Some interesting discussion,

"Strong posed a question about multiples. He asked if any of the others would sell a domain for 5x-10x earnings."


"Strong took the point, but then asked, “1 name at 5x [annual revenue]. Would you sell it”.

“No”, responded Schilling. “If you’re able to make money without selling domains, then you can say no. What’s the difference between a $7,000 name and a $70,000 name? I’ve had people come to me with a $7,000 offer and watched it grow to $70,000. Somebody who doesn’t want to sell will ultimately get a proposal for almost the maximimum amount.”

Sarid said he would sell a domain for 5x-10x if the circumstances were right. “We will sell for 5-10x. It depends on the circumstances."

"Schilling said, “Some of [this market] has a very bubble-like flavor to it. However, there is a counter dynamic going on. Regular people are starting to decide they need a web site. There are definitely bubbles going on in the world, but you also have an industry maturing.”"


http://domainnamewire.com/2007/08/13...market-bubble/

"We will sell for 5-10x"

...you can sell for whatever you want in an immature industry.

"There are definitely bubbles going on in the world, but you also have an industry maturing." - Schilling-

Is the domain market a mature industry? How close is it from maturing? Multiples don't mean squat in this market. They only mean something when a company is trying to buy your domains and justify paying you peanuts.

When it is mature and transparent, you might be able to establish a fair price. HOLD!

Originally posted by namedog
They only mean something when a company is trying to buy your domains and justify paying you peanuts.

When it is mature and transparent, you might be able to establish a fair price. HOLD!

This would only apply to a % of the market. I think you are coming at this with a very seller centric view. Many names in the market aren't worth 5X, some probably aren't worth 2X.

he said he would sell at 5-10x if he needed to based on his circumstances...

Originally posted by The Columbian
he said he would sell at 5-10x if he needed to based on his circumstances...

OK...I reread it. While he does say "It depends on the circumstances. If something happened in my house...or I need the money for something" he also says “I’m actually a big fan of multiples”. I am just not a fan of multiples when it comes to domains right now. I think their are too many other things going on that will radically change revenue, especially for those that are developing their domains. And, Snoop...yes, my view is a "very seller centric view".

I think there is to many variables to be generalizing, so many different markets, so many different extensions,so many different Industries/Segments , some poised for growth and some declining, hence each domain is analyzed on its own terms ...

Among domainers is a "doggy world" where I beleive "multiples" are used most often than not...

From a sellers prospective each company/domainer has it's own
" pricing model" and "*discount tolerance" (* Some at the moment seem to have none, while some domainers won't even dignify themselves to answer a request for price) , most savvy domainers once they know there is an end-user at the end of the line throw the"multiples" out the window.

(unless of course you have an opportunity to reinvest on a "much better domain " and a cash-flow problem in that case "time is of essence" in a way it seems I am describing my own permanent "State of affairs")...

I still say the multiple question will evolve to how many years revenue an end user has to pay for the traffic ie: it would still be possible for an end user to pay 5 or 10 times his cost to buy the traffic if he has the domain at the end of the day, otherwise by just buying the traffic alone he has nothing to show for it at the end of the day. Another misleading fact is depending on where it is parked I get 10 cents a click on the same name that i get a dollar a click so even coming up with a basis revenue on our end is inconssistent

The only way to properly assess a domain's true value is to know exactly what someone is making off your traffic up the food chain. Multiples based on PPC are a ridiculous way to value a domain. A sucker's lunch.

Someone is paying Google a $1.50 to get a customer they're converting at $1000 and you're going to value your domain based on a multiple not of that $1.50 click, but your share of it, maybe .75c??? Lunacy from every angle.

There was a time when multiples made sense in some way, as most domainers were too lazy to develop or see what was higher up the chain. But now, it's totally different.

Side note about Roundtable reporting.

It is interesting that Adam nor Frank have made any postings
to their site DomainNameNews.com about Roundtable discussions.

Whereas, www.DomainNameWire.com has made 2 postings.
And, DNJ has also made 2 postings. www.dnjournal.com/lowdown.htm

Originally posted by InnovationHQ
The only way to properly assess a domain's true value is to know exactly what someone is making off your traffic up the food chain. Multiples based on PPC are a ridiculous way to value a domain.

Thank you.

The whole "Multiple" question is a joke. For normal public companies there is a basis and history to determine earnings. For domains the revenue changes from parking company to parking company, and from keyword to keyword.

