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NY Times Article on Domainers

Asserts Domaining is Attracting Bigger Investors

12:55 am on Feb 2, 2008 (gmt 0)

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Investors are so confident in the growth of online advertising — and the ability of domainers to capitalize on that trend — that they plan to soon start selling shares of domain-name companies to the public, even in today’s volatile market.

The article also discusses domain tasting, typo-squatters and domain hijacking.

4:56 pm on Feb 2, 2008 (gmt 0)

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Nice find.

I suspect that the savviest investors in such companies will be those who can assess the "break up value" of their respective portfolios.

The aftermarket acquisition analysis of portfolios tends to focus on mutiples of current traffic, which in my book is utter rubbish.

I'd look not only at current traffic but also, in no particular order:

  • Break up or auction value of the package
  • Traffic trend patterns. For example, is the portfolio weighted in favor of traffic that's emerging or declining
  • PPC trends for the traffic. Is "the market" (sector) just waking up.

These are just a few considerations.

I'd also look at the ethical track record of management. Did upper management cut their teeth on dubious domains? Did they start off by acquiring dubious domain traffic? Are any of the players "notorious"? The reason I would is because character tends to be a constant and it may be too easy for insiders to bleed "the value" whilst leaving the detritus in such large portfolios.