Simon Johnson Interview

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Name: Simon Johnson

Industry: Internet Marketing, Domaining

Website: DomainerIncome.com

Simon Johnson’s Bio: Simon Johnson has been active on the Internet since he started creating his own websites more than 14 years ago. He is the author of the best-selling book “Keep Your Kids Safe On the Internet” published by McGraw-Hill in New York, USA. He has contributed to a number of publications dealing with safety and security on the web. Today, he is the expert in domaining and through his website, www.DomainerIncome.com, he helps domain name investors evaluate, buy, sell and monetize domain names.

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Interview Transcript: Click here to download the PDF transcript.

David: Hi guys, David Jenyns here from davidjenyns.com and I’m quite excited today. I’ve lined up an excellent interview with you guys. I’ve found out there’s a new bit of software that you’re probably going to hear a little bit more about which is coming down the pipe. It’s called Domainer Income and I wanted to find out from behind the scenes from one of the main guys over at Domainer Income a little bit more about it and I suppose find out a little bit more to differentiate between buying and selling web businesses and how that compares to domaining itself.

We’ve got Simon Johnson here, thank you for coming down.

Simon: That’s alright, thanks for having me.

David: I suppose just to dig in straight away. You’re a full time domainer, so perhaps you can tell us a little bit about, what is a full time domainer? Some people are in the internet marketing space and they’re familiar with buying and selling websites. How would you separate the two or is it the same thing?

Simon: It’s very similar. There is an overlap between internet marketing and buying and selling domains and websites and domain names. Essentially it’s the same thing. However there are some subtle differences in terms of domaining, in that some domainers may buy a domain name and park it at a parking company, in other words they might put ads on it versus building it out into a website or a fully fledged business. There are some subtleties and things you’ll pick up along the way but that is essentially the difference.

David: Yes, and it is your core business, isn’t it? You just buy and sell.

Simon: That’s right, we buy and develop domains. We’re full time and have people who do it for us, the development part. That’s all we do. We rarely sell domains. We only usually sell under exceptional circumstances but our core model is building out as many as we can.

David: So when you’re buying these domain names, if you’re not looking to sell, because often when you sell something you get a big capital hit at that point in time. These businesses that you’re buying, or these domain names, you’re monetizing and it’s really about adding it to that portfolio, creating a cash flow and then building that cash flow.

Simon: It’s literally about getting the domain name up to a certain point where it can sit by itself and you just get that passive income without us really doing anything to it.

David: I know you’ve been doing this since the dawn of time, starting on the internet way back when modems were around, dial up modems and BBSs and that type of thing. From domain name registering, we’re based here in Melbourne, Australia and before Melbourne IT, you were saying you were registering domain names through, was it Melbourne Uni?
Simon: Yes, Melbourne University was actually the place to register domain names a very long time ago before ICANN and before Outer and before any other industry bodies. You literally had to fax off your paper work or send it off in the post, sign your life away and eventually if, subject to their blessing, you may get the domain.

David: There’s been a huge evolution and we can see the way the market places change now. We were talking about some of the stories just before we started recording here. Just to get an idea of some of stories or maybe one of the stories you came across in your domaining history. It gives people a little bit of an idea that you know your material and I think that’s what I like to do when I talk to anyone, I always like to go to the source and make sure they know what it is that they’re talking about.

Simon: There are quite a few stories because I’ve bought quite a lot of domains but a couple do stand out. One of them was when we were bidding at an auction and it was a domain that I particularly wanted and I was very passionate about it. It was in a niche that we operate in. I happened to be on holidays with my family and kids at the Gold Coast and I ended up sneaking out of bed one morning because the auction was at 5am.

I’m sitting there in this big place looking over the sea belting away. At the time, there was only one other bidder and he was bidding against me at a really rapid pace. Literally the domain went from $60, which was the minimum bid, straight up into the thousands. I actually can’t remember the domain, it was a dot com but it was a generic keyword. It was one of those things at the time, now this was quite a few years back, there weren’t a lot of people around bidding in this particular auction platform. I won’t name it.

