Wednesday 23 December 2009

A sad if salutary tale

I've just been speaking to a friend, who had developed a rather attractive website for her specialist business -- a small local business which looked promising but never developed and is now defunct. A fotnight ago she told me excitedly that she had been approached by a prospective purchaser, who was interested in buying the domain name together with the six or seven pages of text and artwork that comprised the website.

Now, somewhat crestfallen, my friend tells me that she has not heard from the prospective purchaser since. I expressed my sympathy and asked her why. She had no idea. How much did the would-be buyer offer, I asked her, and was told: "She didn't offer anything. I told her I wanted £5,000 and wouldn't take a penny less". Now, the cost to my friend of acquiring and populating the site, plus some expensive and totally unsuccessful search engine optimisation, came to a good deal more than £5,000 -- but I found it hard to explain to her that what a website costs and what it's worth are not the same thing. Bearing in mind the facts that the domain name was long, easy to mis-spell, unmemorable and descriptive, as well as the existence of websites of competing businesses with not entirely dissimilar names, a realistic selling price might have been rather lower if an outright sale were the only option. A lease of the site and its intellectual property furniture might have been a better option.

This episode might seem a little trivial, but it reflects a number of truths that are found in the bigger world. One is that it is easy to over-value an intellectual asset; a second is that one's opening gambit should not be one's final shot; a third is that it's usually better to encourage a prospective purchaser to speak about pricing than to place a tag on an asset and await a dialogue that never comes.

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