Is there a way to make domain names a more efficient market?
Domain name investing is an incredibly inefficient and illiquid business compared to many markets.
There have been times and certain segments when domains were liquid, such as traffic domains sold at multiples and the current three letter .com craze. But for the most part and for most domains, there’s a complete lack of liquidity.
Inefficient markets create opportunity, but they also make it difficult for market participants. A more liquid market could bring lots more money into domain names, boosting overall fortunes.
Is there a way to bring liquidity to the market?
Let’s start with a thought exercise. Take a look at the ten domains below from my portfolio, and think about how much you’d pay for them each at this moment:
RoyaltyCheck.com
MoisturizingSoap.com
DNW.com
MusicPhones.com
VietnamWar.com
EgyptianRug.com
IndianapolisRoofers.com
FruitCobbler.com
Cathleen.com
Comptroller.com
I purposely chose domain names of varying value. Could you assign at least a $1 value to each of these domains?
There are a couple you might not want at all, but someone out there does. I know because when I’ve let domains of lesser quality expire, someone picks them up in the drop. So they’re worth at least $8 to someone.
What if 10 people assigned a price they would pay for each domain? Even if it’s less than what I’d want for the domains, I’d at least have a liquidation value. It would be huge to have a liquidation value for your entire portfolio.
In practice, there are a number of challenges to getting people to assign a price they’d pay for each of your domains. It would be a lot of work if they aren’t sure you’ll agree to sell the domains at the highest assigned priced. And for the seller, if you do guarantee a sale, you’d basically be putting all of your domains in a no reserve auction.
There’s something here, though. There’s some way to make this business much more efficient…
There’s a solution. I don’t say that out of blind faith. Actually built the back end over a year ago – an extensive prototype complete with simulated bidders and so forth. But I ran out of time to code the front end. Therefore it doesn’t exist.
Maybe it’s time to finish it, Joseph… really. Sounds like a winner!
Oh, I plan on it. As soon as I can afford to neglect everything else for a solid 6 months to finish testing, pay a UX designer to speed up the clickable front end, hire a patent attorney, and buy the domain.
Liquidity is a subjective term, coined by domain investors that are used to flipping domains, versus holding long term. When you acquire a domain, by treating it as a long term asset you maximize the chances of selling it at optimal ROI, while lowering your tax bracket for the asset.
@Acro,
It’s true that a strategy of holding long-term has the advantages you describe. Still, whether or not domain owners are interested in quick flips for their assets, the POTENTIAL for a fast sale (or the lack of potential) is quite real.
As I see it, liquidity is a measurable quantity. Domain A has probability B of finding a buyer at asking price C within D days given exposure strategy E. Independent variables C, D, and E are adjustable. A is a constant. B, the independent variable, represents the domain’s liquidity as a function of the other 3 factors.
In terms of liquidity, domain names behave more like oil paintings than like real estate – despite frequent comparisons to the latter. Most paintings are unsellable. Even those that fetch millions require years of patience and often special handling by brokers and auction houses.
Sorry but domainers didn’t coin the term liquidity and liquidity is very much real in every market commodity, Forex,stock, bond.
Liquidity as it applies to domains. This isn’t a blog about stocks, is it?
Liquidity in stocks follows similar principles, and you end up selling below market value.
Even oil paintings and art have seen attempts for greater liquidity with derivatives. Will domains ever be as liquid as shares of GE? I doubt it. However, with enough exposure and mainstream use you may see liquidity similar to stock warrants or other derivatives.
You don’t sell below market value when you sell a stock. By definition, you sell AT market value.
Unless you want to hide the fact you are selling big quantities of the stock, then you go around the market value and give your bulk buyers some discount 😉
Liquidity is a matter of demand. Really. Low demand, low liquidity. Or higher supply. If you are a portfolio manager, make sure you hedge it rightly so for the proceeds to recover all the rest. Focus on higher quality domains. Now the markets. Learn the stats well. it takes years to master these days. But very possible.
@DNSal.es,
That’s partly true. Liquidity is a matter of demand, yes. But it’s not so simple. Liquidity depends greatly on (1) buyer confidence and (2) merchandise discoverability, which are phenomena separate from buyer demand as such. Improvements are to be made in those areas. DNSal.es (the website) certainly helps with the first.
At a moderate price level, domainers compete furiously to buy domains like XQZP.com. Currently such domains are so liquid that they’re virtually undroppable. In a sense, this is market demand. But end users are not lined up around the corner to buy XQZP.com. Wholesale resellers are.
Setting China aside, there are 3 basic reasons for short-domain liquidity: (1) Wholesale buyers perceive a well defined consensus value, based on numerous sales; (2) The merchandise itself is largely interchangeable, which simplifies appraisals; (3) Market places have implemented filters for TLD and length, making short domains BY FAR the easiest to find.
If you believe strongly that a domain is worth $1500 and that everybody else agrees with you, then you can afford to buy at $750 simply to flip for $1100. You’d anticipate only a slim margin yet face minimal risk. That’s great liquidity, even if the market demand supports no more than $1500.
Where goods can be assessed at a glance, confidence is greater; therefore wholesale prices are higher relative to retail, margins are slimmer, and there’s more liquidity.
Suppose you see a used Honda for sale at $10,000 and a rare painting for the same price. Which do you buy? You have KBB automobile values at your fingertips but have never met an art collector. Even if market demand for the painting is far higher, a cheap Honda will always be more liquid.
I meant DNPric.es.
Agree. Also, not only similar historic prices matter, but also other parameters, domain name age, [SEO] KPIs, brandability, and on top of this, intrinsic potential. Difficult to quantify, like real art. You never know the price of a master piece until one buys it at an auction.