What ended up happening was the other bidder was bidding so much and at such a rapid pace I just thought, this is a robot, this is not some person who’s bidding, this can’t be real. So at 5am in the morning I ended up giving up on that, only to find later when I questioned the auction platform, the people who run the place, they said, oh, no, we can assure you it wasn’t. I checked into it and it was one of the world’s largest domain holders who operates out of the Cayman Islands who had a lot deeper pockets than I had.

David: To get into the space of one of the largest domain name holders, how many domain names are we talking? How many domain names do you hold?

Simon: The person I was bidding against, who I won’t name, I know owns in excess of 450,000 domains. So we’re talking people with very deep pockets who have had these over time, many of whom sell their generic keywords in dot com for millions of dollars. So this is not your average industry that buys domains in the hundreds, they’re very serious developers and they often sell their names to large corporates for that price.

David: So I suppose this comes down to how to make a full time income in domaining at the moment. It’s about identifying those opportunities, these domain names and seeing value in them, hopefully trying to get them as they’re coming up as expired or whatever or they’re about to expire. We can go into that a little bit more and then try to figure out a way, well how do I back end monetize then up until a point where we can then create a saleable asset for someone else? You were saying look, you’re adding to your portfolio, your long term view thinking, domain names are never going to go out of fashion, if anything they’re going to get more popular, so I might as well hold onto this asset. Is that where you’re at and what do you do to monetize that, develop, park?

Simon: It’s a really good question because it depends on what the end goal is in mind. We do lots of different things, so we might park some domains that we think are best put in parking companies. That’s often the less preferred option, we usually do that for international domains. Foreign language domains that we know have value or IDNs as they’re called, International, Domain Names, where we don’t necessarily have or want to obtain the expertise to develop in that language. So parking companies already have that and are a really quick and easy way for you to earn recurring income there.

If you’ve got keyword domains like we have in the com, net and org space or even in .com.au, then you might want to develop them out from CPA offers or make them into businesses or do something with local business.

David: Yes, and from a developing point of view, ok, so parking is one option and I know there are different parking companies out there. A parking for those of you who aren’t familiar, is there are different companies that you give them the domain name, they’ll optimize the domain name, running ads almost like in an AdSense type program to fully monetize any of the traffic. A lot of times when you’re doing domain name parking, you’re not going to get a huge SEO benefit. It might be that a domain name is previously expired, already getting traffic or it’s a single keyword that people are typing into your domain name.

Anyway, however the traffic gets there, these companies sit there and say, well, how can we monetize that as best as possible? That’s one way of monetizing. I can’t imagine that you could, or maybe you can, could you retire on the revenue stream that you get from parking?

Simon: Yes, you can, and people do. It’s often those people with those hundreds of thousands of domains that literally get sent their cheques every month. I know a lot of them personally, they’re quite happy. I would say they’re lazy but they’re quite happy to sit back and collect their cheque and not have any overheads, not have any infrastructure or development or anything, they just do whatever they like to do. They’re people who have acquired those domains many, many years ago, so they can afford to do that.

Times have changed and the opportunity really is in development. But having said that, a lot of those people are looking at parking revenue which is declining and if you’ve used things like AdSense you have seen that, so they’re now looking to probably the internet marketing space and developers to actually build out some of their portfolio.

But it is one of those risk return things. If you take a domain out of parking where you know you get revenue every month, then you develop it, you might not get that same revenue. So there’s a bit of a lifestyle choice for many of them.
David: From a developing point of view, how are we talking? Thinking, right here’s a good domain name, let’s build a web business on the back end of this? When you think of development, how do you think of it?

Simon: It really depends on the domain and keywords and if it gets traffic. Generally speaking, if you’ve got a domain that doesn’t get traffic, or doesn’t get back links, then the sky’s the limit, you can do whatever you like with it.

If you’ve got a domain that you know gets traffic, then you really need to ascertain what’s driving that traffic, what’s behind it? Is the traffic going to convert and how is it going to convert? So you look at the source of the traffic and you find out what they’re searching for and really what’s in the mind of the person that types in that domain and what do they expect to see when they arrive? Then you can make basically an educated decision on how you want to monetize it.

David: Yes, and we’ve talked before, some of those ways for developing, like creating CPA style offers is one way, building out a site is another. Are there any other ways that you see or it really is dependent on what the domain name is.

