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Rick "DomainKing" Schwartz on Cameroon - Garbitrage - and Controversy

With Video Interview by Brett Tabke

1:37 pm on Jun 29, 2007 (gmt 0)

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Rick "Domain King" Schwartz on Cameroon, Garbitrage and TRAFFIC Conference

Lane R. Ellis - Lead Editor of SearchEngineWorld.com
Story By Lane R. Ellis
Lead Editor, SearchEngineWorld
With Video interview by Brett Tabke
Posted June 28, 2007

Domain King Basics

Rick Schwartz has been known for some time as the "Domain King" of the Internet domain name industry, and is sometimes even referred to as the "Webfather." He was a pioneer in the history of domain names, and is generally regarded as an expert in the field of web site traffic, flow and valuation. In 2004 he sold the domain name Men.com for $1.3 million and made a huge profit on his $15,000 initial purchase price. He has gained attention for believing that the value of domain names "would go up faster in value than any commodity ever know to mankind," and owns over 5,000 domain names, including:Rick Schwartz of TRAFFIC.

  • eRealEstate.com
  • Candy.com
  • Properties.com
  • Tradeshows.com
  • ChristmasCarols.com

He is also known for being one of the first people to recognize the value of "type in" web site traffic, which is also known as "direct navigation" traffic, referring to domain names that are typed in directly to a web browser's URL text box. In 1998 Schwartz purchased the domain name PartnerCash.com for a mere $35, which he later sold for $110,000.

Brett Tabke, founder and CEO of the popular WebmasterWorld online forums for Web and search engine optimization (SEO) professionals, recently had the opportunity to sit down and talk with Schwartz about a number of subjects, including:

  • Domain parking companies and monetization
  • The .cm gambit
  • Live domain auctions
  • On ramps to Google and Yahoo
  • "Garbitrage"
  • The potency of web traffic

The video of the interview with Schwartz is presented here, and is followed by an in-depth look at this influential and curious man.

Interview with Rick Schwartz


From a Prince to a King

While Schwartz was a child his family moved frequently, and after attending school he entered into a job in the sales field, which he immediately took to. While working as a manufacturer's representative he soon advanced to holding national sales manager positions with two furniture companies, and he worked in this capacity for ten years. Then, in 1984 he began his own industrial lighting business.

Schwartz began using the Web during its earliest years and soon purchased his first domain name, LipService.com for the three-figure sum of $100 in TRAFFIC Conference.1995. Schwartz has written about the thrills he experienced in the early days of domain name purchases, when he saw what few others did and began buying domain names, a simple process overlooked by "six billion other people that had the same opportunity," he has said. Met with huge success, Schwartz's initial foray into the domain name market spurred him on to continue, in a process he has called "the ultimate satisfaction!Ē

In less than nine years Schwartz built his domain name business from the ground up, a ride which took him from an initial investment of $1,800 all the way to over $20 million in earnings. Industry professionals have opinions about Schwartz that appear to run either hot or cold but rarely any place in between. He has his detractors as well as many admirers, and as Ron Jackson notes in a 2004 Domain Name Journal article, "there are just as many who swear by him as swear at him."

A Notorious Figure in the Domain Business

In the same article by Ron Jackson, Schwartz is quoted as making a statement that was met with scorn by some, and that has undoubtedly contributed to his notoriety. "I like to build sites with limited content. In other words, I have mostly crappy sites! But even that is for a reason," Schwartz said. "I donít want anyone sticking around on my sites. I want them off as quick as they came via a revenue producing link," he concluded.TRAFFIC Conference.

Monte Cahn of Moniker.com, a co-founder and the CEO of DomainSystems, Inc., has his own take on Schwartz. "I consider him the Warren Buffett of the domain name market - sticking to a philosophy both short and long term because it works - he meets every definition of being pragmatic," said Cahn. Some of the criticism directed towards Schwartz might come from the fact that among his 5,000 or so domain names, a number of them are adult-oriented.

