Bad News for Most Domain Investors

[Recons.Com]

Afternic has quietly implemented a change that will hurt sales for most of the investors.

Afternic was fantastic in 2018-2019 for me, as well as for most others, but for last 40 days it has been very quiet. With portfolio of around 3800 names listed, that is surprising.

So I checked what might have changed. And came across a very bad news.

With few partner registrars, my listed prices were showing with plus 15% price from Afternic/GD actual price.

So, if you have a name listed at $2000, it will show at Epik, Name etc. at $2300, while you'll still be netting $1600. The effective commission for names not sold directly at GD/Afternic is now $1600/$2300 which translates to about 31.5%, close to what marketplaces like BB, SH charge, while also doing logo, promotion etc. for you. That is over 50% increase in commission without announcing anything. And more than doubling commission for high end $xx,xxx names.

So what, you might ask? We get the same money, right? Wrong. Most goods sold, unless it is oxygen or life saving medicine, or some super luxury goods, have a built in price elasticity. You increase price, you decrease demand. So that 15% increase in prices, can very well translate into 15% to 30% loss in sales.

I estimate that 2/3 of Afternic sales were via partners. So expect to lose 10% to 20% of your sales for the year.

Afternic, meanwhile, might not lose anything, unless we all, as sellers, do something about it.

I am not sure how the profit sharing is done with partners, but let's assume before GD was giving half of 20% to them and then also taking care of charges etc. with another 2%, so netting 8%.

If 2/3 are partner sales, it was getting weighted

2/3 * 8% + 1/3*20%= 5.4%+6.7% = 12.1%.

And now, if it still gives the partners 10%, but from 1+15%, then partners get around 11.5% of the actual price, while GD gets to keep 20% there.

2/3 *20% +1/3*20%=20%.

So, GD's return per sale increases just like that by 60%.

If the sales from partners are down by 20%, GD still wins (1-0.2)*(1+0.6)=1.28.

28% in net profits! Plus some of those sales might be also re-captured, if buyer did search more and found GD offering.

So, reduced sales, but GD profitability up. So who loses? Partners and sellers.

Very bad strategy for GD and near sighted approach. Hopefully, they reconsider and CEOs of partners put pressure on GD about this. There is literally no need for this except for greed.

@Rob Monster could you shed some light on this?

@Joe Styler could you comment on this change please?

 

[iKhalyfah]

Nice observation. And also awaiting response from those concerned!

 

[korganian]

I know Name.com has been doing that for years.

 

[RevolutionaryDomains]

Pretty sure it's just the regular MLS markup percentage, which is pretty standard and has always been around.

Everyone gets their cut, imo.

 

[Rob Monster]

The topic has been covered before here on NP.

https://www.namepros.com/threads/so...your-domains-without-your-permission.1154482/

Short story:

Approved accounts at Epik can buy MLS names without markup.

Unverified accounts will see a 15% markup.

Why?

Because the single biggest source of chargebacks in the industry is bogus MLS transactions where the fraudster buys their own domain using an invalid payment method.

MLS remains very broken in the industry. We hope to do something about it with the forthcoming rollout of WHOQ.com as an industry-standard way to verify domains.

 

[bmugford]

This is not something new. It has been going on for quite awhile with Epik, Name.com, and other registrars.

https://www.thedomains.com/2019/09/...-markup-your-domains-without-your-permission/

GoDaddy at least needs to offer a way to opt-out of these specific registrars.

Brad

 

[Recons.Com]

OK, I might have jumped the gun. I checked 5 registrars first, all showed markup.

Now checked few, and some seem not to charge that extra. Dynadot and Namecheap, for example.

Uniregistry is weird. It says the name is available, yet you have to scroll down to find it again and even there it says price is unknown and you should contact to inquire about it. Basically, they want the leads but not the sale necessarily. Maybe, try to direct to something else.

PS I wish Namepros did not limit editing time to minutes only. Literally no reason to do that. Anywhere else members are trusted to edit their input and update by latest info, correct typos etc.

 

[bmugford]

The topic has been covered before here on NP.

https://www.namepros.com/threads/so...your-domains-without-your-permission.1154482/

Short story:

Approved accounts at Epik can buy MLS names without markup.

Unverified accounts will see a 15% markup.

Why?

Because the single biggest source of chargebacks in the industry is bogus MLS transactions where the fraudster buys their own domain using an invalid payment method.

MLS remains very broken in the industry. We hope to do something about it with the forthcoming rollout of WHOQ.com as an industry-standard way to verify domains.