Simon: Yes, it is.

David: You personally, do you pretty much do anything?

Simon: We do anything, we do a whole lot of things. We have geographical domain names for here and for overseas, so you can build up domain names based on a town or a location. We join affiliate programs even in those places, it can be anything from hotels to airlines to the financial services niches. So it really depends on the domain and the type of traffic and what people really expect to see when they type in that, or when they go to it from another search engine or another website.

David: How many domain names, I know I’m putting you on the spot here, how many domain names if you don’t mind me asking?

Simon: Quite a lot.

David: Multi thousands?

Simon: Multi thousands but the funny thing is, when you collect literally domain names over time, you lose track of it.

David: I’m getting out of control with five hundred.

Simon: It’s crazy. To tell you a story, the other week I won an auction at an auction site, I won’t name the company. They assigned the domain to my particular account at a registrar and I thought, what is this and I logged into it. I found a couple of hundred names just sitting there and I said, oh, I didn’t even know I had those. I had to add them to the development pipeline so it’s just one of those things really.

David: It’s your core business, so I understand it’s easy for that fat to collect along the way and then there’ll be a time where you go through and clean it up.

Simon: It is.

David: Ok, we’re talking about lots and lots of domain names here. What is it that you’re looking for when you’re looking for a domain name? It’s trying to identify that little diamond in the rough out of everything that is coming out of there. That’s ultimately what your software does and we’ll definitely talk about that in a little bit more detail but what components are you looking for a domain name?

Simon: It really depends on your own investment philosophy and the risk that you want to take. For me, it’s something that’s ideally a keyword that’s brandable, that’s memorable. It would need to be in, say, a niche that has high traffic or high cost per click for example. So there are a number of different factors that we look at and determine, yes, we want to get into that or no, we don’t.

For example, if you’re playing in the CPA space, those people who know CPA well, could reel off the top of their heads the relevant CPA offers that pay you $20, $30, $40 a click. If you’re comfortable in that space, then those are the types of things you look for in a domain versus if you want to park it. You might say, well, I’m lazy, I don’t want to do any development as long as I’m earning enough to cover my registration costs for the domain, I’m happy and I’ll just keep on acquiring domains that way. So it’s really up to you what you want to get out of it. They’re the sorts of things that we look for.

David: Are there different areas, like markets that you focus on? That’s another thing, there’s huge scope. Do you pick two or three markets that you go after, and say, right, I’m operating in this space and I’m collecting as many gold nuggets as I can in that space?

Simon: We used to. When we were first starting out, we were looking at, this was a long time ago when I guess some of those high cost per click and high CPA offers were out there, we would say, ok, we want to go into the financial services sector, we want to go into the job market, there are some of those things that just don’t go away, flights and holidays and accommodation. They are the things people need day in and day out and they consume. So it’s really easy to do that.

What we’ve found is, yes, we’ve got networks of sites that do that. But nowadays, because there are so many domain names available, for us it’s literally, we’ve got the ability to look across the masses and say, you know what, we’re going to take that one, that one and that one, just simply because we don’t have the time to take all the rest.

David: You gave us one hint, making sure the keyword is in it. Other characteristics, do you say, I want a minimum PR of x?
Simon: Yes, there are some things we look at. PR, believe it or not, isn’t one of them and that may shock a lot of internet marketers. I had this conversation last night, an internet marketer got me on Skype and said, can you give me some page rank domains? I said, here you go, here is a bunch. He said, oh, this is PR7 and PR6, can I buy these? I said, yes, you can. Now can you make a profitable website out of them or a business and that’s what we look at. Well, maybe, it depends on the domain and the traffic.

There are a variety of things you can look at. You’re really going to look at, how am I going to monetize this, is it going to be offering selling physical product, am I only buying this name so I can resell it to a local business or am I going to buy it in the capacity as a wholesale domain for example? That may be some terminology that maybe isn’t well known to internet marketers.

There are wholesale prices for domains and there are retail prices for domains as well. A lot of domainers operate in that wholesale space where they might acquire a domain cheaply, sell it to somebody else, like a broker who then sells it to a retail customer. There are different opportunities in there, depending on what you’re playing at.