TRAFFIC Conferences

The TRAFFIC conferences are known as the domain name industry's largest and most successful, and many consider them to be the premier domain name events each year. They are presented by the World Association of Domain Name Developers (WADND), and the acronym is short for "Targeted Redirects And Financial Fulfillment Internet Conference." The eighth TRAFFIC conference wrapped up recently in New York City, and the next will be held in Miami, Florida on October 8th through 12th, with an additional conference scheduled for 2008 in Las Vegas, Nevada on February 18th through 21st. The money spent in 2006 via "the domain channel" is placed at $400 million, according to the conference web site, which also cites a Fabulous Research study showing that "four million .com marketing web sites are controlled by domain portfolio owners." The term "domain channel" generally refers to parked domains containing advertisements. Google defines a parked domain as "an undeveloped webpage belonging to a domain name registrar or domain name holder."

Last night, on the tails of his latest TRAFFIC conference, Schwartz noted in his personal blog with the easy to remember domain name RicksBlog.com that conference attendees were happy with the results. The conferences are aimed at bringing together domain name owners, sponsors, search engine companies, registrars, industry experts, as well as the banking, financial and advertising communities, according to the conference web site.

When I asked Schwartz just when he felt an aspiring domain marketer or investor should make the move to the next level and attend a TRAFFIC conference, he replied "As soon as he or she has more money invested than they want to lose but not before your earnings are competing [with] or surpassing your day job. Most folks that come to TRAFFIC make their living with domains or search or other related channels and all have TRAFFIC as the common denominator," and went on to add that potential conference attendees should "either have or want to buy traffic, have domains producing traffic or want to learn the difference between crap traffic and potent traffic that generally costs the same except potent traffic can out perform crap traffic by huge margins. Secret is, they usually cost the same. One produces lots of sales/results, the other limited or no Rick Schwartz Personal Blog.results. Most folks don't know the source of the traffic they get. They think all traffic is created equal and nothing could be further from the truth. So while our focus is domains and the traffic they produce, there are things we learn and see that few others do until you shine a bright light on the subject. It is things like this that are bringing search, publishing, developing and domain names closer together."

According to the conference web site, TRAFFIC "isn't for the average domainer, it's for real professionals."

The conferences are held on an invitation-only basis, with potential attendees having to pass through a screening and approval process before getting a green light to attend. Schwartz explains, "We make it by invitation only to keep the noise of most tradeshows out," and adds that "your good reputation is your passport for acceptance." The approval process is aimed at helping those attending the conference "relax and network in a much more productive environment," according to the conference web site, where Schwartz also notes his belief in the old adage, "If you bring great people together, great things will happen."

Those who are planning to attend a TRAFFIC conference are urged to bring a list of all their domains, as "There will be a whole lot of trading going on," according to Schwartz who has also pointed out that the conference's "core attendees control over 4 million domain names and over 10 million daily unique visitors." Those who attend the conferences are responsible for buying thousands of domain names every day, according to the TRAFFIC web site.

Live Domain Auctions

Citing figures from the Domain Name Journal Schwartz has noted that the live domain auctions held by TRAFFIC and Moniker have to date accounted for six of the ten top domain name sales in 2007, and 39 of the top 100 for the year. At the TRAFFIC conference that concluded yesterday in New York City, "nearly $11 million in domain names were sold at the live auction," according to Schwartz writing in his personal blog, a figure that did not yet include the domain names offered in the silent auction portion of the conference. "Estimates and buzz around the silent auction expect that to go many millions higher," said Schwartz, who proclaimed the conference "one for the history books!"

Domain Industry Trends

I asked Schwartz about how the process of finding information online has changed over the years, and whether it is easier or more difficult today. "Personally I think it is easier but there is also more choice. I think one of the reasons that type in traffic from domain names is so rewarding and targeted is that when you search certain terms there is likely the same companies buying those ads. That eventually hurts the search engine and frustrates the surfer," Schwartz said. "So what a surfer says when he bypasses the regular search engines is that he is not finding what he or she is looking for. They know eBay, they don't need another link to eBay. On the other hand it pays dividends to eBay orInternet Commerce. they would not continue to advertise," said Schwartz, who went on to conclude his thoughts on the matter. "Point is there is a balancing act. For years most of us had no maps in our glove boxes. Today we don't travel without our GPS. Folks love information so I don't see any of this dying out in any of our lifetimes. Search will get better. More personal. But if it gets too personal you lose the ability to search. So [there is] a lot of balancing to be done," Schwartz noted.

