There is a great deal of anticipation about the Domain Swap event we have planned for the Epik DevCon. This post provides some context about what we seek to accomplish by conducting this unique swap event and why.
The Single Biggest Problem in the Domain Industry: Absence of Liquidity
Since becoming a full-time domain investor/developer in March 2009, I have watched in disbelief as amazing names go undeveloped, and good names get dropped. Savvy domain investors are expanding their portfolios while many domain investors play “lifeboat” with their portfolio, paring back to the high potentials and the existing money-makers. This is what recessions do — they compel efficiency. And there is no question, this is one Mother of a Recession, and I stand pat on my assessment that it is not over.
Many domain investors would like to strengthen their portfolios as well as begin to develop domains. However, the challenge for much of the industry players is that cash is finite. And because cash is the medium of exchange for most transactions, deals that should get done, often do not get done. Why? Because at any given time, Person A does not have what Person B wants, whether that is cash or a like-for-like exchange. The result is a Buyers market where only the guys with cash get to play. Raw deal? You bet.
The more I studied this market, the more I became convinced that the Domain Industry needs a medium of exchange that is not limited to reserve currencies. We have seen this work on a small scale by paying for domains with Developer Credit (aka EpikBucks) and then allowing the Developer to use this currency for buying development services, buying other domains, or holding the EpikBucks in reserve for future activity. The key was to make this currency transferable, non-expiring and convertible into value.
So how do you get EpikBucks?
The Epik team has been thinking about the model for Domain Swaps for some time. How does one create liquidity for development-grade domains without a room full of cash buyers willing to pay fair market value? We think we have a solution that scales. It is a modified version of a “Silent Dutch Auction”. Here is how it works:
- A domain owner submits a list of names to Epik. The Epik team appraises the development-grade domains. While this appraisal process is part art and part science, we think it is not all that different than having a gem grader that appraises an uncut diamond.
- The domain owner can now offer the domain to others and determine if there is a cash buyer at Epik’s price or better. If there is not a cash buyer, Epik will buy it for the indicated number in the form of EpikBucks. The EpikBucks are now transferable, won’t expire, and can be redeemed for domains or services, and eventually more.
- The domain is now owned by Epik. In most cases, the newly acquired domain will be made available to others for development on the most favorable terms possible, relative to the basis at which the domain was acquired by Epik from the prior owner.
If you have development-grade domains that you want to swap or sell, send the list to firstname.lastname@example.org. We’ll review them and come back to you with appraisals, in EpikBucks, for your review and consideration. It may take us a day or two, but we’ll keep you posted on our progress. To save time with the sorting the wheat from the chaff, please note that we are looking for names with a Domain Quality Index (DQI) of 500+, i.e. Exact search per month multiplied by CPC as reported by Estibot or Appraise.Epik.com. Parked domains with 500+ monthly visits are also fair game.
So what happens on 9/17 in Seattle?
On 9/17, at the Domain Swap event in Seattle, we will physically post the inventory on the morning of 9/17 at 7:30 am PT. The inventory will consist of thousands of development-grade domains where buyers can pick up any domain by writing in their unique bidder ID. The vast majority of these assets will be listed at $249, for a development-grade domain with a turn-key website. These domains will often appraise for thousands of dollars on Estibot and in most cases, Epik is now giving them away for free. The Domain Swap inventory will be exclusively available for bidding by registered participants at Epik DevCon. Post-conference, the list of sites that were not taken by DevCon Swap participants, will be sent to a 7-day public cash auction.
September 2010 marks the official kick-off of EpikBucks
On 9/17 at 10 am PT, we’ll start the EpikBucks-enabled swap event with a briefing by Epik CFO and Counsel, Cliff Beer. He will explain the accounting mechanics of EpikBucks and supervise the transaction clearing process. He will also a brief update on the financial health and strength of Epik for those who care to know such things. In the meantime, for your amusement, here is Ala Dadan’s rendering of an EpikBuck. 🙂
Although we really don’t take ourselves that seriously, the principle of having a living and accountable person on the face of a currency is not a bad one. Imagine if the stewards of our national currencies would be accountable for the purchasing power for their currencies. Now there is a thought! And as for the purchasing power of an EpikBuck … The Buck Stops Here.