If you had a steady investment opportunity with 10% return (about in line with long-terms stock market returns), $9000 per year indefinitely is worth the same as $99000 now (in an idealized finance world. In the real world you can't invest $99000 and withdraw $9000 per year because withdrawals during downturns will take out too much. But it's a quick way to calculate equivalent values).
That's obviously an upper bound, because those domains won't make $9000/year forever. But valuing them at $10k if they make $9k/year is equally unsound. Not to mention the domain is worth more than its ad revenue. You could also end up selling it to a company that came up with the name and saw that the domain is available for purchase for some reasonable 4-5 figure amount (like in the example of this very article, where someone buys a domain for a five-figure amount)
Obviously there is a lot we don't know (is the $9k pure profit or are there substantial costs? How likely is the domain to sell?), but it sounds like the seller got the better end of the deal. He got more than $40k in value, in return the author got a deal he could afford
I have a calendaring site (won't mention it here b/c I don't want to be seen as plugging it) that has been generating revenue from ads and subscriptions for 26 years now. At its peak, well over 100k/yr but now more like 15k/yr for the past 5 years. Still a very steady income b/c the site is sticky. The only expense I have is about $3k every 36/mo for VPS hosting. At this point the code base is so mature that I only do minimal user support. I've looked into selling but people only want to offer 2x annual revenue. Why would I do that when I can just hold onto it for another year? I wish more people saw the math your way.
The main reason this is an issue is that it's a lemon market. Many sellers claim their sites will require "no time to maintain" and that future returns will likely continue, but it's often a lie and thus you don't get the multiple that is truly justified. Even without lies, no one knows the truth of your business like you do. The unfortunate result of this -- and I've been in a similar position in the past -- is that you are incentivized to lazily run things into the ground slowly rather than find a new owner who may bring new passion.
Good analysis. if I was the author I would have just borrowed 20k in a personal loan and paid it off in three years. Of course he may be exaggerating that he gets 9K in Ad revenue per year or he knows that it's going to decline
What's the best network currently to put a domain to generate ad revenue?
Adsense
Doesn't Adsense require website with proper Content ?
Yes this is what im confused about. They described it as a parking domain, but the old strategy of "buy a popular domain and put ads on a one pager" hasn't been something that pays substantively for a long time. Ads sales have plummeted in general but not being able to use adsense would make it worse.
Yes
I imagine that $9k ad revenue is a site that had an actual user base. And that the guy taking over the domain is going to just put all ads and no content, like he had on Friendster.com. And if so, the expected ad income is probably much lower.
I believe it's 9k/year in parking revenue.
Nobody gets 10% a year
S&P 500 average return over the last 5, 10, 50, and 100 years was higher than that.
...unless there's considerable uncertainty about future payments. Happily for the sellers of dubious assets, the world never seems to run out of people who can't resist a deal that's too good to be true.