A simple question but one I have never heard asked.
Has anyone ever lost money on a domain??
Specifically what I am asking has anyone ever bought a name for a premium at a drop auction, private purchase, or industry auction and then resold the domain for less?
In my experience I have never heard of it.
We have never bought a domain and sold it for less later on.
To be clear I am not talking about registering a name for $7 and then letting it go the next year. I am also not talking about domain purchased solely because the are long tailed domains for the traffic, which at some point dries up.
I am talking about investment grade names purchased in the 4 figures or higher.
What got me thinking about this is the recently listing of lips.com at the DRT auction for $140K.
The auction listing said the domain was purchased at a previous TRAFFIC auction for $125K. The owner was, according to the listing, offering the name at a starting reserve price of the same amount they purchased the domain for.
The domain did not sell, but then again very few domains sold at that auction.
We all know about lots of domains which were acquired a price “x” and then sold shortly thereafter or years later for x2, x5, x10, or more.
SO the question is have you ever, or heard of any domain selling for less than the owners purchase price?
If the answer is the same for you, as it is for me, which is it never happened to me, never saw an instance of it, never heard of it, then therein is the inherent value of domains. Unlike any other asset know to man, real estate, stocks, bonds, commodities, domains do nothing but appreciate.
This would make domains the greatest investment of all time.
Happening to me for .tv and .mobi names!
Video.us sold for $75,000 in March 2007 and then $18,500 in February 2008. This sort of thing has happened to many .us domains.
Sure thing, no one is perfect. Most chances are anyone who ever bought a domain, overpaid for some.
Lots of names are result for less. Mostly due to financial pressure and need to sell, while the prices paid for the names were higher than market values. Or if the values dropped – yes it does happen as well for a wide variety of reasons.
Michael,
Many bought domains and are not able to recoup paid prices via PPC or sales. While it isn’t “loss” per se it is just as bad. as these individuals hold properties which may or may not get the same prices they paid for.. ever.
Sahar
Guys for one I am talking about premium domains, .com’s not .tv, .us .biz or .eu and .mobi.
All of those are highly speculative.
You buy a .mobi for $100K, maybe you will make money with it 5 years from now, but certainly if you need to sell it today your going to lose money.
Anyone have an example of specific premium .com’s resold at a loss.
Been in the business for 7 years and spent millions on domains and have never sold a domain for less than what I paid for it.
I started a thread on this same topic about a year ago on DomainState, see here (not sure if your blog filters out links or not….if it does, go to DomainState.com and search for “Documented Domain Losses”), and there were several examples.
Shaft.com sold for $17,500 at TRAFFIC (as reported on July 31, 2007 on DNJournal). According to the DRT auction results (lot #262), it resold for $17,000. If you take into account the commission, the loss is even bigger. One should take into account the PPC revenues that the domain received during the holding period, though, in calculating the loss. However, it’s safe to say that if the domain was generating big PPC revenues, an unmotivated seller wouldn’t have set the reserve at $15,000.
George
I saw the post but it does not look like you got a good answer.
I would call shaft.com a draw.
The purpose of my post today was to look at domains as investment comparing it to other investments.
For example plenty of people bought Google last year at $700+ (high of $749)
Plenty of people sold this year, less than $500.
For each one hundreds shares that’s a loss of $20-25K.
For a few months.
That’s a lot of money.
30% or more percentage wise.
Plenty of people bought real estate in the past few years. If someone bought a $500K house there is a good chance its only worth $400K today and there are a limited amount of buyers.
So compared to domains what asset has held it value more consistently over time??
It’s hard to draw conclusions, because so many transactions are never reported (esp. compared to the stock market, which has much greater transparency).
I think it would be dangerous to suggest to newbies that they’ll never lose money investing in domain names, though (that’s why I started that thread a year ago). The “greatest investments of all time” phrases might be applicable to periods of hypergrowth in the past (which happen to all relatively new assets, that go from zero to a steady state). But, I think you’ll agree that going forward there will be winners AND losers — not simply winners. Like any business, people shouldn’t invest more than they can afford to lose.
I would not judge any asset over a 10 or 20 year period. People said housing would never go down, and that helped support the sub-prime bubble, until it popped. Gold, oil, and other assets have all had wild swings in valuations. Domains, in my opinion, are no different, there will be ups and downs. Some will become completely worthless (e.g. if they’re related to a technology that becomes obsolete). Hard disks might give way to solid state disks or holographic memory, for example, so whole swaths of names become worthless (that’s a reason I tend to avoid domain names related to technology, but instead focus on “evergreen” and enduring topics that I and my heirs can build useful sites around).
