Domain Name Industry Reality Check! Domain Valuations, Domain Sales and Domain Monetization...
|4.0/5.0 (7 votes total)|
January 21, 2009
This article is a reality check for most people
involved in the domain industry, specifically domain name
holders/investors... It could have the effect of changing your life...
Seriously! It involves so much stuff, covering both newbies, who are
considered the up and comers and young bucks who have recently gotten
involved with buying up domains, as well as the professional domainers
with thousands and tens of thousands of quality and generic dot com
domain names. In this write up I'll be discussing some of the issues
related with domain names valuation, monetization, sales and some other
domain industry related stuff. I'll be outlining some of the problems
that exist in the domain industry as well as run through some of the
solutions that I personally believe can easily be put together and make
sense of things. Please note that this write up is pretty long. The
last article I did was over a month ago and this one is the result of
probably a couple of related topics/issues put together into one piece.
It's appropriate though. The most important and good stuff is at the
end, so grab a cup of coffe or something and have fun at it!
things first... The domain hype, it's alive and well, still into 2009
and that is both good and bad. It's probably more lively than it was
ever before which means there is more activity in the domain industry
as a whole. More activity doesn't necessarily mean that more investors
are making more money off of their domain names or people are getting
richer than they were say in 2005 or 2006. It is actually the opposite
in the current state of the market. The domain name parking phenomena
is pretty dead, as revenues has been declining by as much as 50% over
the past year alone and things are not looking any brighter for the
rest of 2009 as well. So where is all the money? Where is all the
wealth? Well, it is being spread around with many more people and
companies than ever before.
industry has come a long way since it's early days following the dot
com bust in 2001 and 2002 which is when most and if not all of the
premium and generic keyword domain names were snapped up by the sharks
and major players of the domain industry... Sure, the domain industry
has gotten the attention of many companies around the world, but
still... It is only a tiny fraction of the business community that all
the domain investors had assumed years back that it would. So what can
we all take away from this? There is a lot more to go. A lot more to
Things will get much worse than
they will get better for people though. Trademark infringement is still
going strong and it is an issue that will explode... Will 2009 be the
year that it will blow up in people' faces and leave many paralyzed?
It's possible! You won't know when or how it will hit you, but rest
assured that it will. Trademarks are not good domain investments and
were never a long term play. It was quick money. The quick and easy
money is going to disappear. All of the smartest players of the domain
game have already "cashed out" and the people left with the trademarks
are mostly newbies or folks that simply choose to ignore everything and
living in their own little bubble.
name holders have domain names that are absolutely worthless. What? You
don't think so?! Well, just head on over to any of the domain name
forums for sale sections and go over the domain names listed there. Do
you see many domains that are worth the registration fee? Probably 90%
if not more are worthless. Now, that is not to say that all domain
names are worthless, it just goes to show you how stupid and careless
people are that they have invested tens of thousands of dollars in
hundreds or thousands of domain names without doing the appropriate
research. The names never had a chance of being sold and absolutely
zero potential. Those sellers are trying to "dump" the names before
There is more and more domain
names expiring each and every day than ever before also it looks like
and this trend will continue into 2010, 2011 and so on. Domain names
have been bought up for each and every keyword in all of the most
ridiculous ccTLD's and other non-mainstream TLD's such as .biz and
info, that one was thinking could be resold and flipped for at least 2x
but hopefully much more. Well, 12 month's later and still no buyers...
Some people are in it for the long run, and they have been holding onto
thousands of worthless domain names for years now. Those renewal fees
start to end up. It is clearly evident that small time domain investors
are cracking under the pressure and will be calling it quits soon.
newbies have been feeding other domain newbies incorrect information
for the past few years. This is a major problem in the industry. Most
people that have gotten involved in the industry just as an "on the
side" thing or hobby are burning through cash and doing so quiet well.
Registering domain names that don't even make sense that will never
make money being parked or have any chance of being resold even to
recover the registration fee. Once again, just go to the appraisals or
for sale section of any domain forum and see for yourself. People have
the belief, but what good is that? It doesn't materialize to
anything... You need to know who to listen to and who to trust when it
comes to investing your money in stuff.
what can you do to find out if the domain names that you are holding
onto are worth a million dollars or worth $-7? What the hell, did you
just say a domain to be worth minus seven dollars or something?? Yes, I
did. Anyways, you should try to list your domains for sale at as many
domain sales venues as possible. It includes forums, newsletters,
auctions, etc. Price them fairly and "ask for offers" but set a reserve
price and this will reveal the type of interest there is amongst your
peers and give you an idea of what the domain name's current true
market value is. If it is a good generic keyword domain name or one
with obvious potential, you will see a lot of offers coming in
obviously. If you do not get any offers, not a even a low ball offer
that would cover the amount that you had to spend in order to acquire
that domain name... Well, that means something is really wrong. What is
wrong? Well, it may be one or two things --- probably the domain name
or the price. The domain name may not be as good as you thought it was,
after all, if your peers can't see the value or potential in it and
follow up with an actual "buy out" and put their money where their
mouth is or offer an acquisition of the domain.... It is worthless.
