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analysis State of the Domain Name Business : A Typical Day

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Bob Hawkes

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I wonder if we could discuss whether these numbers are concerning.
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  • The number of aftermarket domain name sales publicly recorded in NameBIo database varies a bit from day to day, but averaged over the past year is about 220 domain name sales per day on .
  • Clearly there are sales that never get reported on NameBio, either because of privacy agreements or because the sale happened on a venue that do not report, or they are below the $100 price cutoff for sales reported by NameBio. Some estimate that 20% of all sales over $100 are NameBio reported, suggesting perhaps 1100 domain name sales (over $100) per day in total over all marketplaces.
  • The total number of domain names for sale is order of magnitude 13 million on Afternic, just over 19 million on Sedo and several million on Undeveloped. Now clearly there are other marketplaces and sales privately, but not all of the above are unique listings, so probably the total number of domain names actively for sale is about 30 million. I accept that really more than that are in some sense for sale, but I think this number reflects those actively listed somewhere.
  • The number of domain names newly hand registered in a typical day is about 8800 (across all extensions).
  • The global number of new businesses that start each day averages roughly 50,000. I obtained this figure from a figure for China, and then scaled by the fraction of the world's population that China represents. Clearly it is just a rough number - maybe it is really 25,000 or maybe 70,00 but it is of the order.
I accept that all of these numbers are uncertain to some degree. Most of these businesses are probably just one or a few people. So what does this mean for us in the industry?
  1. Most businesses seem to be going some other route rather than purchasing or registering a second level domain (maybe Wix or a free domain name or use a Facebook page or blog or no web presence)
  2. There are many more new hand registrations than resales. Maybe indicator of domain investor speculation on names or many businesses choosing the best available name that can be hand registered. Why is that? I think as an industry we need to do better.
  3. If you accept my factor of 5 multiplier NameBio to real total sales over $100, it seems like in any one year 1 domain name in 75 will sell for $100 or more. That is similar but a bit better than the 1% many of us use, however maybe the 30 million for sale is too low.
This is already long so won't add more here, but I do have some opinions on what it means for us as an industry, and also links and notes for all the estimates used, in my blog post on it from this morning.

https://agreatnameforyou.blogspot.com/2018/08/some-numbers-and-reflections.html

Thanks for reading (or not) :xf.smile:

Bob the Analyst (Bob the Builder was already taken :xf.wink: )

ps One more useful number (not yet in blog post): Wix passed 100 million active users in June of this year.
 
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The views expressed on this page by users and staff are their own, not those of NamePros.
Do note that many domains listed in one marketplace such as Afternic are also listed elsewhere. However, not all aftermarket domains are listed in marketplaces. SEDO sales for me have dropped considerably since 2012 and most buyers there are other investors so I moved most of my domains off of SEDO - just left about 75 which seem to get more offer page views. Afternic recently implemented a Beta listing of Godaddy .COM & .Net domains with easy transfer across their partners so I signed up. However, they don't really encourage listing of .TV domains so I only listed some of the better ones. I recently signed up with Undeveloped but my initial impression is the results are going to be similar to SEDO. If you have the landers using Undeveloped nameservers you make some sales. However, Undeveloped might still become an escrow option where Escrow.com becomes difficult. As of a month ago I was missing dozens of my own domains from my EFTY listings as many .TV domains were not automatically imported (and some .COM as well). I did a review so most can now be found via a keyword search in my EFTY marketplace though I do not have many listed in the category section because so many are Spanish.

Regarding sales reporting it seems Godaddy Auctions sales are showing but perhaps Godaddy Premium Listings sales are not. Some Godaddy Premium Listings sales of mine from recent years are NOT in Namebio results.
 
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Tons of Afternic and Sedo listings are obsolete... the domains which were dropped and are available but listed there.
 
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Would like to get some discussion going on why so many business owners seem to choose a route other than purchasing a premium domain name on the reseller networks. Here are a couple of reasons (slightly refined here) that I offered as possibilities on my blog. Would love to hear your thoughts!
  1. They are not convinced of the value of a better domain name. I think more work needs to be done, using research evidence, educating that a premium domain name yields significant economic benefits to the company or organization. This information needs to find its way into schools of business at universities and colleges, and into the minds of the gurus who write books and are keynote speakers. A stronger scholarly trend in the domain industry will help with coverage of domain names become a more important part of university and college curricula.

