came in over the top of the content, cutting off Monte.

Brilliant marketing intentionally branding those videos a bit hard. Will be interesting to see what all shows up at SearchEngineWorld.com.

10:27 am on June 28, 2007 (gmt 0)

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Thanks guys. We are still learning on all this video stuff and each time is a learning experience. The bar will raise considerably as we go forward. Even so - we are more interested in the quality of the content, than the quality of the picture and sound.

Monte is an interesting dude. I first met him down at pubcon Orlando four years ago. Back then, Moniker was pretty much a mom & pop shop. It has been amazing watching them grow. There have been few companies in our space that have been marketed so steadily, passionately and relentlessly.

It will be cool to have them bring the domain auction down to Vegas. Hey AWall - you don't know of any domains that would be neat to see sell at auction do you? ;-) That would be an interesting option. Good luck buddy.

2:08 pm on June 28, 2007 (gmt 0)

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It's taken great commitment, vision, effort, investment, skill, planning and a myriad of other talents and solid workmanship to position the industry where it now stands. Kudos to Monte and to the organizers of the TRAFFIC events.

Unfortunately there is a lot of buzz about the many "close, but no cigar" multi-million dollar bids at the recent auction, bids in the millions that fell "just short" of an indicated reserve or that many experienced folks have suggested were a bit bold in the rejection or unwillingness to compromise to make a deal on the spot.

Maybe everyone is quite confident that higher prices are on the horizon. For the moment the buzz sounds more like the bidders were more confident that their offers wouldn't be accepted. Professional jealousy? An easy walk when you're not wearing the other man's shoes? Maybe, Monte, you just did too good a job of convincing the seller's that it's a market for holding, not folding? ;)

I would suggest that something be done to manage the perception, certainly something other than threatening those who question the pattern. I'll note that that hasn't happened but there was that recent flurry of finger pointing and other "whatever" behaviour surrounding the NYC event that leads one to believe that all manner of responses are possible. Not from Monte, though, as I know him to be a class act.

I'm not sure what's to be done to manage the perception that some bids may have been made simply to serve as future selling points or to create media buzz but I'll hazard a prediction that a number of announcements - post (this) auction - that deals were actually closed on those domains - the ones that were "near hits" in the crowd's minds - would go a long way to silencing the mob and impressing the media that what is being served is glatt.

In an industry struggling to build and to hold onto its street cred one has to be a master of all things, not just the domains. I'm confident Monte is the domain master who is up to handling the larger job.

That other guy associated with TRAFFIC? Talented. A visionary. A leader too, but his cred took a hit, at least in the forums. . . or maybe in the age of buzz and "reality TV" all the pre-event "How dare you meddle with MY event" noise was just made up? "Plausible deniability Ollie?" "Yes, Stan, plausibly deniable. It never really happened. It was just a bad dream."

Regarding the pre-event? Please guys: Don't drop the ball. The goal line is within sight. Keep things all professional, all the time, even when the other side employs tactics that just don't sit well with you. The audience will figure out who's playing fair and who isn't. This industry needs it street cred if it's going to continue advancing. No more antics, at least from one team.

Great work Monte. Keep the success and PR machine rolling. I look forward to seeing you at work in Vegas. Who knows? Maybe I'll even throw in on the wheeling and dealing. However, if the offer gets up to $740,000.00 - not my $750,000.00 "reserve" - chances are I'll play that hand Vegas style.

Take the money off the table. Surrender is sometimes part of a larger winning strategy. At least in Vegas it can be. ;) Right, ralleye monkey buddies?

[edited by: Webwork at 2:35 pm (utc) on June 28, 2007]

4:01 pm on June 28, 2007 (gmt 0)

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Very interesting. Makes me feel more justified to continue buying up keyword domains that make me little or nothing right now so that I can turn them over at auction later. So are all these domains being sold by Moniker at real world style auctions directly owned by Moniker, or are they selling some of them on behalf of other people and collecting a broker type fee? Although I morally object to the porn and gambling industries as a whole, the concept of what's going on here is awesome.

I hope to see more players on the scene doing what Moniker is and in a tangible way raising the bar on the value of high quality Internet realestate. I still find it a little odd that there hasn't been any big money real world banks stepping up to the plate of domain financing. At least none that I know of. The industry probably needs to mature some more before that can happen, and in particular banks would want to see a history of sales transactions on a domain name showing it's rising value, comparable to how they see home values increase. That would ramp this industry up so much faster, even if it brought on another .com bust (similar to cycles of real world real estate.) We could all benefit from the run up and take advantage of the cheap prices on .com bust 2.0 but that may still be a ways out.

7:41 pm on June 28, 2007 (gmt 0)

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My understanding is that these domains are owned by other people and Moniker is simply getting a broker fee.
8:03 pm on June 28, 2007 (gmt 0)

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Very interesting. Makes me feel more justified to continue buying up keyword domains that make me little or nothing right now so that I can turn them over at auction later.

Be VERY careful with your business model. They have great one-word domains, you can only buy: lousykeyword1keyword2.com domain. That is a huge difference. Remember the number of businesses is not limitless; those who are serious will buy one-worder (keyword or brandable) or a GREAT two-word domain rather than lousykeyword1keyword2.com domain.

If you are new to the online world, buy a good domain and start working on your website NOW rather than live in the hopes someone, in a few years, maybe, will pay you a few hundred bucks for your domain. Do not waste your time for making up new keyword combinations or reading news to possibly get a new "POTENTIALLY" hot keyword in several years. You will be better off writing two good articles a day and adding new content to your website.