Adieu Afternic!

Strategy of Ignoring Customer’s Needs Not So Prudent After All

They say that saying goodbye is hard to do, but few in the domain world are likely to shed a tear at announcements that domain auction platform Afternic will soon be closed. The characteristically inscrutable announcement by Register.com that “the Afternic customer segment will be closed” caps a 2-year story of decline since purchase of the website by Register.com in September of 2000.

At the time of its $48 million acquisition, Afternic was for many synonymous with the boom in domain speculation that occurred during the late 1990s. A community of domain name resellers first coalesced around the nexus of Afternic’s chat and discussion board areas, two features that have since been removed in an apparent attempt to trim costs.

In addition to removing its community features, Afternic has drawn criticism for its failure to control shill bidding and other scams, and for mismanagement of domain name transfers. Customer complaint sites such as AfternicSucks.com tell stories of e-mails and phone calls going unanswered for months, domain sellers not receiving payment, and other examples of Afternic’s “failure to perform to reasonable business standards”.

The result for parent company Register.com is that, instead of fulfilling its pre-ordained role of developing a healthy domain name secondary market in the US, the Afternic acquisition has created only continued financial headaches. One year ago, Register.com recorded a $32.5 million write-down in goodwill related to the acquisition of Afternic. The recent closure announcement accompanied disclosure of more disappointing results for Register.com in the third-quarter. (Which makes one wonder if—now that Afternic can no longer be used as a scapegoat—Register.com will finally be forced to reflect upon the sustainability of a business model based upon selling for $35 a product that is widely available elsewhere for under $10…)

Register.com CEO Richard Forman commented that, “after two years and a lot of hard work, we’ve determined the Afternic segment does not have sufficient opportunity to continue devoting resources toward it.”

Fortunately, there are many others eager to pursue opportunities in the “Afternic segment”, in the belief that Afternic’s demise was a function not of the infecundity of the domain name secondary market, but of Afternic’s own inability to provide services that truly add value for domain name buyers and sellers.

Further, the cooling of the late ‘90s speculative craze means that fewer aftermarket domain sales today consist of speculator-to-speculator sales, which were Afternic’s bread-and-butter. Instead, domain reselling today requires effective marketing to end-users, the businesses and individuals with the resources to put domains to use either as new websites or as traffic-generating tools for existing sites.

Finding these end-users and educating them about the opportunities for purchasing high-quality domain names through the aftermarket is thus a central concern for the team at SEDO.us, the new domain marketplace launched fortuitously only days before the announcement of Afternic’s imminent closure.

“The closure of Afternic leaves a void in the US market, which SEDO hopes to be able to fill with SEDO.us,” said Tim Schumacher, CEO.

The competitive advantage of SEDO.us is an “Active Marketing” program that has helped SEDO’s network of domain re-selling sites in seven European countries post continually strong sales despite the global downturn in domain selling. The result is that, unlike Afternic, the domain buyers on SEDO are primarily end-users, a factor that has helped keep sales values high.

“The domain aftermarket in the US today is fragmented between numerous small players and ‘has-been’ sites like Afternic that are on the verge of failure,” according to Matthew Bentley, the Internet veteran leading SEDO’s charge into the US market. “There is a need for a clear leader to step forward to help educate the general public, to make them aware that there are still many great domains available on the aftermarket, especially in the new TLDs like .biz, .info, and .us.”

Bentley claims that SEDO.us won’t go the way of Afternic because their Active Marketing program allows them to attract more lucrative end-user sales. “Domain sellers will go where the big buyers are, and right now that happens to be SEDO.”

In addition, SEDO has responded to slow times in the domain aftermarket with innovative features like their “Paid Domain Parking” program, which enables domain sellers to generate income from their unused domain names while waiting to make a sale.

For more information on Afternic’s closing:

www.atnewyork.com/news/article.php/1469711


www.atnewyork.com/news/article.php/917411

For more information about SEDO.us:
http://www.SEDO.us/