lot of domain valuations on the forums and by other "professional
appraisal" companies are nothing more than just one persons personal
opinion, it is nothing more than text on your screen. The valuations
are based on comparative data but each and every domain is quiet unique
and they simply cannot be compared one to another. This is actually why
so many newbies fail. They think that just because XYZ.com sold for a
certain price, or XYZ.com is listed for a certain price then also
XYZ.info can sell or it has any value. Simply not true! Get real!
anyways, where was I... If you don't get any interest in your domain
names at all... That tells you something --- failure. That word has a
strong implication and sucks, I know... But yea, the domain is a crappy
domain. There you have it. Because if the domain name doesn't earn you
any money, whether it is setup as a website or parked or whatever...
Whatever potential you may think it has, it doesn't hold much weight
and doesn't mean a whole lot because potential doesn't pay the bills.
Another possible reason for the failure could be that you did not
market the domain name properly, or to the proper audience. Domain
investors after all are looking at bargains and good investments.
Domainer-to-domainer sales are at all time lows. All of the domain
names that could be flipped and re-sold already have been over the past
few years and te best of the best domains have landed with some of the
biggest domain portfolio holding companies that aren't really buying
all that much anymore. They are as you would say "set for life" and
they do not need anymore domains. Their business is in monetizing the
traffic and selling the domain names.
really think that most of the people that go through Sedo, SnapNames or
the various domain forums are fortune 500 companies? Get real! If you
thought so... You have a lot to learn. Look, the domain learning curve
isn't that difficult but the domain game isn't for everybody. It is for
very unique individuals. It is for highly creative individuals and
visionaries with entrepreneur spirit. Who said that domaining was easy?
Ummm.. It may very well have been in 2001 or 2002 and into 2004 or 2005
but the opportunities have dried up. There isn't an endless amount of
quality domain names out there this days available for registration or
drop auctions and competition is as fierce as ever before.
see, whoever told you that making money in the domain industry was easy
only told you the half truth... It is not. All of the major domain
players who have been involved for a while now will tell you that
domaining is a full time job. The biggest and best domain investors
spend anywhere from 10 to 15 hours per day. They dedicate themselves
exclusively to what they do. This is what you gotta do when you
strongly believe in something... It takes a lot of time and dedication
and sooner than later you will know whether it was all worth it or not.
Look, you can easily make a profit in the domain name game if you know
what you are doing. You can buy a domain and be able to flip it the
next day for 2x or 10x or even more. What? Are you surprised... You
don't believe me?? You don't know how this is possible?
is possible. Whoever told you that it isn't is probably the one doing
it and ripping benefits from all those opportunities on the down low.
You really need to know who to trust and whos advice to take when it
comes to domaining, but at the end of the day, you can only trust
yourself. Why would another business give another business good advice?
Are they crazy? Haa... So you think the domain industry is different
than any other industry? Not really, it is a business, and as with the
rest... The same challenges apply here as well. If you can't make sense
of things on your own of the domain industry, you may be in the wrong
biz. It is not for everybody and let me tell you, the success to
failure ratio of people "making it" in the domain game is definitely as
high as it's ever been. People are realizing that all of their
investments in worthless .biz or .info or numeric and acronym domains
aren't even worth the reg fee! Consolidation isn't even a possibility
for them... They are taking a loss and moving on. It is a "damn you"
domain industry and thanks a lot for wasting my time and money. Peoples
life's and dreams have been ruined thanks to the industry but you only
have yourself to blame. It is your responsibility and solely the blame
lays on your shoulder.
If you were silly
enough to get "convinced" or maybe another interesting word that I
should use more often, conned, by people and lured into bad
investments, then you seriously need to brush up on how you go about
doing business overall if you are doing so in very risky environment
with very little information on what it is exactly that you are getting
yourself into... If you are only now discovering that it's whats been
happening... Well, that sucks, but the sooner you figure this out the
better it will be in the long run. The sooner you identify the problem
the sooner you can have it fixed and sometimes it is not too late. You
have to be mentally strong as well as highly focused. Doing the domain
thing on the side isn't "cool" anymore and just think about it... Does
it make sense for you?
