75% of survey respondents see domain values increasing in 2008.
Despite a rough economy, domain industry professionals are bullish on domain prices. 75% of those surveyed see aftermarket prices increasing in 2008 compared to 2007, and only 7% see values decreasing. The results are from Domain Name Wire’s third annual survey of 841 domain industry professionals.
Why are domain owners still bullish despite a hurting domain parking industry? This week I was on Domain Masters with Monte Cahn of Moniker and we discussed this issue. (Listen to podcast).
There are many forces at work here. I believe that the laws of supply and demand still apply in this industry. There’s a limited supply of good domain names, yet all new businesses need a domain. This is a good sign for holders of quality, mid-tier generic domain names.
On the flip side, parking revenue is falling. A lot of domain investors use domain parking revenue to buy new domain names. The source of their capital is drying up. This is exacerbated when these investors bought domains with leverage. Leverage is a great thing when asset values rise. It’s bad when asset values decrease (witness the current subprime mortgage mess). Some of these buyers aren’t getting the pay-per-click revenue they expected from domains and are reaching into their pockets to cover payments. I’m starting to see a handful of domains purchased at auction over the past couple years being listed for sale at about the same price they were purchased for.
On Domain Masters, Cahn said he isn’t as bullish on the aftermarket lately and sees a lot of pressure on it. He knows what he’s talking about; he personally helps sell tens of millions of dollars worth of domains each year.
Another factor that may keep the market in an upward trajectory is buyers outside the U.S. taking advantage of the falling U.S. dollar value.
What will happen in 2008? I’m cautiously optimistic. I’m curious what you think.
Troy Duncan says
I’m on board with the increased domain values, but I think the source of that increase will be from adding value to domains (web sites).
Antoinette says
I’m not sure what to think since I’ve only been in the domain business for a year. I came in very hopeful but I think I entered the market at the wrong time as my parking revenue is dismal, at best.
All I hear about is the demand for generic domain names, at least by other domain name owners. Is there no market for nongeneric domain names? I mean, it sometimes seems like someone went through a registrar with a dictionary and registered every single noun in the English language. With probably 99% of the generic names already taken unless one has thousands of dollars to invest in the aftermarket, newcomers have to buy up nongeneric names. But I don’t see many people commenting on these names, just ones like “pizza.com” or “thing.com”.
I suppose the lack of discussion should indicate the lack of a good market for selling these names. But, I still have a little hope…at least until renewal time.
damir says
Interesting post – Moniker CEO Monte Cahn is spot on 100% Domain Owners Predict Increased Values.
When it comes to the response of Antoinette all I can mention is this – When the going get’s tough the tough get going and the difference between a LEADER and a follower is that the Leader has a POSITIVE vision and drive to EXCEL and the follower does what has been done in the past.
Antoinette – believe in yourself and your capability – living life in fear is NO life at all.
When the person first registered Pizza.com there were many people telling him that it is a waste of time and money keeping that domain name and now 10+ years after his persistance paid off – he made lots of money.
I do not know what domain names you own but I am sure that many of them will be valued in $ millions in 10 years from NOW – Years will go by do we like it or not.
To YOUR SUCCESS
graham haynes says
Enjoyed the pod cast – I essence I agree with the thought that the new influx of investors/end users into the aftermarket from developing ‘internet’ countries such as China, Russia etc will take up the slack of any losses from parked revenue. Though everything seems to crystallize down to quality – generics with obvious meaning or V.Short 2-3 letters and some 4 letters. Will continue to increase in the foreseeable future whereas non generic / brand types will suffer in the slowing of the general economy. Buying 1 good name on the aftermarket, is worth a 1000 average names.
Andrew says
@ Antoinette – you wrote “I mean, it sometimes seems like someone went through a registrar with a dictionary and registered every single noun in the English language.”
Yes, that’s precisely what happened 🙂
There’s a good market for mid-tier domains that small businesses can afford, between $1k-$10k.
David J Castello says
The value of premium Generic and Geodomains will continue to rise as endusers enter the fray. However, these will mostly be private transactions.
I don’t predict that auctions will fare too well. Why? Because once endusers target a name they go straight to the source. I’m seeing more and more names going to auctions only after endusers have rejected them in private solicitations.
The only way to guarantee that a premium Generic or Geodomain makes a return is to develop it. Speculators/name flippers are not interested in that strategy and, like most investors, their behaviour will mimic the economy.
On the other hand, endusers couldn’t care less about the economy. We just sold JupiterIslandRealEstate.com for $17,500 to a realtor in South Florida. Why? Because he needed the name.
FYI: A very well know domain auction company recently told me that we shouldn’t expect more than $3,500 for JupiterIslandRealEstate.com 🙂
bob says
Nice to hear that aftermarket prices will be increasing, my dot CC names might just rise to reg fee prices.
mike says
Domains won’t be worth anything if POS lawyers like Traverse legal have there way.
