By Robert Weisman, Globe Staff | June 12, 2006

A venture-backed Waltham company that's quietly amassed more than 650,000 Internet domain names is stepping out of stealth mode today and unveiling its plans to build a substantial Boston-area Web 2.0 business around the emerging field of ``direct navigation."

The company, called NameMedia, is being led by Kelly P. Conlin , 46, a veteran media executive who previously had been chief executive of International Data Corp. in Boston and Primemedia Inc. in New York. NameMedia has already hired 75 people in its office near Route 128 to buy, sell, and develop businesses around Internet domain names.

NameMedia, which already is profitable, says it owns more Internet domain names than any other party and draws more than 25 million consumers monthly to its vast collection of websites. It makes money when computer users type the name of one of its sites, such as photography.com, bookstore.com, or jobfinder.com, into the Internet address bar and then click on advertising links.

Eventually, its revenue stream will expand to include everything from trading Internet domains to running a variety of e-commerce, media content, and community-oriented businesses on the websites.

``The analogy we use is real estate," Conlin said in an interview. ``Our objective is to build the largest portfolio of undeveloped real estate on the Internet. Some of the sites we have will be held for resale. The best ones, the waterfront properties, we'll build businesses around. It's a content-light, user- friendly way for people to find what they want."
In addition to the 650,000 Internet domain names it owns, NameMedia has struck partnerships with third parties giving it the right to monetize or sell about 350,000 other domain names, Conlin said.

Within the world of Web 2.0, the name coined for the second wave of businesses to capitalize on the Internet, direct navigation, sometimes called direct search or ``searching without a search engine," is considered one of the fastest-growing niches. It is projected to generate $650 million in sales this year in the United States, about 7.5 percent of all search revenue, much of it from revenue sharing with search engines like Google Inc. and Yahoo Inc. on paid placement ads hosted on its sites, said Jordan Rohan , an Internet stock analyst for RBC Capital in New York.

Rohan estimates that revenue pool could double in the next three years if direct navigation companies like NameMedia can refine their processes and develop e-commerce portals on their sites.

``More than any businesses I've seen on the Internet, these companies get to cash-flow positive almost immediately," Rohan said. ``Direct navigation is the overgrown toddler of the online media space. It's large, growing, and a little bit clumsy in its movements right now."

People have been buying up Internet domain names since the early 1990s, though most of the early speculators were ``domain parkers" or ``cybersquatters" who owned static websites. As companies like Google and Yahoo deployed technology to monetize Internet traffic through advertising, some of those website owners were able to piggyback on their success by hosting advertising links. The sites attract traffic because millions of Internet surfers bypass search engines and type domain names directly into address bars.

Hundreds of people own portfolios of websites, but among the dozen or so companies that are trying to develop e-commerce and other businesses, NameMedia is one of the largest, Rohan said. Its competitors include Demand Media and Oversee.net, both of Los Angeles, iREIT of Houston, and Marchex of Seattle. While all seek to monetize their sites, each has carved out a different strategy.

``We're really a media company," said Richard Rosenblatt , co founder and chief executive of Demand Media, which was formed through three acquisitions and owns 200,000 domain names. ``We're not going to build out all of the domains, but we'll use tools and technologies to create a better consumer experience on all our domains."

NameMedia is the new name of BuyDomains.com, a company that was started in Washington, D.C., in 1999 and acquired last year by a pair of venture capital firms, Highland Capital Partners of Lexington and Summit Partners of Boston. During the past year, operating in stealth mode under an interim name of YesDirect, the company moved to Waltham and acquired more domain portfolios and a technology platform for monetizing its sites through advertising. The company has increased its workforce to 75 from about a dozen.

``You hate to predict the future, but I think a business like this can be a multibillion-dollar franchise," said Bob Davis , managing general partner at Highland Capital, who sits on the NameMedia board.

Davis would not say how much Highland and Summit, the two largest NameMedia shareholders, paid to acquire BuyDomains or how much funding they'd provided during the past year.

http://www.boston.com/business/globe/articles/2006/06/12/internet_stealth_company_steps_out/?page=2DominiosIDN.com ||

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