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Making money on domain names: dirty business or brilliant strategy?

Posted on May 26, 2007
Filed Under Domain Names, Venture News |

A few years ago Business2.com had started series of articles on little known and shadowy world of domain masters.

Masters of their Domains - “Forget condos and strip malls. Domain names, the real estate of the Web, have been delivering far greater returns. How some of the savviest speculators on the Net are making millions from their URL portfolios.”

Year after the first article Business2.com has offered another article describing how Richard Rosenblatt verifies the concept behind domain name investment and jumps into it.

Giving the Audience Its Own Domain
Richard Rosenblatt helped broker the $580 million sale of MySpace. Now he wants to build millions of sites like it - this time, in vertical niches.
“A few months later, Rosenblatt was casting about for ideas for his next startup when he came across an article in - yup - Business 2.0 bearing the headline “Masters of Their Domains” (December 2005). The story was about how domain-name speculation had been transformed by cost-per-click advertising systems, how millions of people ignore search engines and type what they’re looking for directly into their browser’s address field, and how the owners of generic addresses (Candy.com, Cellphones.com) profit by setting up pages where the only content is blue-text link ads. The story set off a chain reaction inside Rosenblatt’s head.
“I thought, it can’t be that easy,” he recalls. “So I talked to some domainers, and they said, ‘We own 300,000 domains, we make $20 million a year, we have just four employees and some servers in the Caymans.’ ”

Finally, about week ago Business2.com published story about Cameroon domains which ignited hot debates whether domain name investment is dirty business or brilliant business strategy.

The man who owns the Internet
Kevin Ham is the most powerful dotcom mogul you’ve never heard of, reports Business 2.0 Magazine. Here’s how the master of Web domains built a $300 million empire.

Michael Arrington in his post The .CM Scam hardly took diplomatic approach when labeling Cameroon domain deal as “one of the cleaner scams occurring in the extremely dirty domain name business”.

That reference grossly pissed off Frank Schilling - yes, that Frank Schilling (”Frank Schilling made his mark buying generic .com names in 2002 and 2003, when others were fleeing the Internet. Today his portfolio of 320,000 domain names is among the world biggest, and he works out of his home in the Cayman Islands.” - Business2.com).

That resulted in fiery word duel in Techcrunch comments that later were deleted. Here are original excerpts of this duel when shit hits the fan:

Frank Schilling
May 22nd, 2007 at 7:59 pm
I agree with a few others here Michael. You make yourself look foolish when you unfairly and inequitably malign an entire industry because of the actions of some. A few short years ago you made your living in the dirty domain industry. While I understand that your employment tenure in the industry may have shown some unsavory facets and your exit from the Canadian company you worked for may not have been to your satisfaction, calling the entire industry ‘dirty’ makes you no friends and garners you no respect by those trying to shape it in a positive way. I look at all the worthless bags of smoke that you pump on this forum, all the investors you sell down the river in these Web 2.0 jokes. Who’s dirty Michael?

Michael Arrington
May 23rd, 2007 at 2:22 am
Wow Frank. I didn’t know there was bad blood between us. Good to know I guess.

Frank Schilling
May 23rd, 2007 at 7:29 am
There was certainly never bad-blood Michael. “BUT” .. you used to make a pretty good living in this neighborhood.. Your employer made a lot of money selling me domain names. So to read you labeling the ‘entire neighborhood’ as “dirty” after you’ve personally profited there, just doesn’t sit well. Many people read what you write and take it at face-value. So you’ll have to exuse me if I make you uncomfortable as I speak up to defend an industry which is not as ‘universally dirty’ as you intimate.

Michael Arrington
May 23rd, 2007 at 10:15 am
Frank - you didn’t just defend your industry, you suggested that my “employment tenure in the industry may have shown some unsavory facets and your exit from the Canadian company you worked for may not have been to your satisfaction.” Neither of those statements are correct. My record is clean and I’m more than happy to go toe to toe with you on this. You want to get into it, let’s.

Frank Schilling
May 23rd, 2007 at 11:02 am
I was under the impression you were an employee at pool.com and that when you were fired you didn’t feel good about it. So maybe that’s why you lashed out calling the space the: ‘extremely dirty domain name business’ .. why else tar an entire name-space, the staff at ICANN with the same brush. You worked in this space?

Michael Arrington
May 23rd, 2007 at 2:51 pm
Frank - “when you were fired”
Now I suspect that you know that’s untrue and that you know the real reason why I left Pool, and how I was protecting customers like you when I did it. You’re fucking around in the legitimate web right now, Frank, and your status as king of the squatters doesn’t mean much. And you’re being a serious asshole. Go back to your hole.

kamal
May 23rd, 2007 at 3:00 pm
Michael,
As a regular reader of TechCrunch, am surprised with your tone in this article and comments. Your readers are entitled to opinions, and since you’ve enabled comments, to air them.To respond to them in a personally aggressive manner only dilutes TechCrunch.

Michael Arrington
May 23rd, 2007 at 3:04 pm
Kamal - disagreement is fine, I’m used to it and there are tons of disagreeing comments above that I left without responding. But Frank went personal. And he was factually inaccurate in suggesting that I have dirty hands in all of this. He’s not just wrong, he’s making it up to try and support his argument - he knows very well why I left Pool. Frank is a person that I know indirectly as one of our larger customers when I ran Pool. In general I liked him, and he certainly sent us a lot of money. But he just jumped all over me, and I assume its because the last thing guys like him want is broad knowledge of just how dirty the domain industry is. If he’s going to accuse me of this stuff, he needs to back it up with facts, which he can’t do.

Now with regard to letting people leave comments, you’ll notice I hope that I have not deleted or modified what he said, which many bloggers would do (and certainly any blogger with an audience of this size). That doesn’t mean I’m not going to respond back, though.

A lot of the people involved in this industry are involved very seriously in organized crime, money laundering and tax evasion. They’re thugs and they think they can bully people into keeping quiet. That’s not going to happen, and if he keeps pushing on this I may write a whole post on exactly what these guys do, and how they do it.

kamal
May 23rd, 2007 at 3:09 pm
Since we’re on the subject, am wondering why no one is making a big deal about Demand Media auctioning off trademark names followed by .TV (ie: NFL.TV) for high amounts? That’s a scam. Making a deal with a country to monetize their assets isn’t.

Michael Arrington
May 23rd, 2007 at 3:12 pm
See, that’s honest disagreement, and you didn’t have to accuse me of a crime to say it.

We are not taking sides in this war of words - we are silently jealous of not thinking it first to take flight to Cameroon.

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