Schwartz has compared the Internet to the television market of half a century ago, noting that television took two decades to mature. He appears to view the Web in the same light, with possibilities going even farther than traditional media. Schwartz has compared the domain name industry with the American gold rush of the late 1840s and early 1850s, and called the boom a "bonanza."

The Potency of Direct Traffic

Schwartz is noted for saying that it is not finding web traffic that is so difficult. Instead, "finding targeted traffic is a challenge," he says, and promotes the power of direct "type in" Web traffic. "The purest and most potent traffic comes from type ins on the browser bar going to specific domain names," says Schwartz.

On his personal blog Schwartz recently wrote that "the domain industry is not represented by cyber squatters and infringers and opportunists."

Schwartz notes on the TRAFFIC conference web site, "Learning about traffic and the domains that produce that traffic is the key to all success on the net."

Domain Gold and Multimillion Dollar "Black Holes"

Schwartz spoke about the possible existence of domain name "black holes" potentially worth tens of millions of dollars during his talk with Tabke last week. Domain name extensions such as the .cm extension of Cameroon have been labeled as "black holes" for their huge potential, as Schwartz spoke about in a recent article by Ron Jackson in the World Associaton of Domain Name Developers.Domain Name Journal. "Black holes are intriguing, especially $300 million black holes that are growing by the day. So when folks see that they scratch their heads and wonder if there are other untapped gushers just waiting to be discovered," said Schwartz. Citing Hotels.com as an example, Schwartz noted in the same article that "a single domain can change an industry," and also noted "the prestige that a generic dotcom address has when you are battling your competition tooth and nail."

Domains As Words

As a person who deals with words every day in the form of domain names, I wondered whether Schwartz has become more fascinated with the English language over the years he has spent working with domain names. "I have learned that the written word is the single most powerful tool any of us possess. It is really important to choose your words carefully so that the reader, who ever it is, reads it in whatever spirit it was written. You can change just one word and change the entire tone of a letter", Schwartz told me. "I think we all need to be more responsible for what we put out there. I think that the written word was ignored for so long that it is a skill many of us have to relearn," he continued, and went on to describe his method of correspondence. "I like doing business via e-mail. If I forget what was promised, I can refer back. If the person I am dealing with gets a convenient memory, I have something to point to. It's also a great outlet to get things off your chest. But before you hit the 'submit button' or 'send' it is always a good thing to keep the tone positive even in the face of adversity. Sometimes not easy to achieve, but something to strive for nonetheless," Schwartz explained.

Based on the huge successes Schwartz has had since first starting out in the domain name industry in 1995, it is apparent that he has been very good at choosing his words, both literally and figuratively.

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2:41 pm on June 29, 2007 (gmt 0)

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Some very interesting material to read there, thanks.

*adds to favourites*

3:36 pm on June 29, 2007 (gmt 0)

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Another great interview. Helping me learn more about this space.
3:53 pm on June 29, 2007 (gmt 0)

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Nice one Brett, thanks.
4:59 pm on June 29, 2007 (gmt 0)

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Thanks to Rick I spent a lot of money on domains (some of them were good though). But I learned a lot from him several years ago when participating in his private ThinkTank domain forum ;).
7:29 pm on June 29, 2007 (gmt 0)

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Thanks for sharing this! Whether you agree or disagree with his tactics, there is something to learn.
8:43 pm on June 29, 2007 (gmt 0)

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Thanks for sharing, and well done.

Brett, it's actually quite interesting to see you. Don't know why, but I always had envisioned that you were looking like Richard Branson (the Billionaire). :-)

1:09 am on June 30, 2007 (gmt 0)

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A lot of domain coverage lately, no?

What about the websites ;)

9:13 am on July 1, 2007 (gmt 0)

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Looks like Webmasterworld is now doing the social thing to help grow or join the social networking crowd here?

I can't wait to see more interviews...