David: I suppose to keep pressing on that point, as far as the keyword, when let’s say you’re building for your own personal portfolio, what things do you look for, obviously keyword, PR not an issue, do you look at domain age?

Simon: Yes, domain age is a bit of a myth actually. It’s often touted as, buy aged domains and you’ll make a million dollars and retire. That is just simply not true. The real hardcore fact is, does it get traffic, does the traffic convert? You can get really old domains that simply don’t have traffic. They’ve been registered, they’ve been put in a parking company or they’ve been sandboxed by Google, there are a whole variety of factors that can influence that domain age.

Domain age really isn’t something we hold in high regard. We might consider it, we might sort on domain age when we look at a large portfolio and say, oh, here are some domains that are old, but do they have traffic, do they have inbound links are they listed in directories like Yahoo! and Demoz? Did the previous owner of the domain sell product on their website and what product did they sell? Did they have a shopping cart and delve down into that detail. We do that before we actually buy the domain. Then we’re making an educated decision to say, you know what, we do want to get into that auction.

That may change the number of domains that we buy in a certain time. You’ll allocate a certain amount of capital to an auction process. You might say, I’ve got ten domains I want to buy today and all ten of them are old, but these five are old and we know they’ve got traffic and we know they used to be websites that sold a particular product. So for us, there is an existing market there, that’s used to buying things and that the domain has already had a relationship with, so it’s really easy for us to monetize it. So that’s one way of looking at it.

David: Some of those things are easy to verify like, you’re talking back links, that’s easy to look at. Some of those other characteristics, one of them which you’ve mentioned a few times, is this idea of traffic. The other thing that popped into my mind is Demoz and things like that, you can check on whether it’s all listed but when it comes to figuring out traffic wise, how do you make that determination as to whether or not that site’s getting traffic?

Simon: It’s really tough. A lot of people ask me about things like Alexa and Compete and other traffic indicators. Realistically, a lot of internet marketers use Alexa and the Alexa toolbar so it’s not always an accurate measure of traffic, it’s just one indicator. More often than not you can look at, say, the upstream websites that link into that. You can look at things like, for example, if you’re buying a website, then you do a search on Google and you see all these back links and most of them are from article sites and there are a few foreign websites that link to it from different countries and it’s not a keyword that people are naturally going to type into their address bar, you can probably make a good guess that the traffic’s not going to be there.

David: That’s a good insight depending on whether the traffic would come in type in or through articles and so on.

Simon: One of the foundations of the domaining industry was around direct navigation. People back in the olden days, before Google, they would type in the name or what they wanted to search for directly into the address bar and thus type it in traffic was born. On that basis everyone went and registered dot com because of course all the early web browsers would divert to the dot com websites. The search engines picked up on that and changed their ranking accordingly. For us, direct navigation is a big thing and that translates nowadays into generic keywords.

David: I just imagine to get those generic keywords, I think the user now, a lot of them obviously are just typing into Google. That’s why you have a look in search data in Google and often you’ll see the url. It’s like people are typing in the url into the search bar. I’m just wondering, a lot of those domain names, especially single keyword, we’re talking about those domainers that got started many years ago and they had the opportunity to pick up these good domain names. For most people to get the budget to buy some of those is huge.

Simon: It’s huge. Nowadays what you can do is, you can apply the same direct navigation logic to that. So someone who’s looking to rent an apartment in Melbourne might type in real estate Melbourne to their address bar. That has your generic keyword plus the geographical name at the end of it.

David: That’s easier to rank for from an SEO point of view as well, if it’s got those keywords in it. It’s like a double whammy effect.

Simon: That’s right. So those domains are available right now. The opportunity is still there, it hasn’t evaporated just because a bunch of guys in the deep dark ages went and registered all the domains. A lot of domains are still out there.

David: Yes, where they’re springing up as well, there are different marketplaces and a lot of the guys who follow my material know Flippa is quite hot at the moment and there are other websites. They’re more selling existing websites as opposed to single domain names but what are your thoughts on some of the different marketplaces?

