Valuation of Internet Domain Names - Hi Oldies !!!

[TheOne]

Wow..... I can't hold my breath...!!
Business.com was sold for US$ 7,500,000/- , Loans.com was "grabbed" for US$ 3,000,000/- and registrant of America.com was demanding US$ 30,000,000/- for it....but why? How?? Can my respected Good Oldies give any criteria for valuation of this sort of "Intangible Asset"????? Is there any Accounting Standard for "Domain Names" Valuation????? If yes, then surely I can also be a millionnair (at least) in books... and if there's no such Standard... then who should define One for ICAP or IFAC?. It's totally strange field for Accountants. I'll wait for response.



Edited by - TheOne on May 12 2003 012121 AM

[Cricketer]

Well, this trend of domain grabbing is dying down since a court in the US has decreed that a person cannot ask for such exhorbitant prices for a domain from companies whose name or trademark resembles the domain name. That is, one cannot register the domain coke.com and then sell it to Coca Cola company for millions of dollars anymore.

As far as the question of valuation of such domain goes.... hmmm. I guess that it should be done in the same way as one values trademarks.

[TheOne]

Hi Cricketer,
You're right, One could never register Coke.com or McDonalds.com. but It became well understood long ago. You see I didn't mention examples of any known brand names. It was simply Loans.com...or Business.com which fall in the category of "Generic TLDs". Thus it could be registered & owned by any body. It's like Water.com or Milk.com instead of NestleWater.com or TetraPackMilk.com... Today, having registered such a name which includes an element of Copyright or TradeMark or ServiceMark would be simply waste of time and money. Rather it can attract a penalty and suit for damages for millions of dollars.
I was referring about the "Generic" names. After numerous lawsuites, definition of generic names had quite expanded and transformed. Recently, even Queen of England lost a suit for claim of a domain name. Pakistan.com should've been property of Govt. of Pakistan, but it's not... and it's for sale in the open market. Most of the muslim and Islamic domain names are property of non muslims who've registered them to earn windfall in future. So, now I think that I've made clear my point about nature of domain names I was talking about.
Regarding valuation, your "guess" didn't work. Because, as I explained earlier, it's regarding valuation of "Generic" names. A generic name can never be registered as a trademark or copyright. e.g. nobody can register "Water" a trademark... (but yes, NestleWater is an implied trade mark whether Nestle registers it or not), thus a domain name can't be valued like a trademark or trade name or servicemark. There have to be some other basis or criteria for valuation of gTLDs (Generic Top Level Domains). Further, a trademark may be specific to any certain type of goods or services, because trademark is registered only for certain "Class(es)", but a Domain name can cover both of these or...none of them.
Now, you've got a full toss, hit a sixer.... and I'll catch it.



Edited by - TheOne on May 13 2003 012746 AM

Edited by - TheOne on May 13 2003 013048 AM

[Khurrum]

a good discussion, but it is so simple to answer. the best way to value these sort of item is Cost or Market value. so simple really.

[TheOne]

May be talking about "basis" of valuation is so simple but Valuation by itself is never done on any simple perception...really!!! it's always done on some basis... either cost, replacement cost or market value. Most logical & appropriate would be "Market Value" (specially after bursting of dotcom bubble). This is what I'm trying to discuss that "How to determine the market value of any domain name?" and "What factors should determine such market value"?.... to make discussion more clear.. let's take the example of "Accountancy.com" and "Accountancy.com.pk"... How should we determine market value of both of these?



Edited by - TheOne on May 14 2003 95345 PM

Edited by - TheOne on May 14 2003 95536 PM

[Paki]

Asalam o alaikum
A realy interesting question... I'm not so sure if its 'cost' or 'Fair Value' that we should measure it at,,,, initially there r chances that both r gonna correspond... however u r more interested in knowing how to measure the fair value (as I can make out). Well, lots of factors are gonna be considered for that, for eg. loan.com may not have value for u, but for a bank it may carry great value (so we consider VALUE TO THE PROSPECTIVE BUYER, rather the market as a whole or should I say that selected group of buyers is the market for the domain) plus a common determinant is the traffic that site attracts (this is more important when FV is reviewed subsequently) we can also segragate the 'active traffic' that is those who actually transacted on the domain and 'surfing traffic' that only had the promotional value etc. A thing that may bring negative move in FV is the association of a particular domain to a brand for eg. if MCB owns 'loan.com' and people have used it for quite some yrs and have started associating it with MCB, then probly for MCB its value maybe great but for HBL or other banks it may not be so much, cuz they thing its already taken over and so the active market for 'loan.com' may substantially reduce.
Hope this helps, and if u've anything to help me on and add to this interesting issue, pls.