9:14 am on July 1, 2007 (gmt 0)

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...with more linking out to other sources.
5:55 pm on July 1, 2007 (gmt 0)

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--"I like to build sites with limited content. In other words, I have mostly crappy sites! But even that is for a reason," Schwartz said. "I donít want anyone sticking around on my sites. I want them off as quick as they came via a revenue producing link," he concluded.--

The only reason he can get away with that is because there are many other sites which DO have interesting content. Without at least some content-rich sites out there, people would quickly abandon looking at the web the same way they've mostly abandoned Usenet.

In other words, he's making money off other people's work without doing any work of his own. He's not providing any useful product or service.

6:03 am on July 2, 2007 (gmt 0)

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I'm basically hobby domainer, I've made some decent money buying and holding aftermarket domains, but I've yet to sell a single one, like the stock market, I think an acquire and hold strategy for quality domains is the only way to go. Why sell something making money, and why screw some one over selling something that doesn't make money.

Just as a side note , I went through about 20% of the domains that Moniker sold in their last auction manually and found that almost every singe one of them was parked somewhere, so even the new owners aren't in the game of developing them into useful Internet real estate. Hard to justify developing something that makes money with zero development...but good user experience = incremental increase in overall income while simply parked domains are lucky to maintain whatever they make at the time of purchase...check out eBay for 3 character domains under 300 bucks...did I just say that out loud?

6:53 am on July 2, 2007 (gmt 0)

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My above post was actually meant for another thread but I guess that kinda worked out for this thread. From what I can tell it looks like the parking industry as a whole is on the move to upgrade before crummy user experience with parked domains destroys entire concept of direct navigation or domain type in traffic to the point where even clueless web surfers begin to realize they're better off going to google to do a search then to foolishly try typing in a domain name.
9:41 am on July 3, 2007 (gmt 0)

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Just a thought, what's the positive price valuation posts on the net re domain name valuations versus negative ones?

I put it at about 90% in that the majority think that there's only one way for valuations to go - Up.

Maybe they're right, the crowd sometimes is right (for a time) but I do get the feeling that a lot of the value in domains is simply a self fulfilling prophecy 'everyone says they're worth a fortune and only have one way to go' so that must be right.

But to me a domain name is not where the real value lies (always exceptions to the rule of course), it's in the web property, that's where the meat is rather than just the fluff.

So what would you rather do, spend $100k on a 'killer domain' or spend $7 on a domain you can buy today and the rest on content, marketing and developing the website as a whole?

I know what I'd do.........

[edited by: Calculus at 9:42 am (utc) on July 3, 2007]

10:35 am on July 6, 2007 (gmt 0)

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Maybe they're right, the crowd sometimes is right (for a time) but I do get the feeling that a lot of the value in domains is simply a self fulfilling prophecy 'everyone says they're worth a fortune and only have one way to go' so that must be right.

I've actually been thinking about this a lot lately. This market is still new and there has been and continues to be a lot of speculative domain buying going on which can and does lead to overvalued resale prices. Take a look at the real estate market, other then a few short years of hiccups from time to time, there are always more people needing homes, just like there will always be more and more people needing domains to start their online enterprises. Usually when you go to see who has that wonderful domain you wanted there's a 90% plus chance it's sitting at a domain parking service with no hope of being developed, but you even checking it gave them a new unique impression which further justifies their owning it at a paltry less then ten bucks a year fee.

But to me a domain name is not where the real value lies (always exceptions to the rule of course), it's in the web property, that's where the meat is rather than just the fluff.

I agree and disagree. While I agree that the quality of your internet real estate is very important, it doesn't make up for having a lousy hard to remember domain name. Similarly the exact same home in a lousy zip code is worth dramatically less then that same home in a wonderful (expensive) zip code. However you can make up a one word dot com like yahoo or ebay and make it work, it's just terribly more difficult to brand on a small business budget then say a domain that may cost a few thousand but is a single English word that sums up your business...but for the rest of us there's those two word domains for a $8.95 at Godaddy. On the upside, whenever I spend some time checking domain availability I'm almost always able to grab two word domains that are descriptive and easy to remember so there's still plenty of good names to be had, just don't expect lots of type in traffic.


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