Simon: It’s an interesting thing seeing the evolution of internet marketing and the rise of Flippa. I love Flippa, it’s a great website and it really promotes buying and selling domains. There are lots of other markets out there, primarily used by domainers with deep pockets. They don’t necessarily sell the website or the back end or have any of the proof in say, the revenue that comes with it.

What it will be, is a website that will say, here’s a keyword domain and I want $10,000 for it. It may be an auction that you participate in or it may be, in Flippa terms or in eBay terms, it’s a BIN, buy it now. So there’s no negotiation. That’s the price and that’s it, where some other places may allow you to talk to the seller and have that conversation through a proxy. There are lots of different markets out there, all with their own little quirks and how they operate.

David: Yes. While I’ve got you, and we’re on the tail end of the interview of things that I wanted to cover, I suppose the big news in the domaining space at the moment is what ICANN is doing. They’re suggesting they’re about to open up some of the different extensions. I know you being in the space, I’m just interested to get your thoughts on how you see that affecting the landscape and maybe even tell us a little bit more about what they’ve got planned.

Simon: For those people who don’t know, ICANN which is the governing body for the internet have said that they’ll enable people to register dot whatever they like. Already we have say, things like dotmoby or dotjobs or dot travel – not sure if there’s dot travel but, we have those extensions and people will now be able to make up their own extension other than dot com. That comes at a cost, you have to pay ICANN fees and do all sorts of things to become a registrar.

What that will mean for the industry, a lot of people have said, oh no, this is going to devalue dot coms or what is it going to do to my Google search ranking? What say I own newyorkapartments.com and that might have been valued at a six figure sum, I don’t know. Now someone might register apartments.newyork. So where does that rank and what’s the value of that domain? There are the sorts of questions that are going to come up.

David: It’s still a question.

Simon: Yes, it’s going to come up in the next few years. That’s what ICANN is in the process of doing and a couple of days ago they were in Brussels trying to nut it out with various governments and trying to say well, what are we going to do. Actually at that meeting last week, dotxxx was discussed, and that’s been on the cards for many years. Finally, they’ve said, we’ll allow dotxxx for the adult industry, so that will be an interesting one.

The really interesting thing for me is how will it impact the average user on the street when it comes to searching for information that is relevant to them? Are they going to go out and register dotmelbourne or dotsydney or dotnewyork or dotwhatever? Is it going to be another land rush? What we’ve seen previously with say, dotmoby or dotco or pick another extension is, they haven’t really been successful. People still go back to dotcom.

I’m not a dotcom fan boy, I invest in a lot of different extensions, but I still look at the way we access the internet. If I access it on my iPad, there’s a little button that says dotcom.

David: Yes, people are trained to dotcom.

Simon: They are, it may have an impact. The other thing that it may have a negative impact on websites like fishing websites and other things that pretend to be banks or financial institutions, because you can insert non Roman numeral characters into domain names now. There are those sorts of things we’re starting to see in auction, where non Roman numeral characters are sneaking in there, particularly in the international space. So when you’re buying in auction, you think you’ve got this really great generic keyword.

David: That line is a 1, not an L.

Simon: That is exactly right. I looked at this very early on. A couple of years ago I almost fell for that same thing. There was a dot com which was dropping and it was a two letter dot com. I thought this is interesting and I saw that it had a little line through it. A number of people didn’t notice that, I did. I ended up buying it just for entertainment value. I ended up writing an article on it.

David: As it was an underscore or something.

Simon: Yes. It was a non Roman numeral character. I can’t remember the domain, I should be able to remember it. It looked like ao.com or something like that, but it really wasn’t. so that’s going to have an impact on the public and especially people buying and selling domains because there’s going to have to be some more, I suppose checking out there in the marketplace to actually flag those, to say, hey, these contain non Roman numeral characters or Cyrillic characters. So they’re the sorts of things that are coming up.

David: For me I feel like for the moment I think it’s still too early days to know what’s going to happen. One, we don’t know how Google is going to respond to it, and two we saw this with some of the other domain name extensions when they came out, people saw them as this land rush. What they would do is, they would go and register all these things, big domainers and then end up parking them and then the whole extension was full of parked domain names which obviously isn’t going to support an industry.

