By Chris Woodward
“What we didn’t foresee is people who submitted premium domains did not keep their promises to us. We made it clear that if a person or company was submitting a domain with an end-user Reserve, that they had an obligation to bring in end-user bidders to the auction, either live or by phone. There was not one end-user bidder at the auction. We not only knew in advance that those high-end domains would not be sold to domainers, but made it clear to those who submitted them that the domains would not be sold without their active participation in obtaining bidders.” -Howard Neu on the lack of TRAFFIC auction bidding/sales
Whose job is it to make an auction successful? I have always been under the impression that the auction “house” had the responsibility to promote the items and bring in interested buyers. If the owner of a fine piece of art decides to sell at an auction house like Christie’s, it is Christie’s job to promote the piece and bring in those willing to pay top-dollar. Christie’s benefits from the promotion as the more the piece sells for, the higher the commission they make.
According to Howard Neu’s comments, the TRAFFIC domain auction seemed to be relying on sellers to bring their own buyers if they were going to be selling the domains at the end-user reserves that were set. This was obviously a risky move and the fact that “there was not one end-user at the auction” confirms that it probably wasn’t the best strategy.
Shane and several other readers addressed Howard’s comments with responses of confusion. Why bring the domains to auction if there are multiple end-users interested? Why not just strike a deal with the end-user or users directly? Howard was kind enough to reply…
“A person can negotiate a price for a domain with a potential buyer/end-user, but it is not the same as when you can get 2 or more potential buyers/end-users to bid against each other for a quality premium domain. The price will always go up, not down. So when someone enters a premium domain in any auction and that person knows that the only bidders will be domainers who will price it at a wholesale rather than retail price, it is in the Seller’s best interest to find interested retail buyers (end-users) to bid on the domain.”
Personally, if I owned the domain Dubai.com and had or could find multiple end-users interested, I would most certainly handle the private sale myself or hire an experienced broker that would manage the offers/counter offers from the interested parties. Why give my end-users the chore of having to travel to an auction? I’m trying to sell my domain and would cater to someone willing to spend millions of dollars with me. Handling a negotiation between multiple parties in a private sale has been done before. Ostrofsky did it when he had two parties interested in Business.com, and he didn’t even need a broker. He had his lawyer handle the negotiations and 7 or 8MM later the deal was done.
This is in no way an attack on Howard or Rick or TRAFFIC itself. I just felt that the comments from Shane’s original post posed a great question; whose job is it to bring in end-users for a domain auction? I come from the view-point that the more the domain sells for the more the auction house makes and therefore the proper promotion should be done to get the appropriate end-users to the event, or simply don’t allow unattainable reserves. Domain auctions are unlike fine art or classic car auctions that will attract both collectors and dealers. For a domain auction, chances are it’s going to be all domainers. If top paying end-users are desired, a completely separate type of promotion is going to be required. I don’t think we should rely on the domain sellers to spread the word, obviously we see this doesn’t work.