  2. It is technically much easier to use a service like Wix rather than finding and purchasing a domain name, a hosting service, developing a website, etc. Ultimately the 100 million plus that are choosing a service like Wix are in many ways our major competition. We need to clearly differentiate how owning a domain name is better than using a subdomain on a service that you do not own. I have used Wix for several sites on organizations I was helping (not for my own site of course!) and it is slick and easy. The situation for purchasing and using premium domain names is easier when they can purchase the domain name via a company that will also provide web hosting, and I think ultimately marketplaces that are one-stop sites where they can buy the premium domain name and set up a cost-effective, quality web hosting service with a minimum of hassle, will ultimately win market share in the reseller business.
I think ultimately the most important task for all of us is to grow the entire domain market, and to increase acceptance of looking for better domain names at premium prices.
 
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I have stated this previously but if you look at what real companies spend on all sorts of normal operating expenditures - IT costs, legal expenses, business travel, marketing, exec bonuses, office rents, etc, $1500-$5000 should be no big deal for anything other than a small family-owned business. The reality though is that I have seen companies with annual legal or IT spending which if it were a domain sale would be one of the highest sales of the year hand regging crap domains that looked like a newbie came up with them. The general public does not view domains as internet real estate. Most domain sales are not in DNJ reports because they are low $xxx.
 
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If we estimate that there are 5MM domains with average sale chance somewhere in 0.5% to 1% in any given year and about 3MM of those are a) on the market; b) reasonably priced, then sales from those would be 15000 to 30000 names per year (end user) or about 40 to 80 per day.

The next 30MM names probably have around 20MM on market and fairly priced and would have only 0.2% chance of sale, giving another 40000 sales a year or about 110 sales a day.

So yes, for the whole planet we have about 150 to 190 end user sales a day. NB is probably recording only about 20-30 of those (the rest there are reseller type).
 
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I am not sure how to gauge this other than via sampling reported sales but I believe many reported sales are merely expired auction results (Godaddy Auction or Namejet for example). We have also discussed the many registry sales in new extensions which do not represent what a typical domain investor would experience. An audit of my personal sales over the last 12 years indicated that fewer than one in five sales was really being used for a business. Most sales were to other investors or unmotivated end users and many had been subsequently dropped and then picked up by Huge Domains or no longer resolved.

However, if we are trying to gauge the end user market, we should exclude registry to domain investor, domain investor to domain investor and expired auction results.
 
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I can't remember where I saw the first below recently (maybe an Andrew DNW podcast?) but someone related the price of a premium domain name to a 30 second SuperBowl ad. I think this model but at lower values as well, if attractively presented and on social media/conferences/etc might be effective in starting to change business thinking.

  1. $100,000 domain name is equal in cost to (fill in some kind of tv ad)
  2. $25,000 domain cost equivalent to (x newspaper ads)
  3. $10,000 domain cost is equivalent to etc.
  4. $5000 domain name equivalent to 1/2 page one time ad in city newspaper (or whatever it is)
  5. $1000 domain cost equals 4 small colour ads in community free newspaper
  6. $250 domain name equals one set of single page fliers to 100 homes (or whatever it really is)

Don't quote the above - these are just off top of head (well 4 is about right for the nonprofit newspaper I volunteer at),I have not tried to find any of the actual costs. I am hoping someone has already done this. Has someone already done this in a nice authoritative, attractively presented form? If so, I would like to tweet it!
 
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I had one assignment where one division of the company spent more money weekly on Googlle Adwords than any domain sale I have made in my domaining career. How effective that spend was?
 
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It is technically much easier to use a service like Wix rather than finding and purchasing a domain name, a hosting service, developing a website, etc. Ultimately the 100 million plus that are choosing a service like Wix are in many ways our major competition.
Just to expand on this point, Wix runs TV commercials using A-list actors..not many domainers can compete with that kind exposure.