Also, the domain owner generally shares about half the revenue with the parking company, if you are selling domains for "Multiples" and they are parked, you can essentially just cut your multiple in half.....if you sold at 8 times revenue then you really just sold at 4 times revenue....especially if the buyer gets a direct deal.

To even compare domain names today to stocks with 30-40 years of earnings history is to totally shoot yourself in the foot...if you sell based on these metrics.

All of the buyers are laughing when they buy these names. They pretty much get a total safety net, while also getting upside that will likely be in the hundreds of percent...often thousands of percent upside.

When you buy a seasoned stock for 8 times earnings, if you are prudent, you are generally a value investor and are not expecting huge gains in any short period of time.

Anyone who consistently sells revenue names for the current multiples is giving money away......assuming no ticking time bomb trademark issues.

Millions of dollars in assets are being transferred to those who have a clue. That is the way it should be.

Revenue is a bonus for most great names. Snap Names sells hundreds of names per day, many for big money.....no revenue information is available.....and nobody cares. The people buying have generally made money in the domain business, so they likely know what they are doing.

DN Journal sales are listed without anything but the price....the buyers of those names never ask for revenue. A great name doesn't need much else.

A name is a name is a name. The "with development it could be worth more" comments are mostly a joke. Some names lend themselves better to development, and this adds to their value, but a name should stand on it's own.

If you are selling a developed website then you are not selling a domain name, so give it up. People who buy great names are buying great names....not websites.

Big sales of developed websites should not even be reported, yet most everyone in the industry trumpets them as headline making news. That is dishonest and doesn't make sense. It is the difference between Google the domain name and Google the business. When Google went public it wasn't a domain name sale, it was a sale of stock in a business.

These credit report names that recently sold should not even be reported. Why mislead people?

Also, the domain owner generally shares about half the revenue with the parking company, if you are selling domains for "Multiples" and they are parked, you can essentially just cut your multiple in half.....if you sold at 8 times revenue then you really just sold at 4 times revenue....especially if the buyer gets a direct deal.

Unless the seller can sell to someone else for more or earn more themselves then it's pretty immaterial that they're getting a share or a share of a share.

The bottom line comes down to what the seller can get/earn over the timeframe they're working to vs what they can get now.

The argument reminds me of people who just compare park companies based on the percentage revenue share not what they actually earn - the focus is in the wrong place.

Originally posted by safesys
Unless the seller can sell to someone else for more or earn more themselves then it's pretty immaterial that they're getting a share or a share of a share.

The bottom line comes down to what the seller can get/earn over the timeframe they're working to vs what they can get now.

The argument reminds me of people who just compare park companies based on the percentage revenue share not what they actually earn - the focus is in the wrong place.

Not true. When the buyer IS someone like IReit and they are offering you 8 times earnings then they are actually paying 4 times earnings. As long as the sellers are clueless that they are being taken advantage of then the show will go on and everyone will continue to laugh.

The people doing the buying would not sell you their good names at 20 times earnings, so keep selling the names and regret it for the rest of your life. If you don't understand why applying formulas from a PE perspective to the domain business (when parking is about 3 years old) is a mistake, then go ahead and sell as much as you can. Sometimes the only way to learn is to make huge mistakes on your own.

Not true. When the buyer IS someone like IReit and they are offering you 8 times earnings then they are actually paying 4 times earnings. As long as the sellers are clueless that they are being taken advantage of then the show will go on and everyone will continue to laugh.

I don't think you read what I wrote - unless you think its better for a seller to make less money just because someone else could make more.

It only helps the seller if they can access that higher earnings either by increasing their efficiency or by selling to someone else for more money.

Maybe an example will clarify it:

smallfry earns $5k a year with his parking company, the most efficient parking company available to them due to their size.

bigfish offers $40k (8x smallfrys earnings).

bigfish knows they will earn $10k per annum making this a 4x multiple for them.

over a 5 year period, assuming smallfry can't improve earnings and nobody else is going to offer the same amount as bigfish (who can offer it because they're a big fish) then smallfry can either:

sell for $40k

continue to hold making $25k (5 x $5k)

it makes no difference to smallfry that bigfish can earn more from the same asset - they can't access it.

smallfry aren't entitled to the same economies of scale as big fish and if they think they are then they're kidding themselves.

The only weak point is assuming the small fry might not
be getting a better deal from the ppc companies.

I believe the ppc companies are cutting different type deals.
And, it is very easy to move from one ppc company to another.

Do I really know what percentage they are sharing/giving me?
Not really.