Get your catchy domain at it.com
Dynadot
On NamePros, and on social media, a number of investors have mentioned that the last month or so has seen a significant downturn in the domain name aftermarket, both in terms of retail sales and in offers or inquiries.

For example, long-term investor @elmoney started the discussion Recession of Sales and Inquiries.

In this article, I report on investor polls, wholesale and retail sales data, and extract guidance about how investors might respond.

What Do People Think?

I posted a poll asking Are Things Slower In The Aftermarket?, obtaining the results shown below.

Image-NP-Poll-Results.png

About 54% of NamePros respondents reported a sharp decline in sales and offers during the past month, although nearly 14% saw an increase over the same period.

I posed a similar question on Twitter, obtaining the results shown below.

IMAGE-Twitter-Poll.png

In the Twitter poll, while slightly more than half saw a decline, only 32% would characterize it as a sharp decline.

What Does The Data Say?

While it is significant that so many are seeing a decline, I wanted to back it up with actual sales data. On May 14, 2022, I used NameBio to look at sales numbers and volumes for the preceding week, month, 3-month period, 2022 so far, and 2021.

Rather than look at all data, I only considered certain sales venues according to whether they are predominantly wholesale or retail.

For venues representative of mainly retail sales, I used sales reported from Sedo, BuyDomains, DomainMarket and individual private sellers. While a few investor acquisitions happen at these venues, most will be retail sales.

For wholesale, I included ParkIO, Sav, GoDaddy auctions, NameJet, DropCatch and Dynadot. While the division is not perfect, most sales at these venues are probably investor acquisitions.

Keep in mind that the numbers and volumes reported are by no means the entire retail and wholesale markets, but rather a representative sample based on certain sales venues.

The results for all extensions are shown on the left below. All data has been converted to weekly numbers.
Both-Table-MayDrop.png

Compared to 2021 data, retail sales numbers are off 6.1% during the past 3 months, and off 16.1% during the past month.

Average retail prices have dropped, however, so the sales dollar volumes have declined more significantly. The past 3 months are down 32.4% in retail dollar volume compared to 2021, while over the last month the retail volume is down 36.5%.

The very low dollar volume in the last week is mainly due to a low average price, rather than a low number of retail sales. It is probably simply a statistical fluctuation, since one or two high-value sales can strongly impact a weekly figure.

The picture is very different for wholesale transactions. Both numbers and dollar volumes are up compared to 2021. Over the past month wholesale sales are up 7.3% by number, and up 16.8% by dollar volume, due to slowly but steadily increasing average prices. There is no indication that investors have slowed their acquisition rate yet.

It is important to keep in mind that these are for only a small part of the total retail market. The actual market may be down more, or less. Also, 2021 was a particularly good year for domain name sales, so some decrease from those highs is perhaps to be expected.

The .com extension dominates the market, so I also looked at results for that extension only, with results shown on the right above.

The picture is not much different, although the dollar volume decrease is a bit more pronounced for .com. Over the past month .com retail sales numbers are down 16.4% compared to 2021, while retail dollar volume is down 44.2%.

On the wholesale side, the rate of .com acquisitions continues to grow slowly, as do average prices paid. As a result the wholesale .com dollar volume is up 13.8% over the past month compared to 2021, although the number of sales is up just 2.8%.

Possible Reasons For Downturn

While many sectors of the economy struggled over the last two years, the domain name aftermarket has seen excellent returns. Existing businesses saw the need for a stronger digital footprint, and many digital-only startups emerged as well. It is only natural that the strong growth rate could not extend forever, and some slowing of the elevated domain name sales of the last two years was to be expected.

But there is more to the story than that. The war shows no signs of resolution, and that has brought significant economic uncertainty and disruption and fragmentation of the global economy.

The return to near pre-pandemic commerce and social activity has lessened the need for digital solutions, and yet the pandemic continues to threaten a smooth economic and health recovery.

The stock markets, particularly technology stocks, are down well over 20%, and that has created uncertainty for both individuals and businesses.

Many who invest in startups and domain names also invest in cryptocurrencies and NFTs, both of which have seen even sharper downturns. The coupling of the markets may account for some of the domain market downturn. Certainly there are anecdotal reports of sales falling through due to significant drops in cryptocurrency valuations.