Have you seen a service that values a decent art objects? Would love to see that.
Any tips folks?
This is the only relevant blog of the year! Yiu should win an award for it.
Tes, there’s only one way to bring liquidity to the domain market.
I can write a 1000 word promulgation for it, but here’s the synopsis:
Stop the cabal of big registry, afternarjet, dropcatchers, and donain name insiders/bloggers, and you have one tomorrow.
Big fat fingers butchered my comment. Try to make sense of it.
Also, domainers are too concentrated on the 6 or 7 figure sales. Profit should be the thing, not sales price.
All of those things you mentioned have nothing to do with liquidity I’m not really sure how domain name insiders or bloggers even play into it at all. I guess that’s just your conspiracy theory bloggers do not affect the liquidity of the domain name market.
The fact that some don’t understand what liquidity is makes it a really sad state for domaining.
Only area I see liquidity is 2/3/4 L/N .com’s, and single word dictionary .com’s.
Everything else is a one of a kind that needs that special kind of buyer, so liquidity will never be here. They will simply have to use the forums, or auction platforms if they need short term cash.
Many have tried the pawning of domains to raise capital, and that is very expensive, and most end up losing their domains.
Risk involved within the industry, price it into your sales.
List domains on an auction platform with no reserve and you will see they are very liquid. The issue is your perception of a domain’s value is probably much different then the next guy’s.
One of the best points so far. I suppose if you list your domains with no reserve at NameJet, you’ll liquidate them.
Namejet isn’t “the market” though. They are only one of many places to find a buyer and some liquidity.
MLS and DLS stand good chances if they unite all the markets eventually. Maybe Frank should be then and integrate? Frank, do you need a M&A hummer?
Great topic. I like the idea of an Estibot like bid/clearance/valuation tool. The problem is the prices you need to clear there are no willing sellers and so no buyers are willing to spend their time pricing names and bidding with no hope of fulfilling the order.
Uniregistry is working on improving it’s DNS platform which does bring increased liquidity over time. It’s coming.. we’re working on it. To the extent that others do too, that would be great. A rising tide lifts all boats.
Can’t wait to see the upgrades
@Frank Schilling,
You’re right. That wouldn’t work. Natural financial incentives and real human covetousness must be brought to bear. Appraisals mean little without necks stuck out.
What upgrades will you make Frank that will make Bonomo.com liquid ?
DomainNameSales’s VP is hard at work enforcing complaints from rude ladies with $21 in spending power and banning domain owners for saying “Listen, Lady”.
With such laser focus on improving the platform, I’m sure Bonomo.com will become liquid at $20,000 by this time tomorrow.
@Frank Schilling,
please remove that free quote form.
We are interested in serious buyers. We want quality buyers but not time-wasting people.
That format is bad.
On the contrary, I would appreciate buyers not having to give an email address to get a quote on DNS. I think it turns off buyers.
Options, Options. Every situation is different.
Not having to give an email address? How would the domain owner be able to notify them of an asking price?
@yunny
Liquidity is high volume if activity, turning assets over to cash, at least semi dependably.
Domains are selling everyday by the people I listed up there. Sales price running the gamut…
All the bloggers do is report these sales, and entice new domainers to buy similar domains, but never able to sell them, thus illiquid.
Take a moment and peruse the daily sales at Godaddy and Sedo…you will be astonished; poor quality names fetching good prices.
Try listing your names at Sedo, abd see if it’s an open market.
Even reported sales may not be what it is.
“Is there a way to bring liquidity to the market?”………………….The simple answer to this question is: Grow the base of investors………..The amount of people investing in domain names remains stagnant. This stagnation is due to the large amount of industry insiders who remain hostile to new investors and the money they bring……
@Aaron Strong,
Exactly.
People like Yunny do not understand what damage conflict of interest can do to a market, including things like insider trading. Everytime one raises an objection, another uses ‘conspiracy theories” to destroy it, as if conspiracy dosn’t exist.
I understand conflict perfectly just tell me where they are don’t be vague give me specifics who are the large investors that are showing disdain for the small investors if large investors dont buy small investors handregs is that disdain ? Or that they have no interest in something that has little value ?
Again clear examples of who are the large investors that are discriminating against or showing disdain for the small investors I don’t know how bloggers posting domain sales has anything to do with that isn’t that the relevant news of the industry ?
Very good, I will give you a specific example, and actually we are lucky because it’s inchoate, that is to say, this example you can follow easily because, it’s at the incipient stage!
The new gTLDs! The Registries got together and launched new extensions, but they predetermined how to cut the domainers out of it, they did it in a way that the Registries sell the names at retail prices themselves, or higher; some renewals are in the thousands, they withheld “high” quality names. They released the names via the same culprits I mentioned earlier: Registrars, and Aftermarket places such as Sedo, NameJet etc etc. The domainers are left to scavenge, pay exorbitant prices for the experiment. It’s a cabal!
It’s no surprise that the people who brought these new gTLDs are the same people who brought Snap Names, Namejet and other drop catchers (except a few like Schilling) … all designed to cut the domainer out of the food chain.
So what’s the remedy? Boycott them all. Don’t report on their activity.
Please try to see the connection…The new gTLD program is but one example. But respond to that.
I agree the pricing ridiculous. The little guy can’t pay thousand a year. I think they overpaid for rights to the extension.
The point is that the thousands per year, the pricing being ridiculous, is by design, it’s by calculation, to do one and only one thing: to suck it to the domainers. They can spin it anyway they like. The withholding of “quality names” couples to show intent.
