Supply and demand will push prices for good keyword second level domains down in alternate TLDs.
Sales of premium domain names have been a revenue driver for top level domain registries as they’ve launched new domains in recent years. Will this be the case with new top level domain names that come out in the next year or two?
I doubt it.
It’s a simple supply and demand equation, and it’s the same reason that existing second level domain names in “second tier” top level domains will see their value drop, too.
Consider the domain name Refrigeration.biz, which sold on Sedo earlier this year for 1,100 EUR.
The buyer was commercial freezer company Traulsen.
I don’t know exactly what went through Traulsen’s thought process when buying the domain name. But it’s clear the company decided it wanted a new domain to use in the future. Refrigeration is a good keyword for this company. Obviously, Refrigeration.com was taken. So the company looked at alternate extensions, and all the major ones were taken (.net, .org, .info, .biz, etc.).
So it decided it was willing to pay more than a typical registration fee to acquire the domain, and Refrigeration.biz was the winner.
Now fast forward to 2015. Would this scenario play out differently?
Traulsen is looking for a domain. It wants refrigeration.TLD.
Although .com, .net, .org, .info, and so on down the line are taken, it is now presented with more choices than just Refrigeration.biz:
What happens now? How does the thought process change?
We already know the company is OK with buying a .biz rather than .com.
Let’s say that two of these are available for a $15 registration fee. A couple others are owned by speculators. The registries for two others have priced them as “premium domains” but with reasonable price tags of $200 or so. Another registry has priced theirs at a premium of $5,000.
Which one will the buyer select?
The company may have somewhat of a preference between the extensions. But you can almost be guaranteed that the buyer will skip on the $5,000 one. If the speculators also want thousands of dollars, the buyer will pass on those. The buyer has options. There’s lot of supply for Refrigeration.TLD domains, and only a handful of buyers. So the prices will fall.
Notice that I didn’t throw .com into this bunch. At least in the near term, a business likely will prefer the .com domain.
All things being equal, the buyer will go for the lowest priced option.
Now, refrigeration is not a fantastic keyword. It’s just so-so.
But think of great keywords that have sold for five figures: Hotel.biz, Car.biz, Flowers.info, Mortgage.info, Freebies.org.
Will these domains sell for anything close to five figures in the majority of new TLDs?