Simon: No, it doesn’t. I don’t like to pick on dotmovie but it’s really the easiest one because a lot of domainers did recommend it. I didn’t, but a lot of people said go ahead and register it. I’ve just bought my iPad, it doesn’t have a dotmovie button on it.

David: Whenever we’re buying, we pretty much just stick to dot com, dot net and dot org. They’re the three ones, we’ve never really ventured down dot info or dot biz. We do dotcom.au as well, but that’s more so for business here in Australia. Your thoughts on that?

Simon: Yes, we’ve always done com, net and org, largely due to the traffic and the globalization of it. I think a lot of Americans see dot com as America and not dot us. They’ve cottoning on to dot us. So there is an opportunity in dot us to get in there. We have a couple of generic dot us keywords and we paid quite a lot for them and I believe in that extension but I think it’s going to be something that will happen over time.

Dotcom. au has its own risks from a rules and regulations point of view, in terms of what you can and can’t register, so there are some risks in there that you really need to take into consideration. But largely com, net and org. it really depends on where the traffic is. We have some dotcoms that get a lot of foreign traffic and it’s not because they’re foreign words, it just happens to be that there might be, I don’t know, a campaign on a particular keyword and that’s what they’re typing in instead of their local international domain.

David: I think there’s a whole new world out there and a lot of people are starting to dive in. To find out more, I think you guys have launched just recently, it’s only just been opened to the public, you’ve been working on it for many years now, which is domainerincome.com and I’ll make sure I have a link to this website underneath this video.

I suppose the real key when being in the domaining space is trying to identify these domain names as they’re about to drop and these final auctions as they’re going through and then having an ability to sort and find out which domain names have the most value based on those key things that you talked about, having a look at back links, having a look at age, having a look at is it indexed in some of these big directories and things like that. Tell us a little bit about what it is that you’ve got planned with that platform. I know having had a look at it, I need to dig into it more, but it does look a superior system to what’s currently available.

Simon: Yes. Domainer Income is something we developed for ourselves many years ago. It was our own personal investment platform and we developed it because there was nothing out there like it and there still isn’t. We knew there were a lot of domains out there but we just couldn’t buy them all.

David: As hard as you tried.

Simon: As hard as I tried. I keep on doing it, not a day goes by. What we ended up doing, we created this platform, we kept it to ourselves, we just bought lots and lots of domains. One day my wife said to me, you can’t keep buying all these domains. I said, well, I can’t keep letting them drop, it’s a crime. We released Domainer Income to the public just yesterday actually. It’s a very interesting thing because it’s a complete domain investment platform so we look at multiple markets, auctions, we look at forums, we look at domains that have actually expired and you can register. So there is no participating at auction or buying it with the seller.

Or, and this is another thing with the domain life cycle, it may not have gone into an auction but someone’s actually picked it up and said, I don’t want to register this anymore and they’ve dropped and it maybe hasn’t gone back into an auction process for some reason. These are things that have expired and you can register right now. What we did, we created this system where you can find a domain, buy it and monetize it and keep track of it.

One of the problems that I had when I was buying domains and websites was we had so many and we didn’t actually have a system to keep track of them. We started out with an Excel spreadsheet. The problem we had was these things would expire obviously, and sometimes you’d get, depending on your registrar, the notice or sometimes it ends up in your spam folder or it just doesn’t get to you.

So we actually created this system where we could put these domains in to and say well, we just bought this domain and it tracks the expiring and tracks where it’s at, it does everything for you. That’s essentially what Domainer Income does, is the complete life cycle of buy, you find the domain, you buy it, you do whatever you want with it and you can track everything, it’s great.

David: I’ve got a sneaking suspicion that this product is going to launch and be phenomenonally successful. From what I’ve seen and I’ve had a little look around the system, it really has some tools and functions that currently aren’t available elsewhere. So if people want to find out more about what it is that you’re doing, obviously check out domainerincome.com and you’ll find a link. Do you also have a blog?

Simon: Domainer Income has been a blog for several years of domaining, it’s at dominerincome.com as well.

David: We might wrap it up there but thank you very much for your time.

Simon: That’s alright, thank you.

David: We’ll be in touch. Thanks guys, hope you enjoyed it. Thanks.

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