As far as this is true, then I’ve proved my case.
Recall when Google paid decently for PPC, and domain parking at least paid for renewal? How did that go away? Why is Godaddy constantly selling in aftermarket? What was Godaddy relationship with Afternic, and Sedo before they bought the former? Who is buying most domain names in after market now? If you knew, you’ll understand.
Liquidity brings the false assumption that a given domain can be sold at any time.
Of course, if you want to “kill” the domain at a price lower than its value, that’s your liquidity right there. For example, if the average LL .com is at $500k, then you can call it a liquid domain when you sell it for $300k.
That’s the price you pay for “liquid” domains.
You’ve identified part of the problem. There’s a gap between best-case retail prices and must-liquidate wholesale prices; and people underestimate how wide a chasm that can be for domain names.
Domainers ask for a faster rate of sale without accepting the often drastic reduction in price. Something’s got to give. But if domainers who want to have their cake and eat it too … go hungry.
Naturally, if I want to sell my car during the next 4 hours, I won’t realize the best price. In order to achieve liquidity in a compressed time period, price must plummet.
Exactly. So here’s the inverse false prophecy: if you invest in “liquid domains” you’re all set.
In other words, if you go after a genre that performs well at a point in time, you are doing the smart thing.
But in stocks and Forex, the disclaimer that past performance does not guarantee future results is a necessary line to follow.
Ergo, a reference to investing in liquid domains is an alternate way to say that one loves to gamble.
It was said above. Liquidity is no more than demand. Get people to think they need or want the product and liquidity will follow. Liquidity requires a seller/product , an efficient marketplace, and demand/buyers. We have the first two (Frank is going to improve the marketplace). Only the third is left and marketing is usually used to create the demand (or at least the appearance of demand) or a downward movement in price until sales levels are achieved. Own a business and you’ll deal with this every day
We don’t have the first two. Faith that “Frank is gonna” doesn’t make it so.
Joseph,
If you don’t think we have a product then we really have a problem. And despite what you think or feel we DO have a marketplace. Between all the auction houses there is the ability to sell a name for cash in a matter of days. It may not be as much as you’d like but liquidity is movement and the ability to trade in a product for cash not “get what you think its worth”.
And I was playing around with the Frank thing. Everyone says they are going to change the game. Some do, some don’t.
And don’t forget to smile Joseph. That’s part four of liquidity. 🙂
Ah … I read your comment as: “(1) seller/product , (2) an efficient marketplace, and (3) demand/buyers”.
But I guess you meant “(1)seller/(2)product , (3) an efficient marketplace, and (4)demand/(5)buyers”?
Punctuation sucks.
Believe me, Shane, I’m never smiling so much as when I smell blood. Love me a good skirmish. ; )
Exactly Joseph if people buy names like those brand bucket type names they are not liquid Frank cannot make those names liquid no matter what he does.
Are LLL .com domains liquid? If you buy at current prices, e.g. $25k+, is there an absolute guarantee you’ll sell it tomorrow – without discounting the domain? Isn’t the bottom line of domaining and any business to make money vs. lose money?
The term “liquid” is being substituted for “coinage” here, and is thus being abused. Let’s talk about coinage domains, and the joys of domain flipping then.
To answer Andrew’s question: Liquidity – the real kind – in the domain marketplace can only occur when there is an influx of consumers willing to buy your assets at any given time.
So you need to educate the general public – those very billions of users Facebook is proud having – and infuse a sense of capitalist consumerism in them.
Domain marketplaces are great, but not for the reason people think. There is a flow of capital, and that helps the economy and those involved in domain investing, development, marketing, employed in the adjacent industries and beyond.
The first step is exposure. The public at large has to understand what domains are and that they have potential for profitability. The markets have tended to do the rest. Therefore, educating the public about domains would be the first priority.
There are still a lot of hurdles such as how the IRS may actually treat domains and whether the courts actually believe they are property in the full sense of the word.
I you want liquidity in the domain name market than you should do what the domain name was created for; development. That is the sure way to create money year after year which also increases the value of the domain name. Domain names are not trading cards, they should be virtual places that do business or entertain and interact. Domain names are inherently intangible but they need to be made tangible by the owner’s effort to engage and define it. Imagination is paramount.
RoyaltyCheck.com – $10k-$20k
Royalty is a visual, but Check is non-descriptive as it relates to royalty. If you make the development as a “reality check” for royals, then it could get interesting.
MoisturizingSoap.com – $30k
Good name and usage. Moisturizing is a longer more hard to spell word for most. Soap is used often. Development can only be used for selling cleanliness but has a distinct market..
DNW.com
As a three letter word, $10-50k, with website $250-$500k but could be much more depending on yearly revenue.
MusicPhones.com – $2500
Phones are much more than musical. Is limited in value. Would be worth more as MusicPhone.com
VietnamWar.com – $25-$120k
It is known as the Vietnam War and this is the exact match. This name has VR future potential and could be worth much more with a POV website.
EgyptianRug.com – $20k
Name would be worth more as the plural.
IndianapolisRoofers.com – $5k
Limited market
FruitCobbler.com – $35k
I like the visuals
Cathleen.com – $20k
Kathleen would be the preferred name.
Comptroller.com – $50-$80k
Exact match but small market and poor visuals.