They just helped reverse hijack BreedersClub.com away form its rightful owner, and now they are bragging about it.
They are basically saying “Hey BreedersClub.net didn’t even have a trademark and we still were able to steal the domain for them. We can do it for you too.”
http://tcattorney.typepad.com/domainnamedispute/2008/03/another-cybersq.html
Andrew says
@ Mike –
Wow, that does seems like a poorly decided case. Is anyone familiar with other decisions by the panelist, Paul M. DeCicco. Is there anything else I’m missing here?
Apparently I should go buy a bunch of .net domain names and create web sites on them. If the .com version ever expires or changes hands, I can go claim rights to the .com.
mike says
Andrew,
You are not missing anything here. This was an obvious reverse domain hijack.
Where is the oversight for these wacko panelists like Paul M. DeCicco ?
If you think your generic domains are safe, think again. Even Traverse Legal seems surprised they won.
I call on all domainers to boycott Traverse Legal.
If I was answering a UDRP in the future that Traverse is handling I would point out that Traverse Legal takes pride in their reverse domain hijacking skills.
David J Castello says
BreedersClub.com was a terrible decision.
Here’s the panelist’s (Paul M. DeCicco)web site: http://www.pmdlaw.com/
Have this decision been shown to Phil Corwin and Michael Collins at the ICA?
Steve M says
Accurate assessments, David.
Another example: A couple years back, some “top” domainers laughed at my Healthify … yet last month General Mills happily grabbed it for $15,000.
Oops.
…and how much would any of us have said iReport.com was worth; tops? (1k? 5k? maybe 25k?) … yet Rick was able to negotiate a sale for 750k.
Monster double oops.
Stephen Douglas says
David’s assessment was spot on, regardless of the current state of “incestuous” sales between domainers, the real market for domains is, and always has been, the END USER.
Until we domainers start pumping promotions and marketing into this area, doing everything we can to show the value of our domains to the companies that will build them out or use them to brand their current products/services, we’ll always be scratching our heads, and talking about domain values “will they go up or down this year”.
They’ll go UP if we do like David does and promotes to end users. Period.
Nice article, Andrew.
http://www.successclick.com
Jeff Schneider says
Andrew,
Thanks for pointing this concept out. It tells all of us that advertisers are finally realizing the keyword domain name channel is valuable. We should start seeing an appreciable increase in keyword domain names values over the next few years.
I predict that a lot of keyword domains will sell for no less than 10 million $ us, over the next few years. Most good keyword domains are rediculously undervalued from a strategic stand point. Thanks again for the concept. Jeff Schneider
Antoinette says
This is all very interesting. Most of my domains would only be of interest to end users but it is such a crapshoot. I feel like if I approach them, it’ll seem like cybersquatting even if trademark is not attached to the specific name. But I think most of them would be dynamite names for the right company.
My other question is valuation. If the domain really is only of use or value to a couple of companies in an industry, how do you assign a monetary value to it? From what point can you bargain when there is just one interested buyer?
I’ve heard such mixed (mostly negative) comments about appraisal services I’m reluctant to pay for a service that might give me a figure below an outstanding offer or so high that it intimidates a potential buyer. It is really more of an art than a science.
Andrew says
@ Antoinette – I wouldn’t worry too much about that…if the domain is generic in nature and the company doesn’t have any brand names similar to it, I doubt you’ll get that response.
On valuation, that’s an age old questions that’d difficult to answer. Was iReport.com worth $750k? Few people would have said so before CNN bought it for that much. I believed it **had** to have that specific domain. In general, when companies have options they also have negotiating power.
Stephen Douglas says
For Antoinette:
I’ve appraised domains professionally for 4 years or more, and I always follow a simple rule… appraise at a value that the seller should NOT sell below, as opposed to the “HIGH” value of the domain the seller should expect.
This is because no person can accurately state the highest possible selling price of ANY domain. So if a domain can make $100,000 if the right buyer came along, but the domain has a “liquidable” value (selling it fast) of $35,000, then the appraisal value at “liquidable” pricing would be the latter price. It wouldn’t (or shouldn’t) make the seller upset if they paid registration price for the domain, or even $20,000 for the same domain a few years earlier, because the success of a domain sale is that you make an “expected appropriate” profit for the domain, that you used all professional avenues in offering your domain for sale, and that hopefully you have more than one bidder.
If you’d like to contact me at successclick.com to discuss this further, I’ll be happy to help you.
Buddy says
I am curious if you are still optimistic on domain values. I have a few that I have been holding onto that I am thinking of getting rid of to focus on other things like yankeesblog.com and wondering if now is a good time. Thanks.