Domain Industry in a slide - Think Again!

[500,000]

Love Wins

[bgmv]

No, the industry is going through a phase of reinvention. It about to become more relevant than ever, but yes of course to achieve this there is going to have to be a shake out. Even Rick has got it largely right on this one. Much of the worthless dross is about to be dropped. We have seen how all the new hyped extensions included the much vaunted dot mobi have failed to gain traction one after another. That is ultimately because they are attempting to serve non-existent markets. The squeeze is gradually being applied to the cyber-squatters and TM Typo brigade, and the Search Engines are gradually being cleared of shanty town developments by domainers spamming them with worthless content hosted on worthless domains. The only real opportunities in terms of new registration will be to serve those markets which are under-developed because they don't routinely operate in the English language or Latin character sets. OK, many domainers will struggle with the concept of working with a foreign language, but they all seemed to manage in English, when half of them appear to have barely got a handle on that.



Why not 8 digit numerics? After all eight is much more auspicious number than 5.

How much do people pay for random phone numbers?

Isn't the whole point of domain names about substituting numerical sequences that the human brain struggles to recall with meaningful strings that are easy to remember. Three digit sequences are fine, anything with repetition or patterns stands a chance to six digits and beyond, but ultimately its down to rarity, and random 5 letter strings just aren't rare enough to make it worth paying big bucks for, let alone sinking a whole load of advertising dollars into.

Most mistakes in this game are made because investors don't think the problem through. Anyone that believe that random 5 figure numerics are going to yield a significant return just has not thought it through. But then perhaps that is not the angle with a Pump and Dump operation?

i couldnt agree more. very well said

[gingeman]

the industry is crocked. Sell all your generic revenue earning .coms to me quickly before the parking bubble bursts - its the only smart thing to do!

[Adatise]

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[staffjam]

Adatise – could you shed some light on why 2013 is the magic date that the internet will really shine. I’m not taking the mickey here – just interested in hearing valid reasons.

[Adatise]

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[brandnewx]

While people are still registering domains, fewer of them do so less often. Remember, market price is the equilibrium point of the supply and demand. Now the demand is getting weak due to the world economy, and the supply is increasing as domainers need to liquidate their portfolios to increase cash flow. That is a lot of domainers becomes unemployed, and they don't have the money to pay for the mortgage or rent, foods and other essential stuff, they will need to sell the domains for money. Now if they are selling at the normal prices, it will take months to get a sale. Therefore, the more desperate domainers need money, the lower price they are willing to take in order to get the money as quick as possible. Ok, say you don't need money that desperate, but still you now cannot price your domain like before, because if you do that, your domains will look expensive; therefore, buyers will resort to buying other premium domains at cheaper prices. Consequently, the domain market is shifting toward cheaper prices, whether you want it or not, regardless of whatever growth reports you're shoving down.

Also remember that businesses cut their advertising costs in this economic situation. Apparently, Google is earning less from its advertising products (AdWords and AdSense), and so are the rest of webmasters who rely on AdSense. This is one important indicator how businesses spend their money on advertising. So look around, websites are earning less, and naturally, they will fetch less dough in the market.

A lot of you guys understand this. No need to elaborate more.

[reclad]

........... No need to elaborate more.

Well... possibly.

Whilst your reasoning seems sound for pure speculator domainers, whose domains
are sitting there not covering reg. fee or anywhere near it,
... your argument is not the full story, and elaboration is appropriate.

From comments out of the Affiliate conference this last week, it is clear that if you
have natural traffic in commercially viable areas, there is no reason to be
anything other than optimistic going forward.

From my own recent experience, like many others, I've been moving names
from parking to affiliate, and even without buying any Google traffic,
I've got names making from 10 to 20 times their previous parking rev.
No suggestion of a downturn there.

A variation on the ancient GIGO principle is, if you start with crap names, you'll have
crap names going forward. And yes, Verisign may well have shot themselves in the foot
by hiking prices twice recently, as domainers will probably be dropping many more
marginal names than would otherwise occur, especially in the current economic situation.

So yes, basically agree with you, but not all is bleak.

[simon johnson]

I was contacted by MAP Research last year asking me about the domaining industry. I'd be interested to know exactly where they got their stats from and how they validated the information.

[teamwork]

The global downurn in economy will absolutely affect also the domain industry.
The economic activity worldwide has gone down the road, the demand for products and commodities goes down, whole economies are in the brick of bancruptcy.Liquidation of assets that's taking place and devaluation of many kind of assets worldwide will also include somehow and the domain industry. In internet alone, we should expect a downturn in online sales since the majority of population that use this media are western countries that are going to hit by economic collapse.
I would expect that valuations of domains will slide in the next 1-2 years since many people will cut spending (for real economic needs or just from fear of what is unfolding).
If the final outcome will be that too many people will see their standard of living go down instead of what we have learned for so many years, then really I can't expect that the industry will do well.
In this context, I would expect that someone with cash could find many opportunities in the near future. But for valuations alone, I bet that we would have to go down to earth since the ROI of any domain investment would have t be reconsidered under the new reality.As already explained above by others, earnings of online advertising will be hit anyway, so the income from parking and such
just my 2 cents

