Canadian media company buys Auctomatic for $5 million
If you've been around the Internet long enough, you're bound to see a business model or two come back around. The business of domain-name roll-ups--once hot in the dot-com boom--are the latest to re-emerge.
Communicate.com, a Canadian company that owns about 800 domain names including Perfume.com and Cricket.com, is expected to relaunch itself on Wednesday as Live Current Media, with plans to become a network of media and e-commerce sites. To buoy its relaunch, the company bought tech upstart Auctomatic for $5 million--paid with $2 million in cash and the rest in stock, according to company CEO Geoff Hampson. Auctomatic, a start-up fostered by Y Combinator, was also backed by former Google employees Chris Sacca and Paul Buchheit.
Domain name roll-ups are as old as the commercialization of the Internet. In the early days, companies would snap up tons of single-word domain names, aggregate their traffic (often including natural direct traffic to the URL) and try to create a massive property for advertising or e-commerce. (The founders of CNET, publisher of News.com, even bought a few of its own names, including TV.com and Kids.com.) But in the dot-com bust, many of those businesses fell by the wayside as the ad market shrank. Today, players like Demand Media are replicating the model by aggregating a raft of destination sites.
In 1994, the original founder of Communicate.com registered as many as 800 domain names, including Call.com, Brazil.com, and Vietnam. A public company in Canada on the over-the-counter market, Communicate didn't thrive financially from selling products or advertising on sites like Perfume.com, according to Hampson. So last year, he took over control of the company by investing about $1 million of his own money, with another $5 million from institutional investors.
Hampson believes that Live Current's business is different from the old model because Internet audiences and the technology for community Web sites are more mature. For example, Live Current plans to build a thriving community of cricket fans for the site Cricket.com with a fantasy-sports Facebook application.
"The environment has changed...There are a billion people who are passionate cricket fans, (and that's) an opportunity to create a site. The trick here is to create a different experience. The (service) will live where they live," he said.
Auctomatic, which was founded seven months ago by a couple of students from Oxford University, ties into the company because it builds applications for eBay power-sellers, e.g., tools that let sellers change pricing for all their products at once. Live Current aims to use those applications--and the technical talent behind Auctomatic--to build out its destination sites. It plans to launch its Cricket.com site in May to coincide with the start of the new Indian premiere league for the sport; and it aims to introduce a new Perfume.com e-commerce site by the end of the year.
Sacca, who may act as an adviser to the company, said that Live Current has an opportunity to create premium destinations that will eventually include Boxing.com and Call.com. "It's really about the individual properties," Sacca said.
Don't you think they would have been better off spending that $5m building an R&D team in India, that is, I dunno, close to the 1B Cricket fans?
Was someone at communicate.com smoking crack?
- Why its a good fit
- by j091570 March 27, 2008 10:27 PM PDT
- Auctomatic has demonstrated an ability to interact with ebay sellers. Ebay sellers wish to have targeted exposure to buyers of their products/services.
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(4 Comments)Imagine an ebay seller that is currently selling stereos on ebay and paying a fee to Ebay for this service. If the same seller could list their products on stereos.com and pay either a reduced listing fee or no listing fee at all they would use the stereos.com ?DestinationHub? TM to sell to the consumer. Consumers will always use the path of least resistance in reaching a destination (assuming they are aware of the shortcut) It is faster to type in stereos.com than to go to ebay.com and search for the stereos category.
This is true of all the domains that LiveCurrent.com owns. Their goal is provide a starting point based on the phenomenon known as type in traffic. Where a user will type directly in the address bar rather than visiting a search engine first.
If a user uses a search engine LiveCurrent.com has a unique advantage in that their portfolio of domains inherently offer them high rankings in the Google search results simply because Google takes the domain name into account when deciding what results to give for any given search term. If the domain matches the search term and all other comparisons are equal, the domain name closest to the search term is listed higher in the results. To see this demonstrated simply search for perfume on google and notice the high ranking of perfume.com (Owned by LiveCurrent.com)
I do not mean to imply that LiveCurrent will be taking business from Ebay, rather they will be looking to work with Ebay in helping them gain greater market share in the sale of services and products that directly relate to the domain name assets. I can see them doing multiple social networking links as well with companies like FaceBook.com, Myspace.com , Amazon.com and other websites that would like increase market share in categories that correlate with the domain names owned.
Another reason it?s a good idea is that getting a little Bay Area talent into the mix is never a bad idea.
JC