Excellent point. I agree 75%
Two points:
1. Domaining is a unique thing, which is the selling of domain names, only. Like land, compared to real estate. There is such a thing. Our best domainer, Mr. Schwartz demonstrates this perfectly. He sells domain names, period. But, there are heroes such as yourself, who add value to the names, and do much better. However, part of the cabal which I spoke of above, came in and destroyed even what you’re talking about. The search engine giant is part of the cabal I spoke about. They declared war on domainers a few years ago, in that even developing websites is a crap shoot. They are also part of the newgTLD program, what a coincidence!
2. Imagine where Domain Bloggers do this type of topic, people like you will come back and give direction to the rudderless space. This type of blogging will produce results, because domainers can focus on how to make money in this business, new domain investors can get quality information. Instead of constantly writing about these newgTLDs and after market sales.
My concern is that along with the new gTLDs, the system is being overloaded and overwhelmed in the domain space. Remember, domains are just the illusion that sits on top of an IP. In reality domain names are not needed for a search driven internet. There in is the matter which we should all be aware of; the hierarchy of domain names is similar to capitalism. There has to be a reason for what is of more value or what is less. With freedom, comes not only the rich the but poor, who could do without but need avenues to succeed. If we flat line to numbers, we all lose. I am selling some of my best names to those that can do the most with them. I may take less money but the domain names gets the elevation they need for the public’s perception. That perception should not be “search’.
Right. Sure, liquidity helps domain owners with divestments. Sure, it helps us raise money for acquisitions and development – both of which mean reinvestment.
But beyond that, liquidity goes hand in hand with market transparency. As the domain market becomes more intelligible, reliable, and open, the broader public will begin participating.
As they discover domains, people will become more self-sufficient, relying more on names / addresses for direct navigation and bypassing gate keepers like Google and Facebook.
Call it, “Online citizenship through ownership of private digital property”.
Great points. There can be no real liquidity without transparency. This is why it is so frustrating when many parties fight transparency for various reasons. Yes, they get to keep their profitable business methods, but are sacrificing a much larger pie which is silly.
Hey Michael, are those offers? 🙂
Michael’s pricing is part of the problem of…rosy expectation! Liquidity is subjective based on return expectation. Using GAAP or some kind of a crossbreed between portfolio theory (especially compound interest) to arrive at a price, one would sell a domain such as Cathleen.com really easy. Here is how one could do it. Take Cathleen.com and lets say treat it as an investment for the period you’ve owned it. Say 12 years. You’ve paid $180 in renewals (thats hight but i am assuming the worst) say each year, you could have flipped or sold it for $248 (I am assuming you will spend 2 hours each year on the domain name related activities for which you should pay yourself $116.05 ($116.05/hourx2+$15 renewal fee…so that would bring you to a starting base price of $2,976 (this is the money in labor and renewals owed to you by your service to the holding. Assuming you speculated (nothing wrong with that) that you would have wanted to make a 12% interest (based on the 12 year average performance of stocks (the alternative for where you should have put the money or in a compounding interest account at 12%, you would come to price Cathleen.com at $11,594.42 which is ~47x money. That is a huge return. I bet you that asset would be liquid pretty soon. Problem is, everyone wants to make 7 figures on nada!!
Mybe nada is not the word, as something is worth something to someone. The way most of us are doing is it is we are un-objectively looking to sell to “the highest valuing owner”. Yes, there is a high valuing owner for almost everything. It might so happen that what you value for 150K, someone else values for 20K so without a well thought out strategy, you might wait for a high valuing owner for a longtime and thus, the illiquidity you talked about, even in a world of scarce resources like Frank Shilling put it.
Apologies for all of the comments that are getting stuck in moderation. If anyone can find a WordPress comment whitelisting plugin that actually works, let me know.
Email sent.
I always love it when someone says a certain domain is worth between a certain price range. Yeah it’s worth between $25-$120k. That’s like saying my house is worth between 1 million and 10 million. Even the best domainers in the world can’t even pinpoint prices accurately so how do expect someone to magically come up with some formula that shows liquidity. Laughable.
@Todd,
Domain appraisals are imprecise. I agree. But if some appraiser could pinpoint a price – say, exactly $68,724 – that would be much more laughable than a wider range. Domain appraisals WILL be imprecise if they’re to be at all accurate. But the problem with domain appraisals is that they make no measurable claims. Nobody knows what they predict, and nobody measures their accuracy. So from a scientific angle, domain appraisals are meaningless.
But liquidity is something else entirely.
Take 1000 domains – 10 categories with 100 domains each. List them with BIN prices of $10,000. Cut the price in half every single day. Record how long it takes for domains in each category to sell – and, of course, the prices.
There you have a formula for measuring liquidity. No magic required.
Sounds like the “Early Access” Dutch auction.
$10k to $156 by week 1.
5 shiny quarters by week 2.
There would definitely be data – enough for a meaningful measurement.
1: $10k
2: $5k
3: $2.5k
4: $1.25k
5: $625
6: $312
7: $156
8: $78
9: $39
10: $19
11: $10
12: $5
13: $2.50
14: $1.25
Probably not the best way to sell. But that illustrates an extreme test for liquidity. No reason for the concept to be mystical.
@Joseph
Impossible. That test won’t work. A domainer may only pay $50 for a name, a developer may pay $500 for it and a true end user may pay $5,000 for it. You can’t create anything close to a formula with so many variables.
@Todd,
Doesn’t matter. I can measure the age of people in Santa Fe even if Grandpa is much older than his infant granddaughter. You end up with some distribution. Does variability mean the measurement failed? Nope. Santa Fe has its distribution, and that’s different from Portland’s. Exactly the same thing here.