Inflation is at the highest level in decades, and businesses wary of increasing costs may be less likely to make branding upgrades at this time. Perhaps even more important for the domain market, there may be hesitation among potential startup owners as a result of both inflation and interest rates.

The rise of decentralized name systems pose some threat to the centrally regulated ICANN and country-code traditional naming systems. Decentralized names have suffered a far greater fall during the last month. While that might be good for centralized domain names, it is possible that they were instead dragged down by the decentralized volatility.

No one knows how long most of these factors will impact the domain market. It is quite possible that another era of strong domain name sales is just around the corner, but it is also possible that the decline will be lengthy and deep.

Nevertheless, it is best to be prudent, and we discuss some specific steps in the next section.

How To Respond

Especially during tough economic times, it is critical to prioritize: protect your most valuable assets. This might be a good time to go through your entire portfolio and decide which names are in your ‘definitely keep’ group.

If you have made a significant sale lately, this is a good time to retain some cash for future needs and to renew in advance your highest quality domain names.

Those who are in a solid position financially may find good opportunities for acquisitions if the wholesale market weakens, not that the wholesale data yet shows that happening.

It is important to follow business trends. Some of the niches that were strong in 2020 and 2021 may no longer be the right places to invest, and some hard-hit sectors may see a bounce back as the economy emerges from the pandemic.

The best domain names will always find buyers, so in uncertain times it is important to stress quality.

Clearly the best path forward will depend on your own individual circumstances.

Sound Advice From Twiki

@twiki is a NamePros member who sells domains frequently, and also generously contributes to the NamePros community through detailed commentaries. This week he speculated on the downturn and how to respond.

First, he commented on how quickly the downward trend had emerged:
A month ago in a post I was saying I expect a good year in domain sales. Then April came and .... poof! I was wrong – the downtrend came suddenly and much sooner than I expected.

He follows that with advice on how to respond. Here are some key points, but read his full post, and the comments by others, to place the ideas in context.

At lower sell-through rates and weaker prices, as he points out, the math may not be profitable without changes.
The problem we have is, the math will not work out anymore for many domainers. The solution for this? Get better names, even if pricier. Improve the overall quality of your domains.

You also want to reduce the bill for renewals, and that means:
Don’t renew your questionables. Those names which you aren't 100% sure will be sold someday. If they don't sell before renewal, let them drop.

While you may want to continue to acquire names, be very selective.
Reduce your buying. This is the worst time to hoard domains. Cut from the list all those that are questionable and stick only to the top ones. Same applies to what you renew - only renew your top ones. The less junk you have, the better off you will be.

It is natural to try to get sales flowing again, and perhaps see price reductions as a way to achieve that. @twiki argues against thinking that way.
Don’t steeply reduce prices. And don't panic. If you decrease your prices right now, you will likely lose overall. The market is used with these price levels and the problem is not one of affordability, but one of demand.

Other points he makes are to watch the business and domain markets carefully, and to respond accordingly. Read his full post for supporting arguments and additional points.

Share Your Views

What do you think?
  1. Are we in for an extended period of domain market downturn?
  2. What sectors or niches do you think will weather the storm best?
  3. Have you personally seen a recent downturn?
  4. What steps do you plan to personally take to address the situation?


Thanks to all who voted or commented in the polls. Thanks also to NameBio for a superb interface that makes analyses such as the one reported here easy to carry out. Special thanks to @twiki for sharing valuable reflections about the downturn.
 
Last edited:
The views expressed on this page by users and staff are their own, not those of NamePros.

alcy

Top Contributor
Impact
34,424
Domains aren't going anywhere. Just because people got emails they didn't stop having home addresses. None of the above can substitute domains.

Domains also enable autonomy and independent platform to people. While with apps, social media etc you are at mercy of service providers.

come on..typing an address... to get somewhere on net.. virtually.. do u really think this is.the future... for some smooth fast nonstop virtual metaverse experience... sales or no sales now.. personally i see no future for domains
... it just won't be tomorrow... but it will be... in tech nothing really lasts forever..how else could we have progress and evolution...
 
