09|19|2008 02:22 am EDT
Recent Financial Collapse May Benefit Domainers
In the spring of 2001, I came across an eBay auction for the domain Inbox.com, listed with no reserve at $4,000. Now, in a clear sign of the times, the auction ended without any bids or bidders, including myself. After the auction, I emailed the seller and offered him $2,000 for the name. He accepted my offer.
Sixteen months later, I sold the domain name for a high six-figure price to an end-user.
Point is that 2008 is looking, in many ways, like 2001-2002 except this time the crisis is larger, global and based in excessive debt.
People are moving money into no-interest T-Bills or simply holding tight to their cash and hoping their bank stays afloat and if not, the FDIC doesn’t crumble under the weight of its insurance pledge. Some are even looking at their mattresses as the bastions of ‘safety’.
So what is an individual to do? If our money is not safe in banks, then where do we put it? One possible answer is, again, domain names. For several reasons:
- Domains are a global commodity
- Domain names are not based in debt.
- Unlike Lehman Brothers or Mac and Mae, the Internet is not going anywhere but up – especially with the next item as consideration.
- Energy issues/prices and depleted discretionary income will drive more usage of the Internet as entertainment, news source, global connective.
- The normal ‘hedge’ in these times is ‘gold’ but at nearly $900 per ounce, it is a prohibitive investment vehicle. And note, during the Great Depression, the government seized precious metals from its citizenry.
That is not to say that drops in domain value will not continue for awhile – it is a natural devaluation based on economic conditions outside the industry. No, it is to say that once and if this all shakes out, people will notice how well the Internet and domains weathered the storm and the idea of domains as an investment hedge, a place to put your money for tough times, may grow.
Now, the key of course, is to buy on the low side like inbox.com. In down times, like 2002, the opportunities and deals were all around us. After all, who survived the ‘dot-com’ crash? In fact, those that did survive, now make up a large chunk of the upper echelon of our industry.
After reviewing all the upcoming T.R.A.F.F.I.C. auctions, DomainConsultant has decided to update its market recommendation to its clients from ‘HOLD’ to ‘BUY’. We made this change for many of the above reasons – and in no small part, based in current events. Unless it ALL collapses, we see domains as one of the most reliable, secure ‘safe harbors’ – IF the name is quality, bought at a proper price.
We’ve noticed in the submission and auction lists a distinct rise in quality and drop in pricing. If one could conjure a symphony of elements to produce deals in the marketplace, this would be the result, exemplified by offerings great and small. In short, time to buy.
Besides, you’re only other real, viable alternative may be to stick it under your Serta.
M. Fiol is a long-time domainer, regular DNN contributor and Domain Consultant analyst. He also owns and runs HappyBirthday.com among others.