Acro.net – Technology Rants & Raves by Acroplex®

A few years back, I had the pleasure of networking with Nat Cohen, President of Telepathy, Inc., a web development and Internet branding company based in Washington, D.C. The company was founded in 1999 and since then has been associated with a hearty appetite for building – among others – a portfolio of generic domains and LLL .com’s.

In today’s short interview to Acro.net, Nat Cohen shares with the rest of us some interesting and valuable points that led his company to success through strategic acquisition of generics and LLL .com domains.

How did the idea of registering available LLL .com’s come to mind? When did that initial registration occur?

My first registrations occurred in 1998 from drops. All the decent LLL.com were registered even back then. The value in LLL.com seemed clear since they were so short, worked well as Internet addresses, and businesses love to use acronyms. There are hundreds if not thousands of worldwide uses for each acronym, so the supply/demand imbalance supported the value as well. It also didn’t require much mental effort to research them since they are a relatively small, defined group.

Do you invest in longer names, such as LLLL .com’s in a similar manner? Or other TLD’s in the LLL realm?

I have a handful of LLLL.com domains that I picked up cheaply a while back, but I’m not actively investing. The supply/demand balance is much poorer for LLLL.com, but I think there is still money to be made there. I am actively investing in LLL in other TLDs.

Do you think the .biz/.info/.us Registries should open the market to domains less than 3 characters? Is that something you’d invest into – 2 letter .biz/.info/.us domains?

I don’t see a reason for those registries not to offer 2 character registrations. I think 2-letter domains in those extensions would have value so I’d be a buyer at the right price.

What do you think of today’s aftermarket expansion, e.g. auction houses, registrars that perform auctions etc.

I think the development of a robust after market is very healthy for the industry. It has a down side because it is often harder to negotiate purchases with private owners since they want to expose their domains to the secondary market. But on the positive side it lowers the barriers to bringing domains to market so more domains are being made available for purchase than might otherwise. The aftermarket is a sign that the industry is maturing beyond its lone wolf origins. The aftermarket brings transparency to domain valuations and helps educate the public about the value of domain names.

What risks do you see ahead?

There will be an intensifying struggle over the control of the most valuable domains, and the rules that govern the rights to domain names. As domains become more critical to businesses, businesses will seek to control those assets in the most cost-effective way. Sometimes that means trying to seize domains rather than pay for them, or change the rules that govern domains to the business’ advantage. While I don’t know all the facts in the matter, the decision awarding myspace.co.uk, which predates the MySpace social networking site, to MySpace seems to be a blatant example of big business’s attempt to seize valuable domains.

Domain owners do not hold secure title to their domains. Registrants of dot-com domains and the other primary extensions have to agree to arbitration rules that can result in the loss of their domains. The arbitration rules are very loosely written, subject to wide variations in interpretations, and decided in an environment where allegations are often substituted for facts. The risk/reward ratio is heavily tilted in favor of the Complainant who merely risks some money and has no other downside, whereas the domain owner faces the risk of losing a potentially very valuable domain and the expense of defending any claim, no matter how frivolous.

Many domain owners have an aversion to politicking, lawyers, and lobbying. But the viability of domain ownership may depend on becoming active in these areas. Anyone making a living or seeking to make a living from domains should support the Internet Commerce Association. Domainers have been very fortunate and to protect our good fortune we need to become more engaged with ICANN, to donate domains to ICA fundraising efforts, and to contribute to legal defense funds.

Six or seven years ago, I saw a market for short, easy to memorize .com domains. Short, as in 3 characters in length, including one or more numbers; because the LLL .com namespace was long gone.

I wrote a Perl script that would go through all the permutations of 000 to ZZZ – all 46,656 of them (26 letters plus 10 digits, to the 3rd power) and it’d look up the .com of that generated string. This technique is called “brute-forcing”. To my surprise, hundreds of them were available.

Back then, domain registrations were finally cheap. GoDaddy was one of the first affordable new era registrars, and I believe that I was paying $12 for each registration. Later on, I got a reseller account with Stargate and the cost dropped to less than $7.

It was a non-brainer. I registered dozens of 3-character .com domains, then I became picky: I’d only select the LLN or the LNN flavor, simply because it’s easier to remember KP3.com or T11.com instead of 8SP.com or 7V4.com

Many of them were sold on eBay at $50 a pop, others reached triple digit status there or on various domain forums. Others, were sold in private through various inquiries. Companies offering parking pages were non-existent back then; I simply forwarded each domain to an inquiry form. There were so many of them available on a given day, that I started giving away free lists of available domains.