[TheOne]

Good arguments but please consider followings
1) Your point that Loans.com may not have value for me??? No way... I wish I could have that domain. Because my dear now a days good generic internet domain names are also being "Leased" and "Rented" out on "Rent Per Click" basis. good generic domains are perpetual gold mines. So, who'll like to kill the hen?? This argument is not working. When Bank of America bought Loans.com, probably they worked out all potential benefits from the domain before agreeing and paying the price. It could've been equally beneficial to any other bank like BOA. Similarly ABN Amro Bank bought Mortgage.com for about US$ 700,000 (I don't remember the exact figure.) I think their decisions were based upon pure merit of the bargains.
2)Your point regarding traffic is absolutely right. But still, traffic may be "One" of factors to be considered. Sometimes, names by itself never attract any traffic but it's the "Brand Building" which generates traffic. Look at Yahoo.com or Google.com or eBay.com ???? How commonly we see these names out of cyber world?? In these cases actually it was brand building not the "originality" or "popularity" of names.
3) Your argument that may be after some years or after a reasonable period, Loans.com would of no worth to anybody but Bank of America???? Think again... your conclusion should be otherway round. Please note we are talking about "Generic" names not Trade Marks or Branded service marks.... In my opinion, suppose after certain period everybody comes to know that Loans.com is owned by BOA and suppose, somehow, BOA loses that domain to some other registrant.... think what would happen??? My dear may be at that time, BOA would be ready to pay double or even more than the price earlier paid. It's not my perception or "Andaza".. It had already happened at so many occasions. I read quite a time ago that Microsoft had mistakenly lost domain "Passport.com" which it uses for "Hotmail" service. Resultantly, all email handling servers were down because domain name was not there to reach those servers. So, it was bought back by Microsoft for an undisclosed amount....
Now please let me know what do you think....??



Edited by - TheOne on May 20 2003 030404 AM

[Paki]

1) I was thinking u were gonna say that, but what I meant was 'absolute use', i.e. in the absence of an active market u wont be able to value ur asset on the basis of future cashflows that u might expect from it to flow to u (cause u r never gonna be able to sell it and only a direct user can use the asset and it already has some other asset doing great)
part of 1) u say it could have been equally valuable for another bank (u r right) but I was talking about, what if people might start to associate a particular 'generic' domain to a specific brand??

2) well if its 'brand building' that's causing traffic on a domain, then I dont think that domain realy has much value prior to 'brand building' only after the brand building is it gonna have a value, and I dont think somebody's gonna develop a brand (means carry on the bussiness represented by the brand) and then sell it (unless its his business) and besides if he actually goes out selling it, the same question of 'associating a brand to a generic domain' comes to mind...
and u r right that 'traffic' is 'one' of the ways, but like I said, its more important in subsequent measurement to fair value.

3)hmm, that's a food for thought....... u r right there, but is there something of an onerous contract in it???? (when u lose it) and the question remains, it still wont have any value for a direct user... but u r right still........ see if u can move further on ur point 3 and additional stuff aswell.

[TheOne]

Don't beat about the bush. Study the domains market a bit and you'll get so many things cleared in your mind. If you knew about my reply, you should've framed your arguments accordingly.
No point in arguing with a person who goes as per his "andazas" and "Khyals". Whatever I referred was backed by market facts. For the time being only just one further market fact in reply to your yet another "andaza" about brand building that Hotmail.com was built upon lot of futuristic perceptions prevailing intellect (at the time of its development) by two individuals with a total cost of about US$ 900,000 which was of course borrowed. After it's development and creation of market, Microsoft was compelled to buy it for US$ 400 Million. Now it's value is estimated above US$ 1 Billion. It's history. This is brand building and reply of your personal "andaza". Not only this, look at international scene, every brand is for sale... only required price should be there... happy study.

[TheOne]

Further info for learned contributors
Ads.com (not a built Brand) is priced for sale for US$ 450,000/-
Beef.com (not a built Brand) is priced for sale for US$ 333,333/-
Consultants.com.... for US$ 189,000/-
Estate for US$ 149,000/-, Team.com for US$ 250,000/-, Sample.com for US$ 90,000/-, and FinancialAdviser.com for US$ 7,500/- (Here's real delicious food for thought that we are valued around 2.25% of "beef" in cyberspace). Please keep in mind above referred price of Consultants.com. Please note, none of these domain names is a "Brand Name" or 'Developed Brand" like Yahoo, Google or eBay.... all are generic ordinary life names, understood by common street walkers... BUT valued & priced by World's No.1 brokers who brokered Loans.com for 3.0 Million US$.
Now...!!! what the learned ones say????