You may be thinking to
yourself, what the hell do I know about domain valuations or domain
sales... Well, my perspective on things is actually pretty good I'd
like to think and unbiased towards any and all factors involved I think
because I was just an "observer" for the most part of the industry when
it was going through a very interesting transition and a whole lot of
changes during the past four years, some pretty good, some pretty bad,
2005 - 2008. I took myself out of the game and shifted my focus on a
much more stable work environment and industries that I was always very
interested in that had even better opportunities than the domain
industry. Yes there is life beyond domains and many good business
opoortunities as well.. Shocked? But my involvement with domains was
still on a daily basis, just not in the domain buying, selling and
flipping. Being in marketing/advertising and development you deal with
domains a lot. So, I let things settle down and now I am starting to
make sense of things as of late 2008 and into 2009. I have recently
gotten involved in the domain industry on a more consistent basis
because I am seeing quiet a lot of opportunities with domain
acquisitions as well as many others. I have gotten re-energized once
again and I am feeling good about what I am doing.
is always money to be made with domain names.. Always has and always
will continue to be, but you need to be real cautious if you choose to
stay involved in the industry. Why? Because the domain game has changed
forever over the past year and if you have not noticed this then you
probably shouldn't be involved in the first place. The domain
valuations pulled out of thin air don't have much pull or anything else
to em besides declining domain parking revenues and the whole "it has
potential" argument.... It's gotten so old. It's a a pretty weak
combination. There is tens of thousands of good domain names out there
that are worth $xx,xxx and $xxx,xxx and so on but there is millions of
domain names that are worth $-7.00 as well. While some parts of the
domain industry will "cool off" in 2009, others will be more "hot" than
ever before but that is normal. Just as with any other industry, it is
nothing new... Every industry goes through cycles. Finding consistently
and a balance is not so easy. Most parts of the industry will go
through major changes in 2009 and one of those critical changes will be
within domain parking.
So to finish off this
write up, I'd like to end it with some positive stuff... How about some
tips for selling your domains? You would love some... Ok, well --- You
should be directly pitching your keyword domain names to businesses.
That is where the money is. If you have a category killer domain name
or one that is say "top five" within it's niche, you need to go ahead
and approach all of those businesses and notify them that you are
considering selling it. If they are interested, they will reply to you.
You do not need to convince anybody... People know value when they see
it. A good way to find potential businesses (buyers) for your domain
name is to search your root keyword domain name on Google and contact
each and every one of the companies that are advertising.
thing you can do is search for companies in the yellowpages.com ---
There is an even larger database of businesses there... But how do you
go about contacting them? Well, I've tried it all and believe me there
is no one sure way or best way to sell a domain name. I've e-mailed,
mailed, called, faxed and even met up with potential buyers. You should
try each and every option... You never know! The truth is, it is not
easy selling domains but when you do land a sale, it is the best
feeling in the world. Just make sure that you are trying to sell and
pitch the "right" domain name to the "right" businesses or otherwise
you may be just wasting your time as well as theirs.
hand registered targeted keyword domain names for $7 and re-sold them
the next day directly to end users (companies) for lots of money. I've
bought domain names off the forums and flipped them the next day on
another forum for a nice ROI for 5 mins of work. I've bought expired
domain names and put in place lease agreements with companies within a
month of acquiring the domain. The lease fee I collect more than covers
the registration fee within the first month. Yes we are talking about
$x,xxx. I've also re-sold domain names I paid only a few hundred bucks
for $xx,xxx directly to companies. It is all still possible. I continue
to do this into 2009 and in fact, as far as making money goes from
domain sales I am doing better than ever before. Sure, it has to do
with the "experience" and such but just goes to show you that hard work
So, what can you take away from all
of this? Well... Domaining isn't easy. Get that outta your head. It is
a lot of hard work... There isn't any easy money in domaining anymore.
Don't believe the hype. Believe what you see with your own two eyes.
Don't dream up big plans and whatever if you are just starting out. If
you are struggling, in the truest sense of the word, then just stop
domaining --- take a few steps back and really look at everything you
are doing and try to make sense of things. As for all the professional
domainers with thousands and hundreds of thousands of domains... It is
time to get real, too. If you want to make the most money with domain
sales, you need to price them fairly and approach the companies that
may want to use your domain names. The waiting game is a bitch, and at
the end of the day, it may just bite you at the end if you wait too
long. Take advantage of the current momentum domains have and continue
to be proactive as well as start development, and create even more
value. The potential exists.. The opportunities are there, you just
have to reach out and grab them. You got the good domain names? Great.
You already got 50% of the work covered.
may have been the longest write up to date!! I think it took me longer
to fix all the typos I made than it took me to write, because I was
writing so fast.... I'm good at typos:) Not sure all of the information
makes sense as I touched on quiet a few different topics, but straight
down as it came out, raw and unfiltered information and my personal
opinions for you to digest and make sense of. 20/20 --- paragraphs
which was my goal when I sat down and wanted to cover this issues.
Thanks for reading...and good luck !
Written by Mike Cohen of WannaDevelop.com