[Acro]

Teamwork, that's the "doom and gloom" that you're facing in Europe, having experienced a different type of meltdown than in the US. I won't blame Karamanlis for that in Greece, like many of my co-patriots do, I will blame the gray/black market economy of Greece and that of the Old Continent. Here in the US, the economy is more dynamic and driven by entrepreneurship, unlike Europe that it requires brick and mortar industries that have long showed they cannot adapt to new technologies and new methods of shifting their resources to produce revenue. In other words, the economy is in recovery and while it will take a while to achieve record levels it's most definitely past the bottom. In the US the psychological factor of having a competent president has been accomplished. The economical stimulus is in the process of creating several million jobs, which in turn will increase industrial production and both corporate and consumer spending. I am sick and tired of hearing this "economy is bad" thing. I currently respond to email offers that mention that as an excuse for lowballing with a resounding "go **** yourself"

[britishbulldog]

Well all i'm gonna say is that all the domain auctions are still high,there seems to be more domainers with money than sense...........there are a lot of newbie domainers paying crazy money for domains especially in the auctions.

As for the enduser harder and harder to come by to pay good money for a domain these days.

[hecto]

Many good points from everyone!

The domain industry is no different to any other from my point of view. Ok we all know that at the moment we have economical crises worldwide so this has more or less affected every industry. However the domaining market is not a saturated market, there is still a lot more space for growth and money to be made.

This current slow down is temporary for the domaining industry. Fact is that the internet will continue to grow so as domainerss we should not have any problems long term. Newspaper, Television & Magazine companies should be the ones thinking hard about their future.......

Good luck to everyone in 2009!

[Acro]

Well all i'm gonna say is that all the domain auctions are still high,there seems to be more domainers with money than sense...........there are a lot of newbie domainers paying crazy money for domains especially in the auctions.

Those who pay decent money are not newbie domainers, they are the ones that know how to spot a deal. Auctions are far cheaper than a year ago. If you are an investor, now it's the time to buy. If you are a "newbie" now it's the time to sell

[britishbulldog]

Those who pay decent money are not newbie domainers, they are the ones that know how to spot a deal. Auctions are far cheaper than a year ago. If you are an investor, now it's the time to buy. If you are a "newbie" now it's the time to sell

You reckon ? let's test your judgment see if you are right by seeing if you can roughly name the price range the following ten domains fetched in auction ;-)

megatoad.com
bigandblack.com
njnew.com
fineluxury.com
share2flash.com
truematch.com
secretsofmakingmillions.com
mrflow.com
marrigetube.com
teenflirt.com

[Acro]

We must be following different auctions. These seem to be auctioned at Great Domains or what-have-you, where bidders look for existing traffic etc. Read my blog about why I am glad 360.org didn't sell at TRAFFIC From the ones you quoted, only truematch.com stirred my interest.

At the same time, amphibious.com for under $3k at NameJet looks like a bargain surely?
Many more as well, single-word, aged, keyword domains are being grabbed by seasoned domainers for less than $10k.

[britishbulldog]

Nope these were from the usual source not great domains,sedo etc.........

I have found namejet very expensive worse than snapnames to be honest but yeah amphibious.com nice domain for that price...........

[Acro]

Unless you can quote who bought each of these domains, how can you talk about "noob domainers" ? They might as well be end-users that have a business plan for that particular domain. Five, even six figures mean little when you're dealing with a start-up with a plan and funding - even if it's a one-man show. The current advise seems to be, buy the best domain your money can afford.

Snapnames is not worse than NameJet for a single reason: domains at Snapnames, Pool etc. are drops with a brand new birthday. If you want to buy old domains you can only do that at NameJet or directly via auctions from their owner.

[britishbulldog]

Unless you can quote who bought each of these domains, how can you talk about "noob domainers" ? They might as well be end-users that have a business plan for that particular domain. Five, even six figures mean little when you're dealing with a start-up with a plan and funding - even if it's a one-man show. The current advise seems to be, buy the best domain your money can afford.

mmmmmm maybe a year ago but not so much now i'm talking crap names you would never name a startup for going for say 1-2k not like some of the above fetching nearer 10k......

Snapnames is not worse than NameJet for a single reason: domains at Snapnames, Pool etc. are drops with a brand new birthday. If you want to buy old domains you can only do that at NameJet or directly via auctions from their owner.

No mate thats where your wrong because you can buy domains from snapnames still with its old registration date dunno how long its been in force because i thought the same as you but i noticed just a week ago when i bought a 1999 domain and i was chuffed to see it still kept its old registration date

[Acro]

As I said, you can't generalize like this - "crap" - because there is a reason behind any purchase of magnitude. "Newbie domainers" don't throw cash around, they are either making mistakes by investing in exotic TLDs, or are rather prudent with their money. The guy with a suitcase full of cash wants that particular domain and is willing to pay a relative premium, *knowing* that he's maximizing his investment in a market that offers far higher ROI than any other market.

About Snapnames, you can buy 3rd party domains from their owners via auction, but that's when the price factor kicks in: these domains have an associated acquisition cost. I would not buy "2nd hand" domains at Snapnames, I use them if a domain I really want is about to drop.