Domain Economics With Dan Warner – Live From Traffic DownUnder 2008

Dan Warner presented on Domain economics covering the basics of supply and demand, inputs, risk and outputs.

One excellent point that was made is that “original thought” is the difference between using a search engine and type-in traffic. For many people it was one of the those lightbulb moments, where you thought, yeah that makes sense.

Key points:

• Should we go build that new thing that looks cool but wont make money?
• What should we build today, tomorrow or never build?
• The industry does a lot of non-commercial things. eg: ego, demands etc..

Statistics

• Single transactions have no value as data
• Need to look at total ROI
• Without evidence, assumptions have no relevance
• If you cant show that you can get consistent results, nobody will give you any value (meaning you are worth less).

Business Framework

• Finance
• Cost cutting
• Risk
• Growth

If you have high risk, like developing with a shotgun effect, that will significantly increase your risk.

Domain names only have two outputs:

• Traffic (Commodity Cash Flow)
• Future Rights (Sale Value)

Development has no value only output variants such as cash flow and sale value.

Most traffic has only a transient value:

Type-in Traffic

• Behavior (experience)
• Technology (mediation)
• Alternatives (subscription)
• Evolution (fundamentals)

Referred Traffic

• Search (algorithm)
• Social (human)
• Linking  (hosted)
• Spruiked (inbound)

Banished Domains

• here today -> gone tomorrow

Rate of Sale

• Nothing has value until it is sold
• Rate of sale is based on feedback from the market
• ROS is between 1% and 5% per year
• Opportunities that exist today might not be here tomorrow
• All domains are not created equally
• What is that dollar worth today vs in 10 years time?