I’m sure if we all went through each other’s portfolios, some domains would stink to high heaven and be “hidden losers.” And just because one bought a domain name in 1995 for $10, and today it’s worth $500K, doesn’t mean that the domain name might not be a “loser.” It might have been worth $2 million 2 years ago, but you didn’t sell it at that price. In those 2 years, you’ve lost money (i.e. relative to if you sold, took the cash and re-invested in t-bills, etc.).
(of course, no one could buy a domain for $10 in 1995 — for a while, you could have them for FREE, and then $100 for 2 years, and $70 for 2 years, and then later $10/yr)
Lips.com is a perfect example of speculator vs enduser and why endusers will continue to be the majority of those who have a favorable view of the domain name market.
My brother and I were at the TRAFFIC auction last June when Lips.com originally sold for $125K. Before the auction, the owners had sent out a press release extolling the vitues of acquiring a name like Lips.com. Nothing in the press release said what you could actually do with the name. It was 100% geared towards investors/speculators.
Lips.com sold for a solid price. My brother turned to me and asked, “How do you think they’ll build it out?”
It’s now obvious that the new buyers never intended to develop Lips.com. And, for most people, 125K is a hefty chunk of change to buy a name simply to park it or hope to resell at a higher price.
On the other hand, Lips.com is a great generic for someone looking to develop a site with the potential to dominate the cosmetics industry.
And to answer your orginal question, we have never lost money on name we’ve purchased and some of our purchases have been six figures.
George
Of course you have to be smart about your acquisition.
No one is going to say you can buy any domain at any price and always make money.
At the DRT the domain seattlebasketball.com was for sale.
Well the professional basketball team from Seattle is moving so the name makes no sense and would be a bad buy.
I’m talking about generic .com’s.
computer.com, pizza.com, villas.com all domains which I have seen up for sale in the recent past.
Geo domains.
Product domains.
Are you going to lose money on those?
The True Value of Domains: Has Anyone Ever Lost Money on a Domain – I have NOT – the $$$$ value of my Investment domain names is ONLY going to go UP (I may consider to sell some of them in 5 years).
Even the 500+ which I have for sale the $$$$ value is going up (slowly but steady).
I lost money on one domain name a little over a year and a half ago. There was another opportunity and I needed the funds to take advantage of it. I sold a name for $8.5k (I paid $10k) and the owner flipped it 6 months later for $17k. Am I disappointed? Absolutely not. I used the money to buy another domain name, which was then sold for much more. While some people may look at it as me losing out on $8.5k 6 months later, I made many multiples of this by taking advantage of the opportunity that presented itself at the time. Since then, I’ve been vigilant about keeping enough in cash to take advantage of opportunities.
One would be quite foolish to think that [b]any[/b] investment will only goes up in value, and does so steadily, in a smooth curve. One need only take a look at the stock price of Marchex to see that. If NameMedia eventually goes public, we’ll see the same thing, that values go up and down.
One domain I bought about a year ago I paid $5K and I thought it would be worth $10k+ easily, but I overestimated it. Even though it was a good 2 word generic name, it had negative meaning and few possible end users so I haven’t sold it yet.
But generally if we are only talking about premium .com generics and the prices paid reflect the market value I agree it’s quite rare to see the prices drop. Still possible though as George noticed both in the short and long term. No investment is without risk 🙂
How can you tell if you lost or not?
with real estate you can tell if the market is down or up. with Google you don’t need to sell in order to know if you are up or down.
but with domains, a lot of people can say they never lost, but that is based on holding or not selling the domain.
We wont be able to answer these kind of questions until we have an acceptable appraisal/pricing model in the industry.
Most of the domain names listed on DNJ this week are prime examples of people overpaying and will probably never recoup their investment.
Jut remembered I bought one a month ago in the aftermarket, buyer paid 5k, I bought it for 4k.
And again, just because people are not selling does not mean they will ever recoup their investment. I know for a fact how we used to buy domains: we looked at X dollar amount and went spending. In many cases we knew the domain is not worth it and never will however, our game was to look at the big picture, win more times than lose.
Now the question is did we? I think it is too early to tell as the game isn’t over today and we still have time on our hand that we don’t need to find out.
Yaron
What good does the appraisal do for you??
If you buy a domain for 10K and someone says its worth 20K, how does that help you?
Sahar
I don’t get why you would ever buy a domain for more than you think its worth or would ever be worth.