Last edited:
come on..typing an address... to get somewhere on net.. virtually.. do u really think this is.the future... for some smooth fast nonstop virtual metaverse experience... sales or no sales now.. personally i see no future for domains
... it just won't be tomorrow... but it will be... in tech nothing really lasts forever..how else could we have progress and evolution...
Yeah, I can't wait until I need special software and/or hardware so I can use the metaverse to find a plumber. It is really going to make it a far better, and totally necessary, experience.

Unless something is easy to use, and improves people's lives in some meaningful way it is not likely to reach critical mass any time soon.

Sure on a long enough time scale domains might be replaced, but so will humans.

Ironically the "decentralization" that is supposed to be so great is neither actually "decentralized" or better.
We totally need 15+ different .NFT extensions on every shitcoin blockchain. What an improvement.

Brad
 
Last edited:

Recons.Com

Top Contributor
Impact
16,231
come on..typing an address... to get somewhere on net.. virtually.. do u really think this is.the future... for some smooth fast nonstop virtual metaverse experience... sales or no sales now.. personally i see no future for domains
... it just won't be tomorrow... but it will be... in tech nothing really lasts forever..how else could we have progress and evolution...

I second @bmugford on this (as I probably do with almost everything).

Just like not everyone rushed to get VR devices and replace every other experience with it, the absolute majority of people will ignore metaverse for the most of it.

When 3D TVs came out, it seemed the further progress will be around that until eventually every TV is like that. We got one set too. It came with glasses that required batteries, Bluetooth pairing etc. It also required special programming that supported 3D. Fast forward couple of years and suddenly top line TVs are back to 2D and the you pay premium for the screen size, extra pixels, and thinness+looks. Basically, the things that don't require anything extra from the consumers.

Early adopters are by definition the most pro-active passionate segment. But they are tiny % of population. They might keep being active in metaverse unless they are bored too or something else coming along or the cool-factor is gone. For the majority of businesses, the fact that the total audience there is couple % of population will mean that they will not notice the fad.
 

alcy

Top Contributor
Impact
34,424
I second @bmugford on this (as I probably do with almost everything).

Just like not everyone rushed to get VR devices and replace every other experience with it, the absolute majority of people will ignore metaverse for the most of it.

When 3D TVs came out, it seemed the further progress will be around that until eventually every TV is like that. We got one set too. It came with glasses that required batteries, Bluetooth pairing etc. It also required special programming that supported 3D. Fast forward couple of years and suddenly top line TVs are back to 2D and the you pay premium for the screen size, extra pixels, and thinness+looks. Basically, the things that don't require anything extra from the consumers.

Early adopters are by definition the most pro-active passionate segment. But they are tiny % of population. They might keep being active in metaverse unless they are bored too or something else coming along or the cool-factor is gone. For the majority of businesses, the fact that the total audience there is couple % of population will mean that they will not notice the fad.

like most I don't like fb.owner but people like him dont pump billions into things with no future. they got plugs and inside info we cannot even imagine. that's only fb.. there are billions more going into mv from others too.

metaverse will be perfect for the brainwashed masses who are already glued to.games..TVs.. movies..social media
... it's not u or me.. but with great sadness I say its clearly most people today. brainwashing and ignorance is the only true evil around..
 

alcy

Top Contributor
Impact
34,424
Yeah, I can't wait until I need special software and/or hardware so I can use the metaverse to find a plumber. It is really going to make it a far better, and totally necessary, experience.

Unless something is easy to use, and improves people's lives in some meaningful way it is not likely to reach critical mass any time soon.

Sure on a long enough time scale domains might be replaced, but so will humans.

Ironically the "decentralization" that is supposed to be so great is neither actually "decentralized" or better.
We totally need 15+ different .NFT extensions on every shitcoin blockchain. What an improvement.

Brad

see that's exactly where u wrong.
people do not need or want useful or needed experiences.. they just want a dumb escape from reality. it's what they want when they sit to watch TV.. play games.. watch movie..because reality is too boring.to most.. too heavy.. too real. I feel sad to say it but that doesn't
make it less true.. for most people.. this is why metaverse will work..will be a hit.. people already buying nfts..using crypto... buying virtual land.. and chasing pokemons by millons.. it's all just an experiment and
we the rats.
 