Same audience for all 10 groups of 100 domains. Apples to apples. If you don’t think 100 domains is a large enough population, make it 1000. Idiosyncrasies are part of what’s being measured. Who cares if some LLLL.com sells to an end user while another sells to a domainer? The point is that the overall batch of 100 LLLL.com’s would behave differently from the batch of 100 LLL.com’s or the batch of 100 multi-word .INFOs. Those differences are statistically significant, and that’s all that counts.
Liquidity is both supply and demand. There is not enough supply of the type of names people want. Then there is a lack of good information. People want names but don’t know they are available to be bought. The new GTLD opportunity adds more supply. But it will take several years for those names to become more mainstream and valuable in the eyes of consumers. In the mean time there is still demand there. The short term answer to liquidity is probably better market infrastructure. Better machinery providing a more reliable method for clearing sales transactions. If I search a name on Google or on Godaddy, being able to secure clear title and transfer the name reliably between registrars in moments. That adds value and creates liquidity.
That’s all coming .. Infrastructure providers that clear the bottlenecks, which make the process easier, that’s all coming. I’m just one – there will be others. As those new better infrastructure providers start to co-operate and work together you get more transactions.. More of a “market” dynamic and liquidity for everyone.
At the end of the day these are big ticket items and it’s still unusual to have a buyer walk-up and buy a domain for $50,000+ with a credit card and just check out.. But it does happen. The key is to create a freeway and infrastructure that makes the buyer confident and to allow those transactions to happen more frequently.
It will happen because new GTLD’s came on the scene. More inventory which will require a method to be sold dispersed and distributed.
In future, your .com’s are going to be more liquid because enough new inventory came along to justify the infrastructure which will unlock its value.
@Frank,
I agreed with you until the last 2 paragraphs.
Before I dig in, let me point out that, in this context, opinions about the resale potential or brand value of nTLD domains don’t matter. So let’s concentrate on Frank’s new claims and not get sidetracked by the tired old debate about nTLD value.
What Frank is suggesting here is that the very existence of 1000+ nTLDs (as items on the shelf to be bought) will (1) cause innovative infrastructure to spring to life and (2) improve market liquidity for existing domain owners.
Hard to swallow.
Frank owns a registrar. Plenty of those exist already. He could have launched that registrar with or without the new TLDs. Same functionality for the rest of us whether .TATTOO is a possibility or not. With or without his registrar, we’d definitely have a registrar.
Frank owns a parking platform / market place – InternetTraffic / DomainNameSales. Similar venues have existed at Sedo, Afternic, GoDaddy, and elsewhere for ages. Yes, Schilling’s version is different. But he launched it without any nTLDs.
Frank is now folding those other sites into his registrar / registry, which gives him new .SEXY opportunities to convert your .CLICK. Is such integration new? We had the GoDaddy / Afternic merger already. nTLDs weren’t required to build those platforms nor to combine them.
I see how integrating these Uniregistry companies benefits Frank Schilling, since he puts all of his monetization methods under 1 roof and directs your domains to his front door. But what do nTLDs have to do with anything? Except as 1 of Uniregistry’s revenue streams, that is.
Frank, I’m not seeing the innovative infrastructure that emerges out of ICANN’s “Let there be 1000+ new suffixes”. Where and what and when is it?
Even harder to understand … How does merely having all these new TLDs on the shelf improve liquidity?
Frank, I suppose you’re thinking that new TLDs mean new opportunities for registrants. Fair enough. But those are new replacement opportunities. Surely you’re not suggesting that people back in 2013 hit a road block and registered NO domains at all! Either they hand-registered something cheap, or else they bought on the aftermarket. The latter was good for liquidity. Are you suggesting that adding more non-aftermarket domains will boost aftermarket sales?
There is no reason to think that the pace of new website creation will miraculously speed up simply because .OOO and .NINJA exist. Market demand for domains in general hasn’t changed.
Demand is the same, but people have introduced more supply. At best, it might be argued that buyers will be diverted AWAY from the old inventory toward the new stuff. But how on earth does an available .GURU or .LINK help pre-existing domain owners sell their domains?
Bob the domainer is trying to sell his house, and you’re telling Bob that building a cut-rate housing development across town – tenements with enough vacant rooms to accomodate 100 times the city’s population – will help him sell his house faster? Come on!
Didn’t read your reply before I posted, but I think you are dead on. Too much supply.
I know it’s counter intuitive. But when more people own something it makes that ‘thing’ more valuable. Kind of like that well-worn statement from the Fed that they would resort to dropping cash from helicopters to get people to spend it.. The more people that have currency in their pocket the more the value around that currency would be perceived. There is a tipping point of course, where ‘too much’ is bad and inflationary but in the domain name business we are along way from inflation when only 1% of people on Earth have any domain name and there are no perceived “good ones’ left and no-one feels like they can get a “good one”. If not enough people who want a domain name can get one, then those people will engineer a solution around domain names (twitter handles/facebook ID’s) .. Necessity is the mother of invention.
Yes – I could have launched a registrar with the existing TLD’s but without this opportunity there was no incentive to build something much better – to try harder. Much in the same way Richard Branson talks about “registering the name” Virgin Galactic and how that inspired him to dream bigger (at 0:24 here http://bit.ly/1QpwOLQ) The new GTLD program “inspired me” to swing bigger, try harder to not just build another me-to registrar, but rather to build something epic and special and to turn our sales platform into something greater than a Flippa (whom I respect for trying, but who just don’t compare to what we’re engineering). It’s about passion and effort. Names are inspirational and they coax people to spend and to dream bigger and try harder in the same way a great .com inspires more effort to develop it than some awkward made up name.