David
I was also their for the lips.com auction at TRAFFIC. We bid up to $80K for it then dropped out.
If the domain returns 7% per year on PPC I would keep it, can’t get that in the bank
I agree, but I’m skeptical that Lips.com could pull enough PPC parked through direct navigation to average $730 a month.
I bought sexeducation.com at a TRAFFIC auction at the same price (it might have been the same aucton) and it does a little better than that.
I posted this on conceptualist Ref Decriptive domains as article titles mislead, help :
Empedocles
Apr 21st, 2008 at 3:55 am
Would a TM have made a difference in this situation
I note that the Word Mark / DESIGN PLUS WORDS, LETTERS, AND/OR NUMBERS CHOCOLATE.COM was abandoned. Interestingly the mark was Published for Opposition back in November 12, 2002 with a filing date of March 30, 2000 !!
Very interestingly (IMO generic)I also note that Law.com is going through the USPTO US Serial No: 78728331
Basic Search Trademarks http://www.uspto.gov/main/search.html
5 Empedocles
Apr 21st, 2008 at 4:25 am
Furthermore
If the .com / . whatever is a brand (IMO it is) and all brands can be bought /sold / leased with the protection of a TM. How much would domain registrants potentially bring into government coffers ? TM agencies could (potentially) also effectively deal with domain name abuse superseding the CADNA / The ICA and quasi officialdom
TM’s can in many cases ensure the long term value of domains registrations that are bought with a brand in mind, I noted on this site that chopstick.com was sold (IMO) for not a lot, Great name for a new restaurant / take away chain with the TM chopstick.com, you can sell the vision. As for my post I did not see one comment which suprised me as it was food for though !!
Empedocles
Not sure what your asking here, certainly not on topic
”
Sahar
I don’t get why you would ever buy a domain for more than you think its worth or would ever be worth.
”
Because our game was on converting money, not converting domains. For example, we would spend a X trying to get a return on that money, not looking to make return on each domain separately but making a return on the whole.
Sahar
Interesting that SexEducation.com does that much PPC revenue. Shows that a popular phrase can have some pull.
” Yaron
What good does the appraisal do for you??
If you buy a domain for 10K and someone says its worth 20K, how does that help you? ”
in real estate, when trying to sell a property, one can get a pretty good appraisal as for the value of his property.
in the stock market, you don’t need to sell your Google stock in order to know if you are up or down.
it’s a completely different story with domain names,
and I don’t think you can really tell if you are up or down in such a small market…
The topic is The True Value of Domains: Has Anyone Ever Lost Money on a Domain:
The reason I mention the TM is that if, as an example if chocolate.com had a TM would article titles that mislead and drive traffic to another site be open to legal proceedings under the United States TM law. Would this stop the loss of money on the domain. Would the true value of the domain asset be enhanced by a TM
“I don’t get why you would ever buy a domain for more than you think its worth or would ever be worth” ( I feel sure many people have for all sorts of reasons and good luck to those that bought into that lottery ticket ) Your game is about economies of scale and I respect your decision.
Has anyone ever lost money on a domain?? I guess everyone of those odd gems that comes through the drop sales lost . Greatest investment of all time my guess is a pick & shovel !!
I feel like the only lost value on a name was the true great names that I owned, when I was young and impatient and thought any offer was a good offer. What did I lose…huge potential upside that could have been realized today as these names would have sold for many thousands more.
But, I am sure I will find this post in a couple years and most likely, I will sadly report back a big loss (actual outlay in $$$ loss)…just hope the gains are far bigger.
To date though, it has not happened to me.
14x . . . interesting. Thanks for the insights Michael.
Back On topic.
Does losing a domain to an agressor (udrp or lawsuit threat) count ? It is part of the “cost of doing business” in this space. I’m sure many have paid the piper that way.
Adam
I think losing a domain is a risk inherent in the business, but I would not say its the cost of doing business.
I would say defending yourself against such a claim is the cost of doing business, but if you don’t play the trademark typo game, you shouldn’t have too many lost names.
We have never lost a name. We have defended around 10 actions and won them all, not bad when the domain holder generally loses 85% of the time.
However if you have stumbled upon a trademark and your case is crap then its maybe a bad business decision to fight for the sake of fighting.
You have to know when to pick your battles.
If your on the right side fight like hell, spend the money to defend yourself.
That is a cost of this business
A lot of people may not have officially lost money on a name, but only because they haven’t tried to sell it yet.
is there any website which helps to create back links…or can u plz tell me someone wants to see a site…where to approach?