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Sedo Bites the Hand That Feeds It

I like Sedo. I have over a hundred domains parked there and quite a few more listed with them. Today I just closed an auction on one my names (Submit.cc) for $80. They do a tremendous job of moving names. But their latest decision seems quite greedy. They've announced that on October 21st they will be implementing a new "No minimum commission" offer, that is based on your domains meeting two criteria:

1. You must have your name parked with Sedo
2. It must be set at a fixed price

Otherwise if you sell your name through Sedo, you'll have a minimum commission fee of $50.

Let's take a look at this, shall we? First, Sedo has had this no minimum structure in place for parked domains for quite some time, but this "new" offer is more restrictive as now you must have a fixed price set for your names. Companies that try to hide more restrictions inside a "but it'll be better for you in the long run" disguise make me very cautious. But honestly, it's $50. When you look at what Rick Latona's newsletter has as their minimum commission ($200), then $50 doesn't seem so bad, right? Except Rick's newsletter caters to an entirely different market segment. It's rare to find a domain listed in their newsletter for under $800 for example (partly because of the high min. commission structure). Bido has not such minimum and their commission structure doesn't rely on parking, but they do have some caveats if you want to have a Reserve Price auction.

The thing is, Sedo has a huge segment of their sales that are for less than $500. For example, of today's closing auctions at Sedo, approx. 80% of auctions are all currently below $500. Now, I didn't check how many of those are parked with Sedo or how many are at a fixed price but that's a big chunk of their sales at risk of paying higher commissions.

I can tell you that this new policy will have a very significant impact on my own listings:

- Many of my names I've acquired for less than $500, but now I'll be very reluctant to sell them at less than $500 if they don't meet the above criteria.
- The advantage of parking with Sedo (where previously I would have no min. commission if they sold) goes away for many of my cheaper names unless I'm willing to set a fixed price, so I'll likely park them elsewhere. For example Submit.cc that sold for $80 today yielded $72 in proceeds but after October 21st would have yielded $30 as it did not have a fixed price.
- I personally don't like being strong armed into fixed prices for all my names. That's fine for certain names, but especially with, say .US domains, the price/offer prices fluctuate so much that coming up with a fixed price will be incredibly difficult. They also often sell for less than $500 which means that I'll be looking for other avenues to sell those names instead of Sedo.

I think this will cause prices to go up (to avoid paying a higher percentage to commission), will cause fewer sales and parking revenue for Sedo (though some of that may be recovered by increased "sales velocity") as domainers seek cheaper alternatives for the low end of the market and better parking revenue, and will lead to some upset customers who didn't get the memo about this new, more restrictive policy. All of these are negatives for Sedo.

But there's one positive for me - I'm looking forward to domainers putting price tags on names, as inevitably many of them will be priced below what they are worth (either because they relied on Estibot values or Sedo's own automated system). And in negotiations, having a "what they are willing to sell it for at a fixed price" gives the buyer an upper hand. Unfortunately though, there's going to be some upheaval because of this new policy and that means time spent on finding alternative solutions instead of marketing and developing my names.

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1 comment:

  1. Maybe this is Sedo's way of clearing out the underbrush.