Last edited:

alcy

Top Contributor
Impact
34,424
You will be able to go the shop without moving out from your house. But none told you that you will unable to go out of your home at any cost. Otherwise robot dogs will catch you. What? Fantasy? I don't think so... Shanghai.

My portfolio is not crypto/meta based, and I am glad for that.

yea I mean china is perfect example of brainwash masses.. a total experiment.. people dont even see the patterns and think it's all random.. pandemic... limiting freedom.. inflation..Ukraine.. food shortages... etc.. all this has planning and endgame goal written all over...
 

Mkt Sales Leads

Established Member
Impact
641
see that's exactly where u wrong.
people do not need or want useful or needed experiences.. they just want a dumb escape from reality. it's what they want when they sit to watch TV.. play games.. watch movie..because reality is too boring.to most.. too heavy.. too real. I feel sad to say it but that doesn't
make it less true.. for most people.. this is why metaverse will work..will be a hit.. people already buying nfts..using crypto... buying virtual land.. and chasing pokemons by millons.. it's all just an experiment and
we the rats.
True. It seems more and more of humanity wish to escape life as it is and experience unending pleasures.

That's where names like themeparkmv.com and mvfunpark.com (both available for reg) might come in. It wouldn't be a surprise if one of the big resort operators like Disney / Universal enter into this niche.
 

clarkemarketing

Top Contributor
Impact
2,117
Given the current inflationary environment, I would rather own quality domains over almost any other asset class. My guess is auction prices will barely dip for good names because many deep pocketed investors are hoping to snag deals. I would love to buy some 3L .com this year, but doubt prices will go down. This being said, people who own crap will likely struggle over the next year or two. If you own 4L .com, 2 word .com, 1 word .net .org .co .io .xyz, and other good names you'll be fine, if you own most ntlds and other junk domains I think you're in for a rough ride.
 
Last edited:

alcy

Top Contributor
Impact
34,424
Given the current inflationary environment, I would rather own quality domains over almost any other asset class. My guess is auction prices will barely dip for good names because many deep pocketed investors are hoping to snag deals. I would love to buy some 3L .com this year, but doubt prices will go down. This being said, people who own crap will likely struggle over the next year or two. If you own 4L .com, 2 word .com, 1 word .net .org .co .io .xyz, and other good names you'll be fine, if you own most ntlds and other junk domains I think you're in for a rough ride.

ratio of names u mention... to millions of domainers
... proves point of this thread that market is downturn and most will quit eventually.
 

kite26

Fearless Bird
Impact
6,148
Hard times, but I strongly believe that domain names will remain as great asset. Even cryptos fail, or web 3.0 & metaverse, internet will be here. Online business and other activities will stay online.
Think, we had life before cryptos. Why not after?
And the most important: This downturn doesn't mean that names are useless, but the opposite. People want to start new things, but this CURRENT period it's harder than other times.

The future for domain names is more bright than ever!
 

Recons.Com

Top Contributor
Impact
16,231
Hard times, but I strongly believe that domain names will remain as great asset. Even cryptos fail, or web 3.0 & metaverse, internet will be here. Online business and other activities will stay online.
Think, we had life before cryptos. Why not after?
And the most important: This downturn doesn't mean that names are useless, but the opposite. People want to start new things, but this CURRENT period it's harder than other times.

The future for domain names is more bright than ever!

I agree. Domain market turned out to be even the pandemic proof and might have even benefitted from it long term (many businesses realized how important contactless aspect of being online can be).

2021 was misleading for many, because it got some deferred business from 2020 and also there were optimistic expectations by population that affected the sales. So 2021 might have created an impression for many that mediocre quality portfolio can be sustainable. Now 2022 will clean a lot of that.
 
We can stop debating this. Look at the sales completed section, it has gone pretty much dead. Things will be better one day, but for now, this is what we are dealing with like many other industries.
My inquiries and sales have been fine over the last several months. Results may vary.

Brad
 
Top down