May232011

“Netfleet is a domain name market place focused on Australian domains – that’s .AU. The site is a great destination for anyone looking to buy or sell a domain name with an Australian audience in mind. We have about 40,000 domains listed and just welcomed our 10,000th member last week”.

netfleet
Mark Lye

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This Interview was made possible by our friends at

DN Trade

Discussing all things about Aussie domains!

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Today we talk candidly with Mark Lye, the CEO of Netfleet, Australia’s largest domain name marketplace.

The domain name market in Australia is growing from strength to strength. In terms of maturity, the market is many years behind the “.com” – but all that means is that there are still lots of opportunities!

netfleet

MO:

Mark, before we get down to the “nitty gritty” about Netfleet, can you please tell us a little of your background?

Mark:

Sure – I’m 31 years old, living in Bondi Beach in Sydney, Australia.  I grew up in the UK, and after suffering more winters than I care to remember moved to sunny Sydney in 2004.  I’ve been settled here for about 7 years now and sold on the lifestyle and opportunities that I see here.

MO:

Ok, so let’s talk about Netfleet. Firstly, for those reading about you for the very first time, what is Netfleet? Please can you tell our readers about the early days? How and when did Netfleet come about?

Mark:

OK, Netfleet is a domain name market place focused on Australian domains – that’s .AU.  So the site is a great destination for anyone looking to buy or sell a domain name with an Australian audience in mind.  We have about 40,000 domains listed and just welcomed our 10,000th member last week.

Prior to Netfleet, we focused on gathering a portfolio of .AU domain names, and when auDA (the Australian domain name regulator) removed the prohibition on selling domains in June 2008, we realised we had all these domain names we could actually sell, but nowhere to sell them!

We weren’t that motivated to sell them as we were earning a reasonable income from advertising and development, but every name has its price so we thought it made sense to get the message out there and see what happened.  So we created a crude domain name directory (off the back of a $10 template from memory!) with all our domains listed.  It became obvious pretty soon that other people had the same issues – be it a few domains or several thousand, there was nowhere to sell them.  So we invited the public to list their domains too and it all built from there.

MO:

Now I know that for years you and your brother David made absolutely no money from Netfleet as you built it up. It was totally a free service for clients. How did you survive financially, and how did you keep it going?

Mark:

At first both of us ran it part-time squeezing in time when we could after hours and on the weekends.  Once I started working on it full time, our domain portfolio was generating enough revenue to cover the costs while we built the site and membership.  Then sales of our own portfolio started picking up and this provided an additional revenue stream.

MO:

There came a point where you decided to get really serious about providing Australia’s best “domain aftermarket platform”. This is when you formed a strategic alliance with one of Australia’s biggest Registrar’s – NetRegistry. Can you share with us the background to that? And what significant benefits to clients has this partnership brought?

Mark:

We struck a deal with Netregistry in January 2009 which saw each party make a significant commitment into the pot to really get Netfleet moving.  Additionally Netregistry agreed to leverage their huge customer base to grow the site membership and transactions.

It was about building the market as much as anything because with the ban on trading only having been lifted for less than a year, the general public were unaware that you could even buy or sell domains in Australia.

Through the Netregistry channel we spend a lot of time trying to educate small business owners in particular what makes a domain name valuable and why often it pays to spend a few bucks and buy an existing domain rather than compromise on a second-rate hand registered domain.

MO:

Ok, so now we get to the really good bit of the interview. Money making and return on investment! This is what all entrepreneurs are interested in! Netfleet is now starting to make money – can you tell our readers how NetFleet has evolved to reach this point?

Mark:

Even with a burgeoning member base and with total sales values nudging 6-figures monthly, we were still struggling to make much money!  We made a little bit on premium listing features, our domain backorder service and some regular auctions we started to run.  However it was when we moved into the expired domain catching game that we started to see some light at the end of the tunnel.  It was something we hadn’t even considered when we started the site, but we knew as long as we kept doing what we were doing and doing it well that opportunities would come as we had such great faith in the industry (and still do).

MO:

There are only two main “drop catchers” of expired domain names in Australia. NetFleet’s “Snapper” seems to be the most successful at the moment. For those not in the know of how the system works here, can you please briefly explain?

Mark:

Every day, 365 days a year, expired domains are returned to the pool of available domains by Ausregistry – the registry for .AU domains.  This equates to around 700 domains being ‘dropped’ each day many of which can be extremely valuable domains.

