Why You Shouldn’t Invest in Domain Names
Monday, March 16th, 2009
Get rich quick or go broke trying.
A few weeks ago an account manager at a parking company told me he was frustrated. I asked why, and here’s what he said (paraphrased):
A lot of new people are coming into this industry. They’ll register a couple hundred domains and park them. Then they call a few weeks later and say “Why am I not making any money? I thought this is all I had to do”.
New domainers get into the industry for a variety of reasons. But often times they read an article about someone who has made a fortune domaining. Most successful domainers I know will tell you it takes a lot of hard work and luck. But that’s not the image the press always reports.
There are a couple truisms I’d like to share for anyone interested in the world of domaining:
1. If you live paycheck-to-paycheck, you shouldn’t invest in domain names. Domains are not liquid. If you can’t afford to sit on your domains for 3, 10, or even 15 years, you shouldn’t register them.
2. If you registered a domain in the past few years, odds are it gets very little traffic. Your domains have been tasted, chewed, spit out, and tasted again before you even registered them. Very few domains that the everyday domainer registers have any chance of garnering significant traffic. This is changing a bit, but don’t assume you can go out and register a hundred domains and make money from parking.
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So true. But if you think about it. If you have a decent name that would be good for one to develop in to a business it should sell well. People get caught up in the hype of bad recession. That should not effect domain investment. Think about the people that have lost their jobs. I bet there are millions wanting to start an online business. Recession or no recession, the internet is always going to be here to stay.
I’m going ot have to disagree with you on this one, Andrew.
On the contrary, if I was living paycheck-to-paycheck I would put every last cent into investing in domain names (where else would I put it? The bank? The stock market?). Otherwise, I could well spend the rest of my life living paycheck-to-paycheck. No one gets out of a rut unless they take a chance.
My brother and I may own one of the best portfolios on the planet, but I still hand register excellent domains all the time. How? I keep my eyes and ears open. I constantly check the news. I won’t tell you exactly which domains I look for, but I can tell you that I hand registered one last week on Moniker, parked it and doubled my reg fee in the first week. Do this enough times and it adds up. Of course, we don’t register names to park, we register names to develop (because we’re going for bigger return over a longer period of time), but my point is that anyone can make money in the short or long term if they know how to pick ‘em. And that’s the most important factor. You have to know how to pick them. The biggest problem I see is people buying terrible names.
I agree. Investing in domain names is a long term commitment and requires a lot of patience. Investors have to be selective. It’s quality not quantity that matters.
@David….I’d have to disagree with you b/c most folks can’t do what we do. Plain and simple.
I really don’t know why…..but how many folks have you tried to get into domaining and they just don’t get it or are too overwhelmed?
The first time I came across domains in 1995 I “got it” instantly. However, in my experience it is 1 in 50 that “get it”. Usually it is the more technically inclined (in any field) that do understand.
I told a very talented construction worker about this about a year ago and he put it together in his head in a matter of minutes and totally understood what I am doing. I about jumped out of my chair b/c I never saw anyone catch on that quick.
That is why some folks like you and I realized the potential in 94′ or 95′ and afterwards, and others just did not ever get the light bulb to pop up over their head.
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David,
Don’t give people hope – I think people starting saying in 1999 “all good names are gone”. Still saying it today – let them believe it – more for you and me
Where the problem lies and I think this is where people like you and I have a very distinct advantage over newbies is that we are developers and have spend millions on development, keyword advertising and more. It’s this insight, these dollars lost trying new things and the ongoing development that provides an entirely different perspective when searching for new names.
Take DNJournal’s report over the last few years:
first, 90% of sales suck.
50% of them we would probably never register.
90% of them are still parked by owners who are not developers.
There is a huge difference between a developer and an investors perspective when looking for new names so with the utmost respect please just agree and say no good names are left
Correct, one must have the talent for picking names to succeed in this business. But if they do, regardless of their income they need to join the party.
David,
I am going to agree with Johnny, those of us who have learned can do it. I suspect most people can’t, won’t and don’t have the time/money/patience to learn for such a low return. I would suggest them investing in themselves by educating themselves in new technologies — don’t just learn html, learn php, mysql, learn some open source cms systems, some graphics, build something rather than thinking of domaining as a get rich scheme.
maybe it should be changed to “why dumb people shouldn’t invest in domain names”.