Despite that, the majority of GoDaddy partners don't have the markup.

So either they have figured out a way to deal with the issue, factor in a potential loss as a cost of doing business, or Epik and others just deal with a much higher percentage of fraudulent charges.

Either that, or it is just an excuse to charge a higher percent.

Brad

 

[kandyan]

As noted by others above, it was the case all along - imo

 

[equity78]

Afternic has quietly implemented a change that will hurt sales for most of the investors.

Afternic was fantastic in 2018-2019 for me, as well as for most others, but for last 40 days it has been very quiet. With portfolio of around 3800 names listed, that is surprising.

So I checked what might have changed. And came across a very bad news.

With few partner registrars, my listed prices were showing with plus 15% price from Afternic/GD actual price.

So, if you have a name listed at $2000, it will show at Epik, Name etc. at $2300, while you'll still be netting $1600. The effective commission for names not sold directly at GD/Afternic is now $1600/$2300 which translates to about 31.5%, close to what marketplaces like BB, SH charge, while also doing logo, promotion etc. for you. That is over 50% increase in commission without announcing anything. And more than doubling commission for high end $xx,xxx names.

So what, you might ask? We get the same money, right? Wrong. Most goods sold, unless it is oxygen or life saving medicine, or some super luxury goods, have a built in price elasticity. You increase price, you decrease demand. So that 15% increase in prices, can very well translate into 15% to 30% loss in sales.

I estimate that 2/3 of Afternic sales were via partners. So expect to lose 10% to 20% of your sales for the year.

Afternic, meanwhile, might not lose anything, unless we all, as sellers, do something about it.

I am not sure how the profit sharing is done with partners, but let's assume before GD was giving half of 20% to them and then also taking care of charges etc. with another 2%, so netting 8%.

If 2/3 are partner sales, it was getting weighted

2/3 * 8% + 1/3*20%= 5.4%+6.7% = 12.1%.

And now, if it still gives the partners 10%, but from 1+15%, then partners get around 11.5% of the actual price, while GD gets to keep 20% there.

2/3 *20% +1/3*20%=20%.

So, GD's return per sale increases just like that by 60%.

If the sales from partners are down by 20%, GD still wins (1-0.2)*(1+0.6)=1.28.

28% in net profits! Plus some of those sales might be also re-captured, if buyer did search more and found GD offering.

So, reduced sales, but GD profitability up. So who loses? Partners and sellers.

Very bad strategy for GD and near sighted approach. Hopefully, they reconsider and CEOs of partners put pressure on GD about this. There is literally no need for this except for greed.

@Rob Monster could you shed some light on this?

@Joe Styler could you comment on this change please?

Not new wrote about it here https://www.thedomains.com/2017/07/19/lot-shady-things-coming-light-week/

Here https://www.thedomains.com/2019/09/29/afternic-provides-some-details-on-markup-test/

https://www.thedomains.com/2019/09/26/afternic-will-sedo-wont/

One site will allow you to opt out of registrar markups the other won’t.

Here is a follow up to the story I posted last week about some domain registrars marking up your names (for their profit) when you list at Sedo and Afternic.

Joe Styler reaffirmed what Bob Mountain wrote two years ago. You can contact Afternic and have your names not show at the markup registrars.

We also understand many people are against any kind of commission mark up from any partners which is why we allow anyone to email in and opt out for their account. Bear in mind only the Afternic inventory will be affected and if the reseller accepts other premium domain feeds containing your names they could continue to show up on those sites.

Joe Styler wrote in the comment section here September 18, 2019
Joe also pointed out how there is language in the Afternic membership agreement that does say you can be marked up. I did some research into that too.

The way this was done is interesting. Archive.org is our friend here. Joe pointed out that it was not in the fast transfer TOS but the membership agreement, go check it out now, you will notice the updated date, currently

Membership Agreement – Updated on August 22, 2019

So when Afternic slipped in “You understand that certain reseller distribution partners may, upon approval by the Company and at Company’s sole discretion, add a markup to the sale price of your domain name and that the reseller distribution partner may keep this markup in its entirety, and that you will receive no payment for the portion of the sales price that is marked up.” The membership agreement update, date was not updated. This happened in October of 2018 and you can view that here https://web.archive.org/web/20181011084930/https://www.afternic.com/legal

But when you look at the previous record on Archive.org back in June of 2018 you see no mention of the markup language, for proof you can see that here https://web.archive.org/web/20180623050144/http://www.afternic.com/legal

So the question is, why did the Afternic membership agreement change but the date remained May 12, 2016 for the last update? If someone was pedantic about TOS and checked it daily, they would have no reason to read it again to see the markup language placed in there.