[Paki]

well uncle jee, first of all congrats for the 'four stars' (wonder if u can emulate Jen. PM) anyways now one can actually see the purpose u were posting after, 'advanced membership' (jk)
well I'm not a self proclaimed 'learned one', m still learning.
2nd and more importantly, I think that domains need to be recorded at cost.......... what do u think on this??? (I'm not saying its not important to determine the fair value, just saying its gonna be recorded at cost, for both, the seller and the buyer.

I think probably one thing that can better help us ascertain the fair value or factors determining the fair value is, 'why loans.com is priced 3m US$ and ads.com is priced 0.45m US$' I mean both r generic, as u say, so why such drastic change??

and as far as my contribution to this discussion is concerned, atleast I've come up with a couple of things, unlike ur one-rut mind, and mind it, u've not solved anything as yet???

[TheOne]

"A stupid can ask as many as questions in a single breath, which can't be replied by a team of scholars in their life time (Unknown)"... u just keep on hanging... and be blessed under the cool shadows...I would also be blessed... but with ignorance of your posts, because such ignorance is also blessing some times. 4 Stars??? while you've already decorated "Chaar Chaand" at the forehead of Philosophy, Intelligence and Knowledge then who cares about software generated hit counter stars?.... Hunh......
(why didn't u smile today?... perhaps u got the message)...and lastly... please don't write "Gen. PM" with "J" again... he may feel bad because he's a "General" not a "Journal"...and also don't u call me uncle again.. I don't like every "Airaa Ghairaa" to be my neice.



Edited by - TheOne on May 29 2003 014631 AM

[Paki]

<img src=icon_smile_big.gif border=0 align=middle> 'asking questions in a single breath', well that's more like pointing at yourself. or are you considering yourself a 'team of scholars'????
oh yeah, its 'G' not 'J' , thanks for the correction, but I owe u one too 'aira ghaira', I thought was masculine, 'neice' is faminine.... so u might wanna adjust that, if u like... and I donno why you used 'neice' cuz I can hardly believe if u think I'm a girl (u've been answering my posts on 'gender discrimination-reversed), but often its used as a means to show the other person down (I cant see any other reason why u used it, and I'm not at all troubled bout it, I can only feel sorry for ur mentality, cuz here u r using 'being a girl' as a shame and at the other posts u advocate for their rights and 'etc')
coming back to the topic, I still think that we r gonna value domains at 'COST' but for consolidation purposes we r gonna need its fair value..... cause I think a 'domain' is just another intangible asset,, is it-it not?? or are you onto developing a new IAS for internet domain names?? Uncle jee (dont worry I wont call u 'aunty jee' (thats the most I can do for u) so u wont have to suicide with ur self perceived shame, associated with being a girl) <img src=icon_smile_big.gif border=0 align=middle>

Me rulz

[TheOne]

Reaching the end of a job interview, the Human Resources Person asked a young accountant who was fresh out of PwC, "What starting salary were you thinking about?"
The Accountant said, "In the neighborhood of £50,000 a year, depending on the benefits package."
The interviewer said, "Well, what would you say to a package of 5 weeks vacation, full medical and dental, Company Retirement Fund to 50% of salary, Executive Share Option Scheme, Profit Related Pay and a company car leased every 2 years - say, a 5 series BMW?"
The Accountant sat up straight and said, "Wow! Are you kidding?"
The interviewer replied, "Yeah, but you started it."

After reading above joke you must've well understood that you started it (didn't you???)

Edited by - TheOne on Jun 07 2003 025349 AM

[Munda Pakistani]

asalaam o alaikum to all!

THE ONE, tum kya cheez ho, tum ne her ghunte main aik chawal maarnee hotee hai, tum na koi kaam ki baat kerte ho! aur na koi seedha jawab dete ho!
ooper se tum mame bane hue ho! her topic per apni Chawal se nawaazte ho!

I think u r a psychy case (a person having some Mental disorder). ho sakta hai iss main tumhara qasoor na ho! bachpun main tumhare saath kuch aisa hua ho jis ki waja se tum iss site per uss cheez ka badla le rahe ho.
I have studied almost all topics magar tum wakhree shae' he ho

Could u plz. let us live without u!!!!!!!!


Ae Munda Pakistani Ae