"I bought right into it, literally," Cahn said. "I spent $70,000 to buy about 1,000 domain names, so I had to find a way to pay for them. I got a partner and we formed a corporation. It was the first online-domain brokerage system, and we developed the entire process of escrowing a domain sale and appraising a domain name for value. That all came from us, and now it's used every day in our business.
"Obviously I believed in it, or I wouldn't have thrown $70,000 at it in the beginning. Soon I saw domain names being bought and sold out of our own inventory, which helped pay for the expenses. Of course, I didn't have any idea it would become what it is today."
What started as a sideline that Cahn operated from a spare bedroom in his home has morphed into one of the premier online registrar and domain asset management companies in the world. Earlier this year, the Pompano Beach, Fla.-based firm smashed all of its existing records by brokering the domain-name sale of Porn.com for an eye-popping $9.5 million. The tiny two-man company now employs 27 sales, support, marketing and technology people, and Cahn said that number will climb to 34 by the end of the year.
What's the Moniker secret?
"We manage domain names like a fidelity manages a stock portfolio," Cahn said. "We look at domain names like assets, and we always have. We manage clients' portfolios of domain names, helping to acquire, secure, register, monetize and sell those domain names throughout the life cycle of their portfolio management. Every single client is assigned an account executive here to help them with their needs and their strategies for domain names.
"We're the only domain services company that has a primary market where we register names from scratch, and a secondary market where names that have been registered before are available for sale. We also have a company that monetizes domain names that aren't in use."
Moniker charges a small fee of $7-$10 to register a domain name, and has a healthy adult clientele, many of which have moved to Cahn's firm from other registrars that seemed to value their business much less.
Another reason is the respect Cahn has for the adult business.
"We think the adult industry is extremely important to the overall health of the Internet industry," he said. "A lot of things are tried in the adult industry first, before they make it to the public market. It's a fact that all the credit card fraud, the customer acquisitions, practices and tests, all have been done through the adult industry first, before being pushed out to the mainstream. The mainstream companies use many of the same systems and procedures that the adult industry used as a test bed, to make sure they can do business with customers. The adult industry was also one of the first to value its domain names like assets. That's why we always made sure the adult industry knew who Moniker was."
Steady Adult Presence
Moniker has been a steady presence at adult conferences and until recently, was the only registrar to have a booth. The company has pioneered domain auctions in adult — both live and silent — starting with January's Internext Conference.
At the recent Traffic Conference in New York, Moniker enjoyed its most successful live domain auction ever, selling $12.3 million worth of domain names.
The explosion in domain sales prices has caught most online businesses by surprise, but Cahn thinks he knows why it's happening.
"When I got into the business in 1995, there was no monetization, no Google or Yahoo, and really no advertising online," he said. "Those few of us who started registering domain names back then saw them as virtual real estate that no one had developed yet. Now that we have the search engines, online advertising and all kinds of click-through revenue, a domain name is much more valuable."
Cahn believes that the single biggest change occurred when people stopped seeing domain names as commodities that simply cost $35 to register, and started realizing they were assets worth thousands and sometimes millions of dollars. The change in the domain registration process, which used to be similar to the AT&T monopoly days in that Network Solutions controlled all the domain names, also helped to boost the business.
Today, the process is open and competitive with several registrars, and building a website is much easier now with online templates that allow people to buy a domain and get it up and running in an hour or two.
"Another significant change is that domain names now have value over and above the brand name," Cahn said. "They drive natural type-in traffic. More than 50 percent of the people who navigate the web type where they want to go in the URL line, which is called direct navigation. When they do that, it makes the domain name very valuable. Lots of those domain names are owned by big corporations and search engine companies, and they derive traffic and revenue from that traffic. At the end of this year, the total value of that will be about $1 billion in online advertising, which will amount to about 15 percent of all the revenue that's generated by Google and Yahoo.
"Also, several new registries have been introduced. Now there's not only .com, .net and .org, there's .info, .biz, .us, and soon they will introduce .asia. There are lots of new extensions and country codes to deal with, too."
Perhaps the most amazing aspect of the jump in domain-name value is the money that can be made from dormant or unused domain names. Moniker is leading the way in helping its clients mine this revenue platform with a revolutionary system.
"Let's say you own 100 domain names, and you're focusing on just two or three for your business," Cahn said. "We help you make money with the rest of them that are sitting around doing nothing. We have a system called 'traffic club,' a very unique domain monetization system that linguistically maps advertising to the domain name. So if somebody types the domain name into the URL, they'll see linguistically driven ads that drive click-through revenue. Domain names actually can make a lot of money while they're sitting around.
"As far advanced as the people in adult online are, many don't realize that they're sitting on little gold mines in their groups of domain names. In many cases, those domain names that are sitting around can pay for all the renewal fees."
While it may seem that everything Cahn touches turns to gold these days, the history of Moniker isn't all hearts and flowers. In the late 1990s, when Internet businesses crashed and burned all over the world, Cahn's firm had to tighten its belt and ride out the storm. Ironically, it was the fact that Moniker dealt in domain names that saved the company.
"A lot of people thought the Internet was going to close up," Cahn said. "One of the things that kept us in business was the fact that the last standing asset of the companies that went out of business was their domain names that they made famous. Companies like EToys.com, Gardening.com, and Mortgage.com all went out of business, but they retained a valuable asset in the domain names. We were the ones chosen to help sell those when they went into bankruptcy. So the good news is that domain names have value both in up times and down times in the market."
The other good news: Cahn believes there will never be another Internet crash. In fact, he thinks we may be seeing the beginning of a brilliant future for online adult businesses.
"The Internet is still in its infancy," he said, "and as it grows, the domain-name market grows. Two million new users join the Internet every week, and it's not stopping any time in our lives. It's going to be a very powerful industry for generations."
That means there's still room for that industrious individual running a new domain-name business out of a spare bedroom.