When domains are released back into the system they are available on a first-come first-served basis.  This means competition can be extremely high for valuable domain names as multiple parties are trying to be the first to register them.  However we’ve developed technology that ‘snaps’ the domains the instant they become available thanks in part to our relationship with the Netregistry group.

So each day from 2pm until 12:59pm the following day, we run an auction where we publish a list of domains due to become available again. Our members then bid for the domains names just like eBay for example.  Then when the domains are purged shortly after 1pm, we attempt to register the domain names in the winning bidders’ name using our technology.

That means that every day (even Christmas Day!) come 1pm, we’re glued to our screens waiting for the results.  It can be an extremely stressful time as a refresh of the screen will reveal whether you made $15,000 or the system bugged out and you made nothing.

MO:

What have been some of the best “catches” that “Snapper” has made?

Mark:

Some of the big ones include Electricity.com.au for $34,000 and PetInsurance.com.au for $17,800 but the majority are middle of the road domains picked up by domainers for up to a few hundred dollars.  These are the sort of names that can be developed or, at a later date, sold to an ‘end user’ for many times that amount.  For example, one day last week we caught 67 domain names for an average of about $80 each so the big blockbuster domains are really just a small part of the story.

MO:

Time for some controversy now! You and your brother David are passionate advocates of Aussie domain names and the Aussie market in general. I also know that you believe they are a better investment opportunity than .com domain names. Can you please tell us why?

Mark:

We think investing in .com domains is an absolute mug’s game.  It’s not a popular opinion amongst the domaining community mainly because so many people are invested in such domains so it’s not something they want to hear!  For what it’s worth I do agree that ‘com is king’ from a valuation point of view and also that .com domains will always command the highest prices of all domain names.

But .com values have been declining in recent years after peaking around 2007.  I think this is partly due to a lack of ‘end-users’ fuelling the market.  For a small business, it’s hard to find an acceptable domain name that’s available to be registered in .com.  And to get a half-decent name on the aftermarket, you have to be prepared to pay a small fortune.  I believe over the last few years, this has led to a preference for small businesses to register under their own country code domain (ccTLD) – after all the vast majority of businesses are not global and a website based on a local ccTLD gives a huge advantage in the search engines for local searches.  I think all that’s preventing a greater collapse in .com values is the steady stream of bright-eyed new domainers propping up the market.

ccTLD growth on the other hand seems to be fuelled by real business needs, rather than speculation which is much more sustainable.  Australia has certainly benefited and has just passed the 2 millionth’ .AU registration a few weeks ago which is a great milestone.

The .AU market is also attractive from an investment point of view, ironically due to regulation.  Each time a layer of regulation is lifted, the market takes a jump so this, in tandem with a steady ‘end-user’ fuelled increase in demand, means I see a lot more growth in the market for many years.

I should note here that, based on the same ideas, I believe there are probably many other domain markets around the country with an even better outlook – especially country codes.  However there is a lot to be said for local knowledge and language and it’s important to familiarise yourself thoroughly with a market before jumping in.  You don’t want to be the guy who bought 拨火棍.cn thinking he had a goldmine as it translated to Poker.cn in Chinese only to find out that it described a poker you’d use in an open fire!

MO:

Anybody can still buy and sell domains on Netfleet for free. (Excluding auctions and premium services). You don’t even charge commission on these sales. I find that amazing. Is this something you intend to continue with – or do you intend introducing a modest commission or fee structure sometime soon?

Mark:

We have always intended to charge a commission on sales of course.  The fact that it’s been nearly three years is a reflection on the breadth of tasks we’ve had to address in building the site.  Once we have a streamlined Change of Registrant and Escrow service then we will introduce a fee.

MO:

Final question Mark. What does the future hold for NetFleet? Anything interesting in the pipeline?

Mark:

Working on lots of things at the moment.  We’ve just taken on another new employee who brings a wealth of experience to the team and will be a key part in driving the business forward.  So we’ll be refining our existing services and processes, introducing completely new initiatives as well as possibly looking into new markets such as New Zealand.   One thing I can say with confidence is that Netfleet will always be a locally focused operation whichever market it enters which means a closer responsive involvement with the community.

MO:

Thanks for your time and insights Mark. We wish you all the best.

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