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07|30|2008 01:51 pm EDT

Statements of the Domain Name State

by M. Fiol in Categories: Featured

Ten Emerging Beliefs and the Opportunity They Present

Domain conferences share a commonality during which, over time (turbulent times no less), certain conventional wisdoms begin to emerge as the industry matures and infrastructure solidifies. In other words, the more the industry coalesces and becomes viable and full, the more common beliefs come into play and perception becomes a central figure.

Trips to shows this year and all the conversations that went on behind the scenes produced many threads or commonly held and generally agreed upon principles that can help provide guiding light in an uncertain future.

Now, eighteen months ago, this would have been a different article, with different results and beliefs – ultimately, this is a testament to the cycle that is the domain business. Yes, domains too are subject to cycles and those around long enough have weathered a few with their dot com raincoats.

To wit, the current cycle (low with seasonal and economic effects piling on) has cleared up a bit, allowing us to make the following ten potential ‘statements of state’.

  1. With recent Yahoo changes, arbitrage is on its last legs and may have hurt domainers on a large scale – arbitrage is always a declining strategy (not even an asset) as word spreads.
  2. Premium domains (premium and brandable generics) are here to stay.
  3. Sub-prime, replaceable domains continue to lose value. Large chunks of registered names have dwindled to ‘caveat empty’ at base prices.
  4. ccTLDs are the next best choice after .com.
  5. A true shift from traditional TV advertising has begun, led by the Fortune 1000.
  6. .TV has its place yet development is likely a necessary adjunct to the formula.
  7. True development (requiring innovation on some level) is expensive and difficult – the industry having yet to produce a ‘home run’ on the development side (outside industry providers).
  8. Traffic, traffic, traffic as always BUT there is a change going on – with a focus on ‘eyeballs’ as opposed to ‘clicks’ from the Fortune 1000. This is the effect of #5 above as they apply the same principles to the Internet as they did the tube.
  9. The middleman’s influence in the marketplace is shrinking and naturally so – and largely by their own failings. At some point, competitive saturation and strategy combined with fraud, budgetary needs and simple intelligence will push more advertisers directly to the owners. Sendori may be the key figure here.
  10. European domainers are far more skilled in monetization than their American colleagues. Without PPC, they have turned to development and sponsors and networks – they can teach us much in a shaky PPC environment.

It must be pointed out that while some of the above can be considered ‘good news’, I must continue to stress the need to de-generalize our domain discussions. The above points to specific classes and not ‘domains’ as an entirety.

In short, those with premium and brandable generics, geo-domains, prime ccTLDs and .TV have brighter days ahead on the monetization and resale side. Others holding long names, alternate extensions, TMs, typos or generally subpar domains should be looking over their shoulder.

Point being that the above can be a valid road map to the current state if you are not caught up in the generalization and can plot a unique course. These simple statements open mountains of opportunity – that is, if you can read between the lines and extrapolate it forward in time.

M. Fiol is a regular DNN contributor and DomainConsultant.com analyst. He also runs and is CEO of HappyBirthday.com.

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14 Comments

Snoopy

July 30, 2008 @ 5:11 pm EDT

“Sub-prime, replaceable domains continue to lose value.”

Add “prime” names to the list as well, at least for the time being.

Adam Strong

August 1, 2008 @ 12:41 am EDT

Really? Prime names are losing value? I think the domainer to domainer transactions are drying up a little as we’ve seen at auctions but that doesn’t mean the names are any less valuable does it ?

John McCormac

August 1, 2008 @ 12:22 pm EDT

There needs to be a reassessment of what constitutes a “prime” domain name. Most of the rules were heavily influenced by the artificial scarcity created by domain tasting. This meant that multiword domains were given higher valuations than they would have otherwise received.

The way things are going now, there seems to be more emphasis on development than parking. Some of the parking companies are already trying to make their parking pages look like pages with genuine content. The whole domain parking business may be in for a bit of a shakeout.

The ccTLD aspect is interesting because the developed domain percentage is often higher in ccTLDs. The gTLDs have a long way to go yet but in some countries, the venerable .com TLD is being overtaken by the local ccTLD. Fragmented regional domains like .eu and .asia may appear to be doing well but when they are broken down on a country by country region, they are not even a fourth choice extension. The web may be shifting from the era of monolithic gTLDs to ccTLDs and niche extensions.

Adam Strong

August 1, 2008 @ 1:49 pm EDT

John, generally I’d say that multi-word domains aren’t typically prime domains and I don’t follow how tasting would effect their values anyway. Also curious how a prime domain, say for lack of a better example off the cuff, property.com has had its value influenced by domain tasting.

John McCormac

August 1, 2008 @ 2:21 pm EDT

Some multiword domains have sold at high prices Adam,
Domains that would have naturally dropped and have been reregistered (often for development) were being caught up in domain tasting. Domain tasting effectively created an artificial scarcity for the last few years. Domains that would have been sub-prime in a free market sold for high prices. The recent LLLL.com craze is a good example of how the low end of the market was affected by tasting/kiting.