Time passed by and things have changed – there are no more 3-char .com’s that ever make it into the wild, not even for a day. The proliferation of after-market auction houses such as Sedo and Afternic and the sneaky entry of registrars into the game, made it impossible for such a thing to continue happening.

Eventually, entrepreneurs and domain speculators moved onto the next thing: LLLL .com domains. That is, four letters (A to Z) regardless of letter quality. It made sense that somehow, these longer but still short domains would be valuable in the future. Not too long ago, all LLLL .com combinations were registered. All 456,976 of them (26 letters to the 4th power).

The fact is, hundreds if not thousands of these domains were registered en masse by speculators, attempting to capitalize on this apparent “craze” of LLLL mania. The fact is, several good letter LLLL .com’s drop daily and are offered via auction houses and drop-catching services. The fact is, one day not too long from now, thousands of LLLL .com domains will drop within a few days of each-other.

Artificial bubbles do burst eventually.

There is a trend in the domain market – much like in the stock market – to facilitate sales via the spreading of rumors. The difference is, the pump and dump techniques of the stock market are punishable by law. So what is the current rumor in the realm of domain speculators? That 5-Letter (LLLLL) .com’s is the next big thing.

Give me a break.

OK, so I might own a few myself. One that pops to mind is Glute.com and it’s a valid dictionary word. It’s that big muscle that forms my butt-cheek. There is a difference between being an ass and making oneself an ass in public. And LLLLL .com’s being the next best thing since sliced bread, is exactly a manifestation of that.

No, I won’t be going through 11,881,376 permutations of LLLLL .com’s (26 letters to the 5th power) in order to find the ones that are available. I can simply select the few valid, dictionary words of 5 letters and look them up for availability – or not! Because most valid dictionary words are already gone, folks.

You won’t be seeing me in the LLLLLLLLLLLL .com arena, a couple of years from now. I have better things to do than be a lemming of wishful things that never happened in my time.

When I was growing up as a teenager, my friend Mike would always say that one should seize every given opportunity by being alert and prepared. During our trips to downtown Athens’ “Silicon Valley” shops where all the new gadgets, computers and software first appeared, Mike would bring with him a small chunk of cash – “just in case“. Indeed, on several occasions he bought a computer peripheral or a new software game that existed in only a single copy. Sometimes he’d resell these at a nice mark-up. Mike would have done well on eBay – if it were around in the mid 80′s!

In today’s fast-paced, global community, opportunities arrive and go in bursts; the chances to get more things done diminish as the world economy and markets are interconnected, non-stop, 24/7. One has to split their sleeping pattern in order to achieve maximum alertness during the times that people from other timezones are actively promoting their offers and items.

The 6:30 am Domain Gold Rush days are long gone; nowadays domains worth more than their registration fee are rarely released to the general public, without being auctioned through a variety of after-market vendors, like NameJet, SnapNames and Pool. But one can still find great deals at various domain forums, where the sellers and buyers actively trade. At DNForum – the biggest domain name community on the Internet – one can find domains being offered at fixed prices, negotiable prices and …outrageous prices. The key to getting good deals is to keep a trained eye onto these sales.

Power naps help. Sleeping 30 minutes to 1 hour in the middle of the afternoon or early evening, helps restore the alertness and the ability to sustain oneself into the small hours of the night, before bed time. As I am writing this article at 2:15am, I am still plentifully energized by today’s power nap for a couple of more hours. This helps me keep in touch with the European and Asian markets that are active and several hours ahead of Eastern US time.

So there you have it: keep an alert eye, use the best resources, take power naps. Let the power grabs follow!

There are two distinct species of predatory fish, swimming in the seemingly calm waters of Domaining: the domain hustlers and the sharks. At least, that’s what my gut feeling tells me – and I am partial to my gut since about forty years ago.

In the coming days and weeks I will attempt to lay out the intricacies of the domain pool, a world infested by known and unknown species, despised by the media and promoted by the industry itself – out of desperation and resourcefulness. A universe so dense, that sometimes light does not escape the depths of its abyss. Knowledge is power and sharing it makes a few of us feel considerably better – and the sharks & hustlers become less dangerous.

This is my technology ranting blog and I am here to tell it like it is. Stay tuned!