Archive for the ‘DMD’ category

Demand Media (DMD) – The Times They are a Changin’

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“This is the most important and exciting change in the internet in a long, long time. Maybe since the beginning of the modern internet.”

– Ben Fried, Google’s Chief Information Officer (source)

Investors should take note every time a Google exec goes on record saying they are “incredibly excited” about something because most of the time, there’s a good reason for it. Which is why when I heard the above quote at Google’s I/O, I decided to dig in. And what I found was a truly great business being ignored by the market with a value creation catalyst just a few trading days away.

Let’s start at the bottom by walking through the modern domain registry business. There are 4 main constituents in the domain registry value chain:

Here’s a view of the marketplace:

Domain Registry Process

In terms of who gets what, the economic breakdown of every .com sold looks like this (average sales price is about $10 today):

As you can see, the closer you are to ICANN, the more value you capture. The registry operator is clearly king, keeping 78% of the economics from every .com sold.