An article in econsultancy.com, today claims that its a buyers market for domains.
Citing what it calls “the economic downturn and a growing overall trend of declining revenue for parked‘ domains” the article concludes that its a great time t buy a domain from even major players like BuyDomains.com
The article cites a report in In December, DomainNameWire that BuyDomains was offering year-end deals on many of the domains.
The article then goes on to quote the DNJournal to say: “The PPC (pay per click) business was the first to run aground, falling by close to 50% according to most accounts. By the third quarter rough water had started roiling the aftermarket as well. That storm was still intensifying when the end of the year arrived and damage was becoming evident, especially at the high end of the market.””
“”””The trend is clear: the past months have seen far fewer big money sales than in years past and there is far more secondary market activity at significantly lower dollar amounts.”””
The article concludes:
“”””Expect this trend to continue until the economy picks up again. And even then, it’s questionable whether the market for domain names as ‘investments‘ will reach its past heights. With parking revenue down….the significant costs associated with holding onto large portfolios of domain names being so high, it seems inevitable that some domain name owners will have enough uncertainty to encourage dealmaking.
Some may even let chunks of their portfolios go altogether. I’ve noticed some pretty decent domain names being dropped of late and unlike in the past, many are not being immediately snapped up by other ‘domainers‘ or customers of services like Pool.com.””””
“””””While none of this means that you’re going to be able to acquire a one-word generic domain like Business.com for $1,000 anytime soon, it is largely a buyer’s market””””
So what can we take from this.
Well more people are watching our industry and reading our blogs than we think.
If this line of reason gets some play in the media, then we can all expect more offers coming out way but the price expectations are going to be out of line.
It’s all our job to educate the non-domaining world to domains.
While parking revenues are down as you state in your post, the 50% figure relate to all parked domains.
Great Generic domains are down much less.
Unfortunately, as word spread about domain parking a lot of crap flooded that parking channel, like trademark infringing domains, domains that had old spam traffic and domains that had other than pure type in traffic.
Many of these domains have gone down to zero PPC earnings, causing the overall numbers to drop.
The statement “””While none of this means that you’re going to be able to acquire a one-word generic domain like Business.com for $1,000 anytime soon””, infers you might be able to one day, and that is going to create an unreasonable expection in the buyers mind and cause the offer on your domain to be laughable.
You are never going to be able to buy a domain like business.com for $1,000, or $10,000 or $100,000 or even $1,000,000.
We have lots of domains that make hundreds of dollars a day or more, some domains like business.com will make thousands of dollars a day.
Sure some of these are off 25% but they still make hundreds of dollars a day, (in some cases thousands), and cost less than $20 a year to hold.
We are still selling (even this month) a good voulme of domains at a minimum price of $2,500 per and our average is well over $10,000.
Yes it is a good time to buy, there are deals to be had.
But lets not create a false expecations in buyers mind.
Yes the housing market is the worst ever, but that 16,000 sq ft., mansion down the street from me, on the beach in South Florida, went from $20,000,000 to $15,000,000 and sold.
It didn’t sell for $1,000.
I don’t think BD is feeling the squeeze. I tried to buy a long tail 3-Keyword.com from them that was first registered in Feb 2008 and they wouldn’t go below four figures. They may have been trying to bump their 2008 sales figures for investors, but now they’re back to the same old same old.
Excellent Post Michael, exactly right if a name was making $600 a day and now making $400 that is still sweet. Maybe a sweet spot for parking came and went but it is still a great business for generic domains that fit the customer need.
These buyers should also take in consideration that most domain investors also own full developed websites and do not have to rely on parking revenue.
These generic domains which are parked? Well, they are only parked because there is not enough manpower or time to create the fitting business. Most PRO domain investors have hundreds, thousands and some own hundreds of thousands of domains
It only takes 1 average developed and working website to pay for yearly registration fee of approximately 1000 domains.
So why in the world would anybody sell good domains for cheap?
The only domains which would be sold cheap is what no one else wants.
This so called crumble in ppc is also positive. It will clean the market of worthless domains and make clear that you can either waste your money or get true investments.
The true domainers are in no pressure at all and have there income maybe 20, 30 or 50 % less but if your overhead is only 5-10% of income there is no worry.
Newspapers and other business which need more exposure should worry. There are only a certain amount of good names and whoever comes last can keep on spending millions on branding and chasing customers.
Those that come first will save millions.
It is a buyer’s market for mid to low level domains. You will see very few great names sold because most buyers in this market are looking for firesales and owners know better than to sell their prime real estate during a recession. Of course, there are always exceptions and you may see many of these companies open their checkbooks when they wake-up to what we’ve known for years.
Also talking about a domain like Business.com is just one example of what the Domain market means!
When Business.com was bought for a few million ( I think it was around 7,5 M ) people thought this guy is nuts to pay this amount of money. Well this crazy nut had a vision and put a platform on Business.com.
30 months later? Business.com was sold for 150.000.000,00 Dollars. Now who’s the nut?
If a business is lucky enough to acquire a premium domain even if it is costing 100 K or 1 M they better buy. Once word gets around during this recession on how valuable these domain assets are? Take the price you see today and multiply it by a minimum of 10. This will happen within the next 3 years.
Make no mistake those staying confident and not selling for cheap will be rewarded sooner than they can imagine.
“Make no mistake those staying confident and not selling for cheap will be rewarded sooner than they can imagine.”
right on!!!
Don’t listen to those media, it is a plot to “depress” your domains and then they will buy cheap from you.
Backstabbers!!
Comparing the domain industry as a whole to the real estate industry… Not such a very good argument anymore.
It was a pretty good argument and pitch in the early days, but come on, we are in 2009… Things done changed.
They share some of the same principles but domains carry much much much muchhhh more risk.
There is always going to be amazing opportunities with domains, whether you are the buyer or seller.
There may be 90% of domains that are worth more than reg fee… All of the rest of the “made up” brandable names or ones that just sound cool… Nobody needs them. There was never a big enough market for them. I never understood why people had accumulated 1000s of those types of domains.
I always bought domains that either had lots of traffic or ones that had clear development potential.
All the best,
Mike
http://www.wannadevelop.com
Is it a buyer’s market? Slightly, maybe. Domain name values aren’t going to diminish over long term. In fact, the opposite. So some might need cash and will sell under price making opportunistic buys. I’m not paying much attention to the current down cycle in the economy.
Much more compelling is the strength of the internet and its next level of growth, which will be huge. The domain name industry, and premium domains. will be highly valued. Mark these words. As the economy gradually stabilizes and the investment mindset returns, just watch what happens. It will be all about the internet.
let’s just hope google doesn’t take over the browser game and then decide to become a portal and then moves the adress bar to the bottom… Things like that CAN happen
Tim
I agree, changes in technology still is the biggest thread to TLD’s, touch screens, voice commands and things we do even think of could have a huge negative effect on domains in the next 3-10 years.