February 21, 2001

What's in a dot-com name?

Author: JT Smith

- by Jack Bryar -
Open Source Business -
On a week when I began to worry about the viability of certain Linux
companies I know, I noticed that there are just a whole bunch of fairly
cool dot-com nameplates that are available for purchase the second time
around. Are these emblems of other people's foolishness? Or are do they
represent significant values available for cheap money?

While looking for companies to pick on this week, I noticed that the
Web site LinuxOpen was ... err ...
closed. Since this was to be the "community Web site" of the erstwhile Linux
One
, the one Linux company most frequently picked on by the Linux
community, they may have decided to do something else with the site.

I suggest they might like to sell it. Whatever you think of the
company that owns it, LinuxOpen is a pretty darn good name. In fact, I don't
know if you've noticed, but suddenly there are a quite a few memorable cool
dot-com names coming onto the market.

According to Industry Standard magazine, over one hundred "dot
bombs" are shuttering down, and some of them have names that are potentially worth
more than the company ever was.

In some cases that was because the some of these dot bombs spent
gigabucks to establish their brands, before going under. Allegedly, a
well-recognized brand is a major asset. That's why developers of a
start-up airline spent a small fortune buying the old TWA trade name. While it
turned out that the new TWA wasn't much better run than its namesake, for a
while that name provided the firm with instant market recognition and a
measure of credibility. If I wanted to aggregate a bunch of regional
brick 'n'mortar pet stores and could buy the Pets.com name, URL and sock puppet for a
reasonable fee, I'd be insane not to try.

A regional pet store chain did try. Petsmart.com bought the URL of
Pets.com, though the annoying sock puppet doesn't seem to be part of the deal.
This makes a lot of sense, for although PetSmart may have spent years
building a chain of more than 500 stores, they didn't develop the nearly the level of
brand awareness that Pets.com achieved in 18 months by burning millions of
dollars on TV ads.

Other names are valuable simply because they were good brands.
Outside of the dot-com sector there are lots of specialists who do nothing but
develop brand names. Companies happily spend the money, because good branding can be
critical to corporate success in the marketplace. Firms such as
Interbrand specialize in brand valuation studies. They have "proven" that good
branding can add substantially to a company's market value.

Many other management strategy types have closely followed
Interbrand's recommendations, and, ironically the advice they gave Web start-ups may
have led to the downfall of many of the dot-coms. One landmark Interbrand
study conducted in the 1980s studied the prices paid by companies for
strongly branded products and companies. It suggested that while tangible assets
(factories, goods, etc.) represented an average of 82% of the price paid
for companies by their acquirers in 1981, by the end of the decade that
number had fallen to just 56%. That meant that nearly half of what an acquirer
was paying for was tied up in company reputation and name recognition in
the marketplace -- essentially, the brand.

This is why so much effort and so much cash was burned at the
beginning of the dot-com boom. And by this standard, Pets.com did the right the
right thing! It built a brand in its market better than any of its
competitors, despite going bankrupt. And by that standard, the Pets.com logo was
worth a fortune, and whatever PetSmart paid for the name, it got a bargain.

One alternative to spending a fortune on advertising was to find
really clever company identities. There were a lot of witty and ingenious
names generated in the dot-com boom. Several people I know particularly liked
the
name Gazoontite.com. The
company for allergy sufferers opened its first store on in San Francisco in May
of 1999. It opened a Web site shortly thereafter and expanded into suburban
Los Angeles. A year later the company opened its first New York store and
then
went
gloriously
bankrupt
. Whatever Gazoontite lacked for a logical business, it had
a really cool name.

But the world of the Web allowed companies to "own" something it
couldn't in the brick 'n' mortar world. A company could appropriate a standard
word and claim it for its own. For example, no one could name a physical
furniture store "Furniture Store" and claim a trademark on it. Yet for a brief
shining moment, Furniture.com had that right on the Web. So did Food.com. So did a host of others.
Some, like .com were embarrassments. Others, like the quite
excellent Voter.com, had a brief moment of
glory. Voter.com did an excellent job during the recent electoral cycle,
despite not having any viable business strategy.

But the names continued to have value. That's why, when Garden.com began to fail, Burpee Seed
Company quickly snatched its name up. Burpee may have spent decades on
its brand, but to own the word garden on the Web? Even less
obvious names are being snatched up for similar reasons. Why else would eBay
have bid on Ultimatebid's name. It
wasn't their business eBay was after.

And names like MotherNature.com and Foodline probably have retained
significant value despite the fact that their companies have gone
under.

But a rational market hasn't materialized. In a marketplace notable
for its egos, old founders have been showing up to buy back the nameplates
from the management teams that drove these dot bombs into the ground.
Founders like Gazoontite's s Soon-ChartYu, Citeline's Zorba Lieberman and Flying
Fish's Eric Silverman have shelled out money to prove to themselves
that it was the other guys bad management rather than their bad ideas that were
responsible for the failure of those companies.

And it turns out that most open source shops -- who could use the
money -- are out of luck. A quick scan of Open Source URLs confirms that very
few people came to this segment from marketing. Clever Web names are almost
entirely lacking in the world of Linux. Also, very few moribund
companies throw in the towel. The Web is already full of dot-coms -- firms
that have been dead for some time, but which refuse to go quietly. For
example,
etown is supposed to be dead, but it's still on the Web still selling
electronics. Whatever it is that AntEye.com was supposed to be doing,
it's
still doing. Vitts Network and wwwrr may have been declared dead by
Industry Standard magazine, but they are still online, at least for
now. But the Open Source world has even more of the Web undead. How else to
explain the continued presence of LinuxOne?

Part of the reason for all of this clutter in the Open Source
community is that the Open Source Webscape is fundamentally distinct from that of the B2C dotbombs. In Open Source you find the space littered with little,
intentionally non-profit dot-orgs and dot-nets that post notes
saying, "geez, we discontinued this project in
'97
- go to Bob Smith's site" (who probably gave up as well). And
yet the site is ... still up! Because in Open Source, no one ever throws
anything away.(even when they really should).

But for those Linux firms who are trying to make a profit, I
have a suggestion: Despite the lack of high-value titles, Linux shops may
want to take a close look and see if that have any spare URLs someone might
want to pay for. For example, they might not be willing to pay a lot, but
I'd guess that there is likely to be an over-priced prep school, a comfortable Massachusetts
suburb
,
and a semi-respectable newspaper
in
Kansas
that would love to own the name, Andover.net.

In the meantime, I hear Mylackey.com is available. Now, if I
could only come up with a business for it.

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