And to your numbers - and great analysis btw -, but considering first posts from @garptrader and @Jurgen Wolf (obsoletes and multiple-venues-same-name), how would this change the overall unique domains for sale..would it be a significant difference?
 
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Just to expand on this point, Wix runs TV commercials using A-list actors..not many domainers can compete with that kind exposure.

And to your numbers - and great analysis btw -, but considering first posts from @garptrader and @Jurgen Wolf (obsoletes and multiple-venues-same-name), how would this change the overall unique domains for sale..would it be a significant difference?

Thank you for your constructive comments @HotKey, and thanks to @garptrader and @Jurgen Wolf for the insights.

When I made the, admittedly very crude, estimate of maybe 30 million actively for sale I took into account (and stated in assumptions with the original full post on my blog) both that there were many other venues for sales and that not all of the postings on the big ones were unique. Now I did not explicitly take into account the point that a significant number are still listed but not really still available. That might mean that the 30 million is high by a bit, although the other factors tend to push it higher and this factor lower, so it might not be much different. If we ever get a DAN style blockchain listing the status of all domain names, it would make this easier.

So in short, I think main conclusions are valid, but the various numbers like the 30 million actively for sale is possibly off, high or low, by maybe 25%? The factor of how many really sell is I think more uncertain and more important. The number of sales missed may mean we should multiply by more than 10, but I suspect the value of sales not so much, maybe even less than 5 times NameBio reported. I suspect a large number of sub $100 sales on venues like GoDaddy, Namecheap and NameSilo Marketplaces, etc, but not sure how much total value. Would be interesting if NameBio reported the sub $100 aggregate figure for those they are tracking but not reporting, as a start to try to pin this down.
 
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As mentioned in my OP, I did set out 9 opinions about what I think contributes to the mismatch between apparent business demand numbers and how few buy aftermarket domain names even though the number available is significant. Here is my third opinion (somewhat edited and expanded from my blog post). It deals with end user trust of the domain name community. What do people think, is trust an issue and what can we do to improve it? There are some who view all domain investors negatively. Would a more formal trade organization with ethical standards and watchdog help, or is it enough and best to simply make always using third party escrow so that end users don't need to deal with domain investors. Just wondering out loud here.
  • They would like a better name, and are even willing to pay the price for one, but they have trust issues with the domain resale business. The publicized cases of stolen names have hurt our entire industry, as have, to be honest, impolite rhetoric from a tiny minority in the domain name industry. Now with the GDPR caused Whois changes it is even harder to confirm genuine ownership of a domain name.
  • Many domain sellers hide their real identity, possibly for good reasons. However, particularly in cases where a negotiation process is involved, this seems counter productive. I wonder if it hurts the entire domain resale business when some hide their identity since it sort of tars all sellers, even those who do not. As an extreme analogy, would you buy a car from a salesman wearing a mask who would only tell you his or her nickname, and who would not give you any idea of the car price to start with? Especially if you had just read about someone in your town buying a used car that ended up being stolen? Read this from Undeveloped regarding the importance of real identity in domain name extensions. What do you think about using true identity or nickname on a sales site?
  • I think as in many things in life, the actual statistics of unscrupulous or dishonest situations are tiny in the domain industry. But just one is a negative influence if publicized.
 
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I believe that generally speaking website developers and other online marketing professionals have a negative view towards domain investors and their view probably affects the domain selection decision. Their advice might be use Google AdWords where at least you can track results rather than pay for an aftermarket domain where it is difficult to determine how that branding decision influences sales. Or maybe they go with a social media account rather than having a website. Or maybe the developer recommends a newbie-quality handreg (they think it sounds cool though a more experienced domain investor may frown at that same namename). Or they refuse to spend more than low $XXX on a domain while they charge 100 times that for their services.
 
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As most know, I invest mainly in and see a future for quality ngTLDs, especially single word with a good match to the extension. However, I think that mistakes in the ngTLD introductions (too many all at once, silly extensions, volatility in pricing, premium hold outs and renewals in some, in adequate control by some registries, particularly in the early years, the wrong sort of promotion, etc.) have to some degree hurt the entire domain reseller market. Anyway, here are some of my thoughts on that, again taken from the opinion part of my blog post.
  1. The plethora of new extensions has caused confusion for end users. Some of these extensions, and how they were 'promoted' with initial discounts, has cheapened and weakened the entire industry, as have some of the extension choices. Like seriously, why were singular and plural extensions approved, or an extension like .sucks? Who thought it was a good idea to approve so many extensions all at once? (These are intended as rhetorical questions for emphasis; I do know who, I just disagree with the decisions!)

