Ron Jackson, who tracks all reported domain sales and publishes the results weekly in the DNJournal, published his anaylsis of domain sales in the 1st quarter and has some great news for the industry:
“””””The first quarter of 2008 wound up being the best domain sales quarter reported since we started tracking the market back in the fall of 2003. A total of $38,029,543 in domain sales were reported in 1Q-2008, a spectacular 78% jump over the $21,253,105 reported in the first quarter of 2007 – before the current dislocations in the general – before the current dislocations in the general economy started appearing. 1Q-2008 was also 12% better than the $34,089,484 registered in the fourth quarter of 2007.
For all of 2007 $120,805,509 in sales were reported – an average of $30,201,377 per quarter. So the latest qeconomy started appearing. 1Q-2008 was also 12% better than the $34,089,484 registered in the fourth quarter of 2007. For all of 2007 $120,805,509 in sales were reported – an average of $30,201,377 per quarter. So the latest quarter was 26% higher than the average quarter last year.”””””
With auction of pizza.com ending tomorrow, another 7 figures sale get the 2nd quarter off to a great start.
These numbers would all be impressive, save one fact. The average price paid for each name or lease has dropped into the toilet. The fact is there are more names chasing dollars than dollars chasing names. Its called a buyers market.
Add on top of this the fact that the US dollars value is worth approximately 55% of its value in 2002. Domainers are being talked into selling on the cheap. This is absolutely a time to pull away from the table. Take Frank Shillings advice , just say No.
Jeff
I look at the drop auctions every day and I’m not seeing any real price reductions. There are plenty of domains being sold and the prices seem Ok.
Tomorrow we are going to have a domain sell for probably 3M+
We know PPC revenues are down, but the after market is still busy.
Ron was comparing 2007 numbers to 2006 numbers so lets not go back to 2002 dollar vs. euro’s
Moreover most the buyer’s I see in the market are still US based. I haven’t seen a big influx of Euro’s coming into the domain market, have you??
agree with admin. prices are fair with the number of players in the game. In fact, today we lost a very nice domain for $835. Developed, this name is worth much much more, but yet so are 1,000s we all hold. And we hang our for developers to call, email, contact.
Though we can all agree that there are names selling on drops that are worth far more, the shear volume of drops and activity within the names equals big dollars. I was talking with an employee today that if you just spend $300 a day on 1-drop auction, you have $100,000+ tied up at the end of the year. That is real money for people, especially those with no parking, development or other business cash flow.
These numbers Ron reports are very impressive and if we included the sales under his threshold (sub $2000 drops) the number would be astounding.
I agree that there are deals to be found, but the only steal that exists for a holding domainer seems to be a domain selling for under 5X PPC revenue (or actual metric) and I do not see these flying out of any portfolios.
These stats are very impressive as was the last DNjournal sales update.
I would like to know what you base your opinions on because they are not connected to economic factors. Until someone comes up with better answers I stand by my two statements .
1. Average price paid per domain at historical lows.
2. In early 2000s Business.com sold for 7,000,000 $
today that 7 million is worth = approx.=3,850,000 $
How you going to spin that?
Jeff brought up a valid question – what has the average selling price of individual domains gone down? I didn’t know the answer so I just ran through our sales database again to find out. In the first quarter of 2008, 3,764 sales were reported to DN Journal making the average sale reported $10,103. In the first quarter of 2007, 3,086 sales were reported to us but the average price was only $6,886. For all of 2007, 13,888 sales were reported to us and the average sale for the year was $8,698. So 1Q-2008 showed a significant rise in both average sales price and total dollar volume reported.
Regarding the “$7 million” business.com sale it is pretty common knowledge that that was not an all- cash sale (the bulk of the deal was stock, the value of which dropped dramatically when the .com bubble burst). One of the parties to the transaction was interviewed a couple of years ago and said the cash realized from the deal was a fraction of the annouced price. We only report all-cash transactions for that very reason. When stock is involved there is normally a requirement that it cannot be liquidated for a set period of time. There is not telling what the stock component might be worth when the lock up period ends.