The bottom line is that new names breathe new life into naming in general. The new people those names attract, represent a bigger opportunity which is suddenly worth designing something for – where absent that opportunity there would be less motivation to try so hard.
New supply is stoking demand nobody expected was there. Better infrastructure will do exactly the same.
Bob the domainer is trying to sell his house at this moment in time. We are building a community across town for Dan, the future domainer, and that rising tide will lift all boats.. It’s conceivable that Dan’s new neighborhood will be more valuable than Bob’s one day, much in the same way Rockaway Beach in 1901 was was more valuable than Malibu.. but today that is no longer so.
@Frank,
We both agree that domain ownership ought to be extended. I made that point myself in these commnents: “Online citizenship through ownership of private digital property” is why I hang around in this not altogether pleasant industry.
But …
Why do you imagine that introducing more suffixes brings about more buyers / owners? There is no connection. Demand for domains hasn’t changed.
End users with projects in mind would find a domain to use even without .PINK or .CLICK clogging the shelves; they always have. Human ingenuity is like that. No project was ever abandoned for lack of an nTLD.
You imply that people use Twitter handles or Facebook IDs because they tried and failed to get a good .COM. Sheer nonsense! People use social media profiles as home pages for their projects because they don’t want to build websites in the first place. Introducing new TLDs makes no difference to them.
As for new domainers speculating on .OOO and .FISH and .XYZ today, they would have been speculating anyway without them – just on something else, something less likely to be a waste of money.
You can wax poetic about “when more people own something” and intersperse that with talk of new TLDs. But there is no reason to suppose that the 2 things are in any way related.
There’s an illusion of growth. New domainers, fresh off the boat, are easy to spot because they’re disproportionately loaded with difficult-to-sell nTLD domains. But just because Frank Schilling outfitted them with his wares doesn’t mean his wares attracted them to the new world!
Good for you, Frank, if a far-off dream of .TATTOO inspired you to commission a parking platform and hire sales staff. But that isn’t a very persuasive case for the nTLDs. You might as easily have been inspired by an excellent cheese.
If some pocket of nTLDs increases in value, then Dan will be happy he moved into those tenements. But to repeat myself, “let’s not get sidetracked by the tired old debate about nTLD value”. We were talking about liquidity. Right now the nTLDs are the least liquid category; so Dan would find more liquid assets by avoiding them. And if Dan’s nTLD experiments pay off, that still diverts money away from Bob’s investments, which reduces liquidity.
What Frank said about the new domains is open to debate, and will only be proven one way or another over time. But, unless I am missing something, it is obvious that adding risk to the domain market makes it less liquid. There are less buyers in a risky market, so it is harder to liquidate your domains. Adding thousands of new domain extensions to domain market by far increases the risk for .com investors, even if it may stabilize/grow the overall domain market, There are less .com buyers now because of the new extensions.This has reduced .com liquidity.
I guess you could make the argument that a risky market leads to more speculators, and that in itself increases liquidity, but the domainer market is pretty much all speculators anyhow, so I am not sure that would really matter. Yes, maybe having more extensions and better infrastructure will lead to more domainers (and end users), but the vast majority of the growth will be from everything other than .com.
@Eric,
No, you haven’t missed anything. Frank’s argument boils down to this:
Add ice cubes to your coffee to warm it and give it a richer flavor.
As someone who began as a more or less new gTLD naysayer before they appeared on the scene, what Frank is saying and thinking makes a lot of sense to me and I’m inclined to agree with it as some pretty sound and compelling thinking. I don’t say such things lightly, either. The sooner this kind of progress happens the better as far as I’m concerned.
Frank has said many things. Which of his statements do you find compelling?
@Frank
“People want names but don’t know they are available to be bought.”
That’s true and part of it. For most though the process of acquiring a domain in the aftermarket, even if you have the money, can be too difficult to comprehend.
Andrew – I don’t see how your plan for a domain liquidity service is any different than just putting the domains up for sale on Flippa. The expert opinions (or maybe they would be considered actual offers) of the domain buyers in your group are no different than the group of buyers on Flippa. Flippa has many many more potential buyers though, so they offer better liquidity.
If you are talking about instant liquidity for domains, then yes, that is a problem, but I am not sure how your system could handle that either. The only way to do that is to have 1 person run it, and make an almost instant offer to buy any decent domain. That is fine, but most people probably would not want to sell at those low wholesale prices. I would guarantee right now to pay $1000 for your list of domains. If you give me 10 minutes to check on each one and assign a more logical price I am sure it would be more like $5000. On Flippa in 2 days they would probably sell for $10,000+. 30 days on Flippa $20,000+. So, liquidity is what you make of it.
This might not be a popular opinion, but I believe the ridiculous flood of new GTLD’s is negatively impacting the liquidity of domain names for investors. The market will have too many available or “for sale” domains and too many cheaper options or alternatives.
If we just had .com .net and .org, domains would be much more liquid, and hold alot more value. But now that we have over 1,000 gtld’s not including cctlds, there is an oversatuation that isnt going anywhere.
Even though more people are putting their business online, they have way too many tempting alternatives, albeit mostly crappy alternatives.
Soon there will be a gtld for every industry imaginable.
@Rod,
You’re absolutely right.
I’m not opposed to the nTLDs. I’ve bought, sold, and recommended them to clients.
But look at it this way. Buying 2000+ nTLD domains means that my money goes to registrars and registries. That means it doesn’t go to wholesale purchases from other domains. Would 100% of that money have gone to purchases from my peers? No. Some of it would have been spent on hand-registrations in established extensions. But it’s indisputable that some of the money I diverted toward nTLD speculation would otherwise have gone into domainers’ pockets. So in my case alone, nTLDs have caused everybody else’s domains to be slightly less liquid. It’s a slight effect when it’s just me. Nevertheless, your domains have a harder time selling because I bought into new TLDs.
