Minds + Machines’ numbers show fresh TLD auctions are getting out of control
Highly contested fresh TLD auctions are likely ending well above $10 million.
Minds + Machines put out a press release today regarding winning the .law and .vip domain names at auction, and the numbers in it provide hints regarding how much firms are paying to win private auctions for fresh TLDs. If my math is right, these fresh TLD auctions are getting out of control.
The firm won .law and .vip, but lost five auctions: .design, .flowers, .group, .realestate and .video. Its net cash inflow from the losses following paying for the wins was $6.2 million.
The .VIP auction was an ICANN-facilitated auction, which means we know the exact price: $3,000,888. That means that Minds + Machines grossed at least $9.2 million from losing the auctions, plus whatever it paid for .law.
The release doesn’t disclose much regarding .law, other than that one other party participated with it in the auction in return for a share of .law royalties.
Let’s assume for a moment that Minds + Machines paid nothing out of pocket for .law. Let’s assume the partner paid all the cash. (Remember, one partner agreed to contribute up to $15 million for a single one of the domains it applied for.)
That means Minds + Machines received $9.2 million from losing the five auctions.
Here’s how many applicants there were for each of the five domains it lost:
.design 8
.flowers 4
.group 5
.realestate 4
.video 4
Ignore (since we have no option) that the domains didn’t sell for prices exactly proportionate to the number of participants. Also ignore the modest amount of auctioneer fees and refunds for withdrawing applications.
Take away one from each for the winner, and that means the $9.2 million was M+M’s 5/20ths share of the pot, or 1/4.
With the caveats in mind, this suggests that these five domains sold for roughly $37 million combined, an average of over $7 million each.
The big bogey in this math is how much Minds + Machines paid for .law. If it also contributed cash, then the average paid for these five domains is much higher. As an example, assume it chipped in just $5 million and its partner paid the rest. Then it received $14.2 million from its five losses and the five auctions grossed $57 million, an average of over $10 million per domain.
Again, I had to simplify things given the data I have. The proportionality of auction participants to final price is a big question.
But one thing is apparent: the prices paid at ICANN’s auctions the prior week might be considered relative bargains.