Again it all boils down to what is considered a prime domain. A single word generic like property.com is a good example. A city name is another. But where property.com is at the top, other domains containing the word property might also be considered prime or close to it. After that, the question of what is a prime domain and what is not gets harder to answer.

Michael Schneider

August 1, 2008 @ 4:34 pm EDT

Thanks for sharing your

M. Fiol

August 1, 2008 @ 4:52 pm EDT

Micheal, The article was written about ‘perceptions': commonly-held perceptions. At the moment, no type of ‘consensus’ has been reached on IDNs – opinions vary greatly. Will take some time.

And as for “prime” domains, Adam is correct – the article is referring to names like property.com.

Cheers, M. Thanks for the feedback, comments…

Snoopy

August 4, 2008 @ 3:15 am EDT

“Really? Prime names are losing value? I think the domainer to domainer transactions are drying up a little as we

Steven

August 4, 2008 @ 10:57 am EDT

Snoopy,

Those examples do not show a trend. They only prove one thing for sure. The buyer paid too MUCH for the names the first time.

The idea of buying a name at the largest domain auctions and trying to flip them is crazy.

Just because those people lost money does NOT mean that that all names have gone down in value. I think the market is just learning to evalate “true” quality a little better.

Khaled

August 4, 2008 @ 4:04 pm EDT

Personalcheck.com was actually sold for $25,000?
Think about it for sec. How could this domain be developed? who would want it ?(ok, banks) but more importantly, why?
Not a very good buy I would say.

Yet it is a generic and commonly used term so in my opinion, the domain is worth $5,000-$10,000 and I think this year it got its true value.

Out of all the 4 domains you listed, only eob.com appears to be more valued than it sold for, last week. Many sellers unfortunately pay high price for a 3 high grade letters (without q,x,z, etc in it) assuming there will be lot of end-user buyers for it. EOB might sound like all high premium 3 letter domain but if you dig deeper, you will see that EOB does not have much acronyms and abbreviations to sell for high price – even with 1.6 mil Google results. There are no level 1 potential buyers and there are only 2 level 3 potential buyers (not much likely to buy) I can find – eob.dk and eob-london.co.uk. In my opinon, EOB.com is worth $10-15k and it was a bad buy at $17.5k. I am not trying to defend the domain investments but all I am saying is that there will always be few examples of losses from last years.
If you check, you probably will find some domains that were bought for higher in 2006 than sold in 2007.. like you did for 2007-2008.

I am also a domainer in Vancouver and have been in the industry from past several years but I do not hold a very big portfolio. My strategy is focus on few very high premium domains, like country domains.

Snoopy

August 4, 2008 @ 6:32 pm EDT

Snoopy,

Those examples do not show a trend. They only prove one thing for sure. The buyer paid too MUCH for the names the first time.

The idea of buying a name at the largest domain auctions and trying to flip them is crazy.

Just because those people lost money does NOT mean that that all names have gone down in value. I think the market is just learning to evalate

Steven

August 4, 2008 @ 8:39 pm EDT

Snoopy,

If i looked I am sure i could find data that suggests the complete opposite. Numbers can be used in a number of ways. I think you need to look at the external variables such as:

Where was it sold?

Who bought it?

What was the reason for it selling?

In a new era of development, does the names have legs?

How long has it been available on the market?

I mean, most of these questions I ask myself before i buy a name. So, IMO, to say the market is going up or down is misleading.

Obviously, buying names has an opportunity cost associated with them. As I have been saying for at least 6 months, domains will take a fall and probably have because other ways to make more money long term because the state of economy. Once the domain prices come down, domains will be he bargains and you will see people buying them again in large quantities.

I am personally very anxious to see the TRAFFIC auction list and seeing if peoples expectations have come down or if everyone still thinks their name is GOLD

Snoopy

August 4, 2008 @ 10:18 pm EDT

“If i looked I am sure i could find data that suggests the complete opposite.”

Ok Steven, I’ll call you on that….please look and present the data that shows the complete opposite.

Sean Wood

August 8, 2008 @ 8:02 pm EDT

When assessing prices we should take a few things into consideration. As a buyer, I am surprised at how poorly these auctions have become.

The quality of domain names on the auctions has decreased tremendously and the warning for each auction is way too short. 15 days (to view domain names on these auctions) is not enough for me to make arrangements to buy these domain names.

Aside from that there is multiple login requirements to sign up for a moniker and snap names account confusing the hell out of me. If there was one site running one auction with at least a month and half warning I think we’d see the prices are still the same.

The quality of domain names put on these auctions definitely has to be revisited. I see domain names with dashes, .net, .biz. .info being auctioned at these live auctions and I wonder if that is the best they can do.

That is just what I see from my point of view.

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