Now step back and look at the whole industry during the past 1-2 years. Practically every domainer has bought some nTLD domains. Multiply the same phenomenon across all those hundreds of thousands of nTLD domains and you can estimate just how much money was sucked out of the wholesale domain market.
Within my own portfolio, I’ve noticed a sharp decline in wholesale liquidity since 2014. And I’m sure the nTLDs are the root cause. Retail sales haven’t changed much, but domainers couldn’t afford to buy from me or vice versa because we all felt we had to go chasing each and every nTLD as it was released.
That’s why Frank’s argument about nTLDs boosting liquidity is so obviously ludicrous. Money was siphoned off, and wholesale liquidity took a nose dive.
I’m still going to buy, sell, and recommend nTLDs. But I’m going to call a spade a spade.
We’ll have to agree to disagree. I think the absence of the not-com phenomenon would have dampened demand overall. More money has poured into the domain space in general because of new names.. Domainers are investing more $ in total. It’s born out by the numbers. Our sales are up across everything. Every big domainer using our tools has had a great year. I’ve made more YTD than I did by October last year (new G agnostic). If you feel poorer this year perhaps you’re using the wrong sales platform. I do agree that ‘wholesale’ domainer cleared transactions are lower as domainers held back and looked at not-coms instead of coms. But the overall trend is up so it’s a good trade. If you turned your back on reg price new gtld’s in 2015 you shot yourself in the liquidity foot for 2016 and 2017
By all means, let’s disagree. But if we “agree to disagree”, then that’s an end to debate and discussion.
Let’s keep disagreeing. Frank, the more claims you make, the more we can learn by dissecting those claims 1 by 1:
(1) “More money has poured into the domain space in general because of new names”.
Figures, please. I suspect more money has poured into ICANN coffers, nTLD registries, and brand protection firms.
But even many registry operators began as domain investors. So if they’ve diverted funds toward their own nTLD bids, staffing, and marketing, then that’s a further loss to aftermarket liquidity.
(2) “Domainers are investing more $ in total.”
Evidence? Any at all? Or are these statements all plucked out of the ether as futuristic reveries?
(3) “Every big domainer using our tools has had a great year.”
Everybody? A “great year”? Doubtful. But I suppose if somebody only had a mediocre year compared to the past, then he’s not a “big domainer”! Frank, this is all wishful thinking or salesmanship.
(4) “Perhaps you’re using the wrong sales platform”.
There we agree! About 2 months before leaving DomainNameSales, I began A/B testing, parking half my domains at Sedo instead. Now I’m 50/50 Sedo and Afternic.
As soon as I’d wiped the dust of DomainNameSales from my feet, I saw a significant increase in fair opening offers and sales. I sold a .NET for $6k at Sedo last week, and a .CLUB a few days ago. Compare that to DomainNameSales, where I had parked 100% of my domains and had been zero sales since January 9.
I’m not a “big domainer”, I guess, even though my portfolio would amount to 1/100th of Uniregistry’s domains. But you’re right; I was “using the wrong sales platform”. Definitely.
82.5% of statistics are made up in the moment Joe and we should all beware of anyone willing to give same, in front of their competitors in a public forum – but our software will broker more collective sales than Sedo this year. That’s commissioned and off platform (un-commissioned) sales we facilitate. Sedo do a fine job but they mainly handle low priced BIN sales and most of the inventory they sell comes from their willing parent registrar (1and1) selling all those expiring names they take over from you when you don’t pay the renewal fee at their registrar. They sell a million dollars a week with no sales over 5k? That’s their registrar burning somebody’s furniture. They get the odd big deals in the mix and they have even brokered for us on occasion when a lay-down buyer insists on using them but you are kidding yourself if you think you are going to take your portfolio of quality generics there and boutique sell them for more money than with us. If I could do that, I’d be using them or I’d have bought them. Anyway I’d love to match wits for another 3 or 4 volleys here but I have an early morning and you clearly have me on the ropes so I’m going to retire here ;-). Nite bro
Hey Frank. Curious here
What percentage of sales come from platform based leads vs. coming from the domain itself ?
You also say “our software will broker more collective sales than Sedo this year.” . Did you fire your sales force ? 🙂 Is the software making the sales or the people ?
@adam.. we couldn’t do a thing without the people. People make sales and we have great people. We couldn’t get any leads without the name. Sales leads come from the name itself. But this industry has had names, leads and people all along and no liquidity. That magic liquidity comes from the platform, and software which empower the people to sell more names for more $.
Joseph
(2) “Domainers are investing more $ in total.”
Evidence? Any at all? Or are these statements all plucked out of the ether as futuristic reveries?
I can vouch for that. In .nyc space, a huge amount of people have invested who have not done much domain investing before. I met them in person. And i was one who got of sidelines (i did .coms about ) 7 years back and really invested. I wouldnt have invested into any other domain. Majority of buyers in nyc is new buyers, and a lot of investors are new investors.
@DK,
.NYC / New York City may be 1 market segment where (A) domain spending and the (B) number of domainers are increasing.
I’m willing to say that’s my hunch there too. What you’re seeing may be no more than anecdotal evidence right now, but the data might corroborate you where .NYC / New York City are concerned. My bet is they will.
Yet I’m not persuaded that we can extrapolate from .NYC to the rest of nTLDs. Plumbers are probably not becoming investors in .PLUMBING in the same way many New Yorkers might be speculating on their own .NYC.
