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Here I am at 30,000 feet flying over the Pacific Ocean with Hawaii just off to the left. After blogging for this year it's funny where and when you get a great inspiration or a new insight into our amazing industry.
 One of the first things I did when I first boarded the plane was check to see what was on for the in flight entertainment. Other than the usual Hollywood movies, sitcoms and foreign language films there were two business shows that grabbed my attention. I've just finished watching them and I'm feeling even more excited about journeying to TRAFFIC then when I first booked my tickets. The two shows depicted the power of the Internet, branding and how the Internet is dramatically challenging long established institutions. This was right up my alley!
The first program was on the history of the iPod and how Steve Jobs saved Apple from financial ruin. It was a great story but what really spoke to me was:
- The inability of the music industry to change (many of them still haven't) and embrace the Internet as a distribution medium.
- When the documentary was produced there were over 2 million music downloads off iTunes per day.
- The whole success of the iPod boiled down to white headphones (brand) and simplicity of use.
Potential conflict of interest - As I'm writing this I'm listening to music on my own iPod nano (kindly donated by Sedo). We laugh at the music industry and their Neolithic ways, after all we all move with the times don't we? Just think about your own domains, when was the last time you actually tried to improve your revenue line with your own innovative concept? When was the last time you seriously did a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the domain industry? It's sad to say b ut many of us may risk becoming the dinosaurs of the domain industry like many in the music industry are to iTunes.
In rough figures domainers are receiving 58% of the advertising pie with Google taking 15% and the parking companies 27%. What keeps me awake is thinking about how to get access to the additional revenue I'm not getting at the moment.
The whole $17 billion music industry is going "ga-ga" over the number of music downloads on iTunes and yet we domainers are sitting on vastly more traffic and potential across multiple industries.
 I recently asked a friend of mine an important question, "Do you really want to change the world with your traffic or just get an improved revenue line?" There's nothing wrong with improving your revenue line but should we be satisfied with earning our 58% or should we begin dreaming of something new like the domainer equivalent of the iPod and change the world? I believe that it's time that the established Internet hierarchy begins to feel the power of domainers. Yes, we're mavericks, yes we may be radical but who ever changed the world without having those attributes?
The iPod brand boiled down to a set of white headphones that could be clearly visible to anyone seeing an iPod user walk down the street. The problem with domaining is that we don't have a brand that is visible to advertisers. I've heard statistics indicating that direct navigation is twice as successful to advertisers and yet Google provides a way for advertisers to exclude our traffic. Work that one out? So much for Google's quality smart pricing system! We need a brand and a rallying call that allows us to focus and flex our traffic muscles so that we can negotiate a bigger slice of the pie and dramatically change the capital multiples we can achieve via a domain sale.
The second show I saw was on the how blogging and the Internet is completely changing the media world. As a blogger I just had to watch this show. There were a couple of really interesting points raised:
- Google needs newspapers for their content and traffic
- Mainstream media is trying to find the "sweet spot" for handling this diversified super local/niche market of blogging.
We've heard it at traffic before but I believe that it bears hearing again. Google is desperate for traffic! Without traffic Google's advertising model dies. In the year 2007 it is projected that domainers will provide $US1.1 billion in revenue to both Google and Yahoo. This amount is growing at 35% per year, which is HUGE!
EPC prices for many market verticals are maxing out at the highest profitable level for advertisers and this will cause Google some problems. Up until now advertisers have been trying to find the level at which PPC prices are profitable. Sometimes they've over bid and at other times they've under bid. This has been great for Google as they rake in the dollars but now advertisers are getting smarter and the natural law of the market is coming into play.
Once the EPC ceiling is reached for each market vertical the growth is all up to increasing the volume of traffic. The global number of Internet users is increasing by about 4% per year. This is a large number but not really enough to spur on blue-sky share prices even further.
What this also means is that as domainers we corporately have an opportunity. Our traffic IS VALUABLE. If we were to suddenly turn our traffic off for a day it would have huge impacts on parking companies, Google and Yahoo. The problem is that I don't believe that they really understand this because we haven't made it clear to them.
In a similar fashion many mainstream media outlets which are valued at billions of dollars are not getting the fact that the volumes of traffic that we all control actual exists. News Corp (of which I own shares) buys myspace for $580 million and does what with it? Not an enormous amount at this stage. They were trying to buy a hard to access market segment that has been leaving television in droves. I know a number of domainers with more traffic than myspace and yet their portfolio is valued at drastically less than myspace. What's interesting is that the domain traffic is not under the same threat from competitors like Bebo and facebook. In fact, they are opportunities for domainers.
This all leads us back to iTunes.com. I'm sure that none of the corporate high flyers have even considered the fact that itunes.com is a domain name and that there are a lot of domains generating huge volumes of traffic from direct navigation. Verisign posted a recent report saying that 23% of all domains are parked. That's a LOT of domains and even more traffic.
What should we do about all of this? Sure we could always pull our traffic from Google and switch it to Yahoo or from one parking company to another to show them our muscle but I think that there is often a better solution that involves brains. There is one thing that I know about domainers and this industry and that is we all think very differently from the average corporate desk jockey. I believe that it's this different thinking that will ultimately present a solution.
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