On top of that a company should email you and let you know about the markup and the change in the membership agreement.

Just wanted to make sure everyone was informed and provide proof as to what actually happened.

Now onto Sedo who also has the same practice and they don’t mention the markup as well.

When asked if they would do the same as Afternic and provide an opt out? Here was their reply:


@Joe Styler made it clear you can opt out

 

[Recons.Com]

Not new wrote about it here https://www.thedomains.com/2017/07/19/lot-shady-things-coming-light-week/

Here https://www.thedomains.com/2019/09/29/afternic-provides-some-details-on-markup-test/

https://www.thedomains.com/2019/09/26/afternic-will-sedo-wont/

One site will allow you to opt out of registrar markups the other won’t.

Here is a follow up to the story I posted last week about some domain registrars marking up your names (for their profit) when you list at Sedo and Afternic.

Joe Styler reaffirmed what Bob Mountain wrote two years ago. You can contact Afternic and have your names not show at the markup registrars.

We also understand many people are against any kind of commission mark up from any partners which is why we allow anyone to email in and opt out for their account. Bear in mind only the Afternic inventory will be affected and if the reseller accepts other premium domain feeds containing your names they could continue to show up on those sites.

Joe Styler wrote in the comment section here September 18, 2019
Joe also pointed out how there is language in the Afternic membership agreement that does say you can be marked up. I did some research into that too.

The way this was done is interesting. Archive.org is our friend here. Joe pointed out that it was not in the fast transfer TOS but the membership agreement, go check it out now, you will notice the updated date, currently

Membership Agreement – Updated on August 22, 2019

So when Afternic slipped in “You understand that certain reseller distribution partners may, upon approval by the Company and at Company’s sole discretion, add a markup to the sale price of your domain name and that the reseller distribution partner may keep this markup in its entirety, and that you will receive no payment for the portion of the sales price that is marked up.” The membership agreement update, date was not updated. This happened in October of 2018 and you can view that here https://web.archive.org/web/20181011084930/https://www.afternic.com/legal

But when you look at the previous record on Archive.org back in June of 2018 you see no mention of the markup language, for proof you can see that here https://web.archive.org/web/20180623050144/http://www.afternic.com/legal

So the question is, why did the Afternic membership agreement change but the date remained May 12, 2016 for the last update? If someone was pedantic about TOS and checked it daily, they would have no reason to read it again to see the markup language placed in there.

On top of that a company should email you and let you know about the markup and the change in the membership agreement.

Just wanted to make sure everyone was informed and provide proof as to what actually happened.

Now onto Sedo who also has the same practice and they don’t mention the markup as well.

When asked if they would do the same as Afternic and provide an opt out? Here was their reply:


@Joe Styler made it clear you can opt out

Interesting! I might opt out. I believe that varying pricing creates confusion in the mind of a potential buyer, as then he focuses on discounts, not the values and after some search might totally give up on the name, find something else, or just stop with the doubts.

I'd opt out of the "price unknown. inquire." registrars too. They don't want to close the sale, they shouldn't get the lead.

 

[Jurgen Wolf]

Almost all AfternicDLS sales are coming via GoDaddy...
So opt-out from other registrars has no any sense.

And SedoMLS is just for fun, it is NOT supported by GoDaddy.
So opt-out is also useless.

 

[Jurgen Wolf]

I guess, this is just weak Q1/2020...
I also still didn't meet any serious buyer... still without sales in 2020...
Regardless of platform... Sedo/Uni/Dan/Epik/Bodis/ParkingCrew... almost silence everywhere.

 

[Jurgen Wolf]

During first 40 days of 2019 - I sold 2 domains to endusers...
Just for comparison... year to year.

 

[Abdullah Abdullah]

I think everyone makes a purchase on the platform they are happy with, so if there is extra 15% on a domain, a buyer who trusts a registrar that not many people are aware of will not even found out the price difference. He or she will need to visit Afternic/Godaddy to see the difference as well as wherever the domain is parked provided same pricing is adapted. This has been on for long time and I saw this with some of my domains before it was covered I believe by @equity78

 

[Recons.Com]

During first 40 days of 2019 - I sold 2 domains to endusers...
Just for comparison... year to year.