  2. The variable renewal rates on some premium new extension names have scared some away from domain names in general. I think that the industry would be stronger if a universally enforced policy required all extensions (legacy, country code and new) to commit to suggested retail price renewal rates for a 5 year period. I am not saying fixed at current levels, but price increases should be known - e.g., 2% per year, or whatever. I am not arguing for uniformity, and registrars should be able to sell for less, but there should be a maximum renewal rate for years 2-5 for each extension that the buyer knows. Also, premium renewals should be outlawed. Period. I am glad that the .icu extension, while having premium initial prices, has committed to standard renewal rates for all.

  3. Volatility in value of domain names, in particular of .mobi, have caused some to fear a domain name they paid a lot for will go out of vogue and become worthless. I think the persistence of .com owes much to this one factor. Businesses feel more confident that if they pay a large price today, it will have at least much of that in two years time. Of course as the NameBio daily report shows, even many .com prices do drop by 90% or more on resale. For mobi, the highest sale price over the past 5 years (on NameBio) has been $2214 (it is $598 2018 YTD and $491 last year) while the average sales price in mobi all time is $4321! I think the rapid rise and fall of mobi prices, even though in actual websites it still persists some what, has hurt the entire resale market, and especially the market for ngTLDs.
I welcome discussion on these, and other aspects, of the health of the domain resale market, and why so many startup owners are choosing to avoid it.
 
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There has always been very little user demand for domains. Most domains have been sold between domainers. Now, you have an overcrowded marketplace with tons of overpriced names that domainers are finding it hard to pass off onto end-users.
 
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I'd rather think the confusion resulting from the plethora of new extensions has lead end users to stick with what they know: .com and their ccTLD. Plus, most are not really paying attention. And they don't visit godaddy on a daily basis, where they would get a chance to be exposed to 500+ random strings (which alone should frighten them).

So I think the confusion is within the domain industry, normal people are not researching and thinking about domain stuff all day long like we do. They just carry on with their business.

Judging by reported sales, new extensions have not crashed the market.
But domain names have long been cheapened/commoditized items, the registrars even offer coupons and reduced prices for the first year. So people are used to paying very little money for domain names. On the other hand, they are also exposed to suggestions that include aftermarket domains, sold at a premium. Still, aftermarket sales are the exception and not the norm.

As an end user you have to be motivated to buy a domain name, because the sales process isn't very smooth and is registrar-dependent. Most people are not even familiar with a domain transfer. Dealing with that kind of stuff may be daunting to a non-technical person.
On the other hand, almost everybody has bought a car, or a house, or some other asset, or will buy one at some point in life. The process is clear, signposted and well-documented. Now compare that to the Wild West of the domain name industry.
 
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I think that @Kate has eloquently expressed a direction we in the domain industry need to move.

As an end user you have to be motivated to buy a domain name, because the sales process isn't very smooth and is registrar-dependent. Most people are not even familiar with a domain transfer. Dealing with that kind of stuff may be daunting to a non-technical person.

On the other hand, almost everybody has bought a car, or a house, or some other asset, or will buy one at some point in life. The process is clear, signposted and well-documented. Now compare that to the Wild West of the domain name industry.