Thanks Ron for that information it clarifies things for all of us. I stand corrected on my first point. My second point still remains valid. The weakened dollar affects all industries not just ours. Gratefully Jeff
Jeff
The weaken dollar effects the money you have in the bank as well, stocks you own, real estate, money market accounts, t-bills, cd’s, all of them.
All are worth much less than 5 years ago and 20% less than a year ago.
The difference with domains is that the principal invested has risen substantially over the last few years, like gold acquired at $400 a few years ago and now sitting at $900, some of the appreciation of is eaten up by the dollars decline but you are still far ahead of the game, than you would have been investing in any of the other possibilities, including gold.
You want to know why?
Read today’s post
Nice an informative POST
Thanks Andrew I will reread todays post. I enjoy a little spirited debate can you tell ?
Jeff
No problem with debate, the free exhcange of ideas is how we all learn
My name is Michael not Andrew
Sorry Michael I got confused by admin. I agree with a lot of what you say by the way. Gratefully, Jeff
Mike,
I think you are in a position unlike many others in this space where your company owns tens of thousands of fantastic generic domain names, and you probably have a good firsthand view of the “domain economy.” Have you seen an increase in offers for your names, and has the average offer increased?
NP
Regarding the devaluation of the US dollar…yes, the dollar is worth less when you are purchasing assets affected by exchange rates. If you are a US domain owner selling to a US domain buyer, the currency is equal, thus the transaction equal. If I sell a name to anyone, and I think the name is worth $10,000 US regardless of 2002 or 2008, I do not reevaluate based on whether the buyer is getting a good deal on exchange rates.
$1 million US dollars in 2002 are the same as $1 million US dollars in 2008 (not adjusted for inflation) if you are US based, have no plans of buying something outside of US dollars – exchange rates, etc. Yes, we can get into the cost of inputs into end-products, but I believe in dealing in today. There is much more to economics than just currency and exchange rates.
In fact, I believe the only way a weak dollar even affects domain pricing is if the SELLER is in a strong money country and thus need more to feel fully valued. I do believe most premium .com names are US dollar based in price also.
For your information the weak U.S. dollar affects all markets. Especially ours here in the U.S. No matter what way you spin it its inescapable.
I have to agree with Jeff here.
A dollar today is definitely not the same as a dollar in 2002.
You have not only the exchange rates, which have moved against the US dollar, but time use of money and inflation always make the same money less valuable over time.
This is why there is interest. Interest is the cost which balances out the normal loss of value over time.
Our business is especially a global one.
We compete in the Global Marketplace.
We live in a Global marketplace.
How much gas could you have bought in 2002 for a dollar compared to today?
Oil is quoted in US dollar in the global market.
This is one of the major reasons Oil has gone to over $100 a barrel is that the dollar has sank 20% in a year.
You know what a gallon of home heating oil was at on 12.31.02?
$.91
Today it is $3.23
Sorry Greg, 1 million dollars in 2008 is nothing close to 1 million dollars in 2002.
Good points. I still believe for 90% of domainers though, not the big guys, but even guys like me…a couple true premium names and the rest just “awaiting that guy” type of names- see Name link if interested (true premium not listed for sale)…every domain valuation (minus those with a PPC multiple) can be argued arbitrary thus making the value of the dollar at least to myself not a factor (as a seller).
I kick myself for selling names like internetmarketing.com, dancestudio.com, etc not due to dollar factors but rather the increase in value over time from market adoption.
I guess there are arguments on both sides. I believe those who are benefiting and UK and CA and elsewhere, not the US, but not sure it is a huge hurt to US, just gain to others.
You do have valid devaluation points though. Can’t dispute that. In fact, I never realized that Oil to those in the UK actually has not changed in price or even gone down (or at least that should be the case). I need to do some research on that 🙂
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Jeff
Thanks for your kind words
Michael