I had few sales, but from direct and BB. Which is surprising. By normal rate, with 3800 names listed there, I should have had 4-5 sales from Afternic/GD during the time span.

 

[Recons.Com]

I think everyone makes a purchase on the platform they are happy with, so if there is extra 15% on a domain, a buyer who trusts a registrar that not many people are aware of will not even found out the price difference. He or she will need to visit Afternic/Godaddy to see the difference as well as wherever the domain is parked provided same pricing is adapted. This has been on for long time and I saw this with some of my domains before it was covered I believe by @equity78

You assume people have all the info in the world when making decisions. And that people make rational decisions and choices all the time. It is not true.

I have seen deals not happening over $200 price gap in low $xxxx possible sale. The customer sees the extra $300 on $2K, he might go with his choice two that is priced at $1800 elsewhere, even though he had $2K budget and could have bought yours. Or just go with his long tail hand reg fall back option.

 

[Jurgen Wolf]

This gap was always for many years... for both SedoMLS and AfternicDLS registrars... except Dynadot/Namecheap...
So reason is absolutely another.
Probably, the predicted global crisis has started simultaneously with Chinese virus...

 

[Abdullah Abdullah]

You assume people have all the info in the world when making decisions. And that people make rational decisions and choices all the time. It is not true.

I have seen deals not happening over $200 price gap in low $xxxx possible sale. The customer sees the extra $300 on $2K, he might go with his choice two that is priced at $1800 elsewhere, even though he had $2K budget and could have bought yours. Or just go with his long tail hand reg fall back option.

I do understand when you are looking at the budget, but here, what I was talking about was the buyer wanting your name, just your name, not thinking of other names. I have seen people buy on Afternic with higher price when the domain is pointed to another place with less price.

But yes, it can happen if the person is not 100% into the name, but buyers can negotiate or even found that that difference.

 

[Recons.Com]

This gap was always for many years... for both SedoMLS and AfternicDLS registrars... except Dynadot/Namecheap...
So reason is absolutely another.
Probably, the predicted global crisis has started simultaneously with Chinese virus...

Could be downturn, could the effect of confusion created by many choices. Many companies go for the ngtld for start. I talked to one biz owner yesterday.

His brand is LLL+tech. LLL+tech.com is not available and in use by another company. He checked LLL.tech, but that name has a price tag of almost $10K to reg and renew. So he went with LLL+tech.solutions )

Absolutely, horrendous unmemorable name that screams that the guys IT services probably suck as much as the name, but most business owners don't think domain matters. They have one name they'd love and if that is used or priced high in their opinion, they go for one of 1000+ awful choices.

I was also told that GD could have changed search algorithm? Some of the sales for word+word.com or word+suffix.com were from search for "word". Now GD might have tweaked to favor its own inventory. There is no way for me to check this. Maybe, someone has an idea to check?

 

[lock]

I would pay more commission for more marketplaces I am sure it could be explained better. Eg You might be only paying extra commission if the lead comes from a marketplace that brought the sale.

 

[AbdulBasit.com]

This is not something new. It has been going on for quite awhile with Epik, Name.com, and other registrars.

https://www.thedomains.com/2019/09/...-markup-your-domains-without-your-permission/

GoDaddy at least needs to offer a way to opt-out of these specific registrars.

Brad

They offer opt-out option as I've discussed with my Afternic manager and he said "When you opt out, your domains will no longer display on our partners' websites that mark up their pricing."

So I decided to leave my domains as it is and not to opt-out.

 

[Recons.Com]

I do understand when you are looking at the budget, but here, what I was talking about was the buyer wanting your name, just your name, not thinking of other names. I have seen people buy on Afternic with higher price when the domain is pointed to another place with less price.

But yes, it can happen if the person is not 100% into the name, but buyers can negotiate or even found that that difference.

Sure. But if you are selling thousands of names, have tens of sales a year, some are the fixated names, some are with alternatives. In totality, these changes can result in considerable cash flow loss.

 

[Jurgen Wolf]

There are various buyers...
Some of them even don't know where to throw their money...
For example, $50K was paid for ANALYTICS.AI just for redirect...

 

[Recons.Com]

They offer opt-out option as I've discussed with my Afternic manager and he said "When you opt out, your domains will no longer display on our partners' websites that mark up their pricing."

So I decided to leave my domains as it is and not to opt-out.

I wish GD would make it transparent where the sales occur. Then we could make an informed decision. If it is 5% loss, for instance, it would be in the interest of sellers to opt out to force them come around.