You are correct that .nyc is different, for one its location and two it doesn’t have exorbitant renewal prices as in London and other local gtlds, plus it had more emotional connection then more general gtlds . Hence new investor can try their hand without sticker shock. But Frank is correct too, it did create a wave of new investors, wave of new end users who might not have thought of domains as investment before or paying good money for them.
In the auctions there were a lot of new people, who never done domains before. All in all, there will be gtlds that will be a wash maybe even majority of them, but there will be a number that certainly have positive effect on on size of overall market in the positive way. I met a guy who spent about 100k on .nyc at the auction, never having owned domain in his life. Hence, both you and frank valid points from my nyc experience
A lot of people get angry when domains cost more than $25. Before there is liquidity there must be public awareness that the domain aftermarket exists.
This.
This times 10.
This times 1000.
This.
Not the buyer, THE SELLER should quote a buy back price. Then the buyer would much more comfortable to buy.
Ex. you are selling a domain for 10k, with the guarantee to buy it back at any time for 7k.
That would increase liquidity, just like in the stock market.
Do you make this offer to potential buyers?
That is not a bad idea in theory, but I don’t see how it could work. The buyer would have no faith that the seller would follow through with their promise. Keeping the buyback money in escrow would work, but the vast majority of sellers want the cash right away. Most importantly, my buyback price for a $10,000 domain might be $3,000. That would not instill much confidence in the buyer and it could kill the deal if they think I think it is only worth $3000.
Also, since this discussion is about liquidity, having the seller be on the hook for a substantial buyback amount at a future date is not really liquidating it. That more in the area of selling it with financing (or leasing it), which is a great way to get a sale, but not liquidating it really.
Great discussion everyone. Personally, I believe domain liquidity is a misnomer.
Although not as bad as the depreciation witnessed by consumer products, e.g. cars or iPhones, domain assets should be acquired with a clear plan in mind: to park for their traffic and reap revenue, to develop and build a business, or to resell at a ROI that justifies the initial investment.
If you buy domains for “liquidity” reasons, save your cash for a low yield bank account.
Hi Theo.. liquidity is indeed what everyone is after .. You want more 10k sales, not more sales that equal 10k. In the mix everyone wants the same thing, a greater velocity of deals and for more money. I think everything that is happening right now in the domain name industry is a catalyst for getting us there.
Who determines what a “liquid domain” is? Investors? Marketplaces? Companies? Non-techies?
A lot of people and companies rather be edgy and get a brandable domain. You might have a hard time selling a “liquid generic domain” to this crowd. What appeals to one person will NOT to another. Experiences, tastes, and knowledge vary.
I have lots of small value liquid domains (5N and 4L) but selling them for low profit isn’t worth my time, and I must account for that.
Receiving hundreds of low-ball emails is also upsetting…
EvaHerzigova.com is a liquid domain.
RosyBindi.com is not a liquid domain.
Someone took your EvaHerzigova.com and transformed it in RosyBindi.com.
Of course your EvaHerzigova.com is no more liquid now.
It seems AbdulBasit posted an article about one o the most important ways to add liquidity…
“The domain which has been leased to sell was actually a deal in 5 figures and making consistent money for a period of 24 months is a great thing and I am happy with this new way of selling domain which might not be new for some but I am sure most domainers would love to sell their domains on lease to buy option.”
Financing/leasing features integrated in the landing page.
http://www.abdulbasit.com/domain-sales/more-five-figure-domain-sales#comment-18723
More than a dozen of years have passed since the appearing of the first platforms and they still do not offer any good feature to sell domains in installments or lease them integrated in the landing pages…
@Ivan,
Leasing would help, I think.
Recently a domainer friend of mine began listing his domains at Epik – primarily to take advantage of their leasing option and portfolio creation features. To date, I haven’t tried Epik myself; but I may.
The last time I spoke to GoDaddy about introducing a leasing feature, I was told that domainers don’t seem to want such functionality. Beg to differ!
Paul Nicks ought to be eavesdropping.
Yes, I know Epik,but you know that strange things happened in the past at Rob Monster’s platform, otherwise I’d have been long ago a customer of Epik, exactly because they have done something good to lease and buy domain in installments, but when you can’t trust someone… (it’s like bloggers appearing on Domaining, I can trust only 2 or 3, or 3 and a half of them, or 1 and 3 halves 🙂 – even AbdulBasit didn’t post my comments about leasing features on landing pages…).
If you try Epik let we know about your experience.
At least I am speaking with someone who understand these issues (you have all my esteem and I am sure it’s the same for the majority of domain investors), but we know, platforms are often on another side: just to say, Sedo removed the best feature they had: searching domains by language, one of the most important feature for a buyer….GONE….).
“The last time I spoke to GoDaddy about introducing a leasing feature, I was told that domainers don’t seem to want such functionality. Beg to differ!”
:))) What did you expect him to say? Of course, very large portfolio owners don’t want to see other people selling domains, that would means higher resell prices, no more tons of good domains available for $ 69 etc. I can “understand” them, of course, but enough is enough. 20 years of malpractices are enough for me…..
And political strategies…
And google…
And…..
Have been talk to Sedos and GoDaddys about leasing for over six year now. They are not interested in complex products that carry our more risk than they currently have on their balancesheets.
Still decided to pitch leasing to every client and offer the most lease friendly terms. Now have one lease in every four sales.
@DNSales,
Which platform (if any) do you prefer for handling your leases?
Own, prefer to deal with the end users directly.