I work from paycheck to paycheck and over the last year have hand registered about 50 names. I managed to sell about 10 of them to a wholesaler but will probably let a lot of them drop as parking has not even covered reg fees. Funny thing is, most of my parking revenue comes from a few names I registered for free in my Country’s ccTLD which I figured out were getting typo traffic from the U.S.
I’ve decided now to only purchase names with revenue from my ccTLDs and by doing so am much more careful about what I buy.
I recently managed to find a name with a $25 estimated CPC for the exact keyword. Hopefully I can get something going with this name and start to build a decent portfolio.
I’m living from paycheck to paycheck but I’m finding a way!
I think one or two quality domains developed into websites would be a good entry goal for someone new.
The days of cheaply building a high quality portfolio are over. Most new domainers don’t spend near enough time learning. They waste reources jumping in too early and lose valuable investment capital on poor domain selections.
Actually I think it is surprising that some two words domains get any type-in traffic at all. So in my case it has been the opposite. I was pleasantly surprised when I started parking my domains that some of them got a little traffic. I agree wholeheartedly with the post. If a domain that is registered today makes its reg fee in parking it is better than most.
David, et al – My assumption if you’re living paycheck to paycheck is you don’t have any savings to invest, so you’re going into debt. It’s OK to go into debt to start a business, but you need to have near term revenue potential in mind. Rather than thinking like a “domainer”, I’d think like an entrepreneur starting his/her web site. Buy a domain that you can built and nurture and turn into a real business.
Take it from me the under priced domain names today are the .com domains that has 3 letters and number and the 4 numbers only domains.
I started in 2003 and about 99% of my purchases are hand registered or dropped domains that cost me $7, I have sold a good handful of these $7 domains anywhere from $100 to low xx,xxx, I do not buy random letter domains I only buy generic keyword domains that contain 2-3 words that describe a product or service that an end user will have a use for and I never sell on domain forums, where else can you turn a $7 investment into 2k 5k or 7k etc…, been doing it for 7 years and have no plans on stopping now, I still sell hand registered .com domains to businesses today and I don’t approach them at all, I kick my feet up and wait it out, whether the domain makes ppc or not I still hold the good ones as most of my sales were on domains that don’t even make $7 a year in pay per click, I only sell a few domains a year but that is all I need to sell as my return on investment allows that, just wish I had gotten involved a little earlier as my portfolio would be a lot stronger.
Domaining is an art… If you want to put in some 10 – 15 hours per day for a few month’s without any vacations or time off… Week after week after week… You too can succeed from a few “hand regs” but there is no easy money in the domain game. There hasn’t been any since Frank Schilling and Kevin Ham cleaned house and this was around 2002… Few other running large operations managed to do well upto 2005 but it’s really a thing of the past.
Newbies come into the domain industry, burn through a few hundred dollars or few thousand and abandon ship faster than they got on.
It’s totally different in 2009.
The old school mentality works for the successful guys who have already made it but for those wanna be’s that are coming up… Old methods = don’t work.
You have to bust your ass and grind…and the only way to do so is by registering good keyword domains that make sense within non-competitive industries and developing them..
Within a few weeks or a few month’s at most, they should turn profitable if you do everything right, assuming you know what you are doing
Cheers!
To success
We should ask those people on the street why they are not investing in domains rather that we dickering around.
Anyway, we see the future, so we can brag all we want.
A simple rule of thumb for newbies is do not keep any name that doesn’t immediately receive direct navigation. Any name you keep that doesn’t do that is dead weight. You are instantly in a negative financial situation and will be stuck with the name forever until you can flip it – if ever. And that is where these newbies are getting in trouble. They are buying “catchy” names with zero direct navigation or TLDs that no one cares about.
My brother and I get emails from newbies all week long complaining about their portfolios. I can tell you that 100% of their problems stem from buying great sounding names with zero intuitive traffic.
I think that it will be very helpful to see a few examples of the kind of hand registered domains that you all consider to be good and it will be even better to get some tips as to how to go about finding those good domains. IMO
I regularly hand reg names and turn a profit, but I don’t do it by parking. I sell 1 or 2 domains per month by just pointing them to a page that says, “for sale”. I can’t retire doing this, but turning $8 into a $500 sale is a decent investment.
You can still hand reg domains and make money.