So how can we make the process more like the car or house purchase process? Some of the following come to mind to me....
  • More "one stop" clarity re how to access what is available. Something like MLS in property or AutoTrader in cars. I realize we have Sedo MLS and the Afternic large network that go some distance toward this. It would be so great if there was a single site that you could enter any keyword and for each domain name would list all of the places it could be bought. Is something like DAN the answer, not sure.
  • More attractive presentation of domain names. When I search for a house or car, the sales people are only too happy to give me glossy brochures showing specs, taxes, etc. I think most of us in domain community throw up the name on multiple sites, and not much more. I think we miss potential purchasers when we do this. Some do a great job of showing an attractive potential logo, or suggesting a few applications, but I think we can do much more. Just as auctions on NPs require certain things, any domain listed for sale should also have some standard items like at least registrar, expiry date and registrar, cost of renewal, etc. We know how to find this information, but a business owner who ever only wants to buy a single domain does not.
  • Standards re those who sell domain names. I do realize there are downsides of this, but when we shop for a financial advisor, real estate professional etc. we look to see that they are certified and are part of an organization that has e.g. a statement of ethical standards, etc. It may depend on how the domain name is being sold what is required here, but certainly those who sell directly (not through services like Undeveloped that handle the actual transfer). Those who are abusive with potential clients, or unprofessional, should lose the right to be accredited, imho.
  • Evaluation of Worth. This is the most difficult, but I think an important, part. When I am going to buy a house I can see what the house sold previously for, what nearby properties have sold for, hire a an independent property assessor to look at it, etc. Now to some degree we partly have these, but certainly they are far from complete.
 
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Let me offer another opinion, and try to keep this, in my mind very important, topic alive on NamePros. Ultimately the health of our community going forward depends on getting more users into aftermarket.

I know there are many on NPs who hate any use of automated appraisals, but I feel that appraisals, whether automated, human or hybrid, are necessary to facilitate acceptance of after market domain name purchases by businesses and organizations. If you are proposing a major expenditure (and major may just be hundreds for a tiny nonprofit or three person startup) for a domain name in an organization with a board of directors, to approve the purchase they will want some indication that the purchase is at fair market value, and some sort of appraisal is needed. I am not as critical as many of GoDaddy GoValue and Estibot, and do consult both regularly if only to be informed what potential purchasers will see, but I feel that they could be so much better. If a huge AI player stepped in, as either partner or third player, I have no doubt that the evaluations could be hugely more reliable. I like the approach of using extension specific, or niche specific appraisals, and also of a hybrid that used both quantitative/automated and qualitative scale assignment by humans, like the NPs user offering .app evaluations has done. Ultimately we need the process of appraisal of value being separated from those who could profit from high valuations. I think that GoValue and Estibot should move toward including an uncertainty along with a valuation - ie this domain is worth between $200 and $2400. Yes, a huge range, in a sense maybe not helpful, but in another sense it will help calm those not domain knowledgeable that the proposed purchase is at least in the order of magnitude of what someone not party to the transaction believes is reasonable. Potential end users need to be able to go to an inexpensive and trusted source. That does not mean that to me it is worth only that, or that much, it is worth what it is worth to that business or organization.
 
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after reading the title and then some of the opinions....

I don't get the point, or got loss in what the point was.

are to trying to time capture > volume, supply and demand, on a typical day
and then speculate the future, based on averages? or what -

clarify, pulleze :)

imo….
 
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I know there are many on NPs who hate any use of automated appraisals, but I feel that appraisals, whether automated, human or hybrid, are necessary to facilitate acceptance of after market domain name purchases by businesses and organizations.
But do they really move the needle ? I don't believe that end users are paying attention to them. Only once I had to deal with an end user who quoted two appraisals to bring down the asking price. He was then using the appraisals as leverage against us.

If automated appraisals were effective then we should be seeing a lot more domain sales. I am talking about the automated ones because they are the ones that - well - can be automated and do scale.

It's hard to calculate ROI on a domain name purchase from the POV of an end user. It's very often for branding reasons but how do you put a price on it ? I'm not sure the real problem is determining the 'fair' price. Maybe it is more about assessing the positive fallout from a domain purchase.
For example you know that upgrading your domain name will boost image and credibility but you can't predict the indirect gain in sales volume. If you could, it would be much easier to justify the cost.

In larger companies, purchasing a domain name, especially when it's going to be expensive, is not going to be a one-man decision. Instead, the whole board may have to authorize the purchase which means all those people have to understand the value and share the same vision.
 
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Hi @biggie - sorry to be confusing (I am told I am that way a lot :xf.frown:)

I just was trying to show that using VERY ROUGH numbers it seems way more businesses start than domain names sell in a period of time (I adjusted all to a day, but it could be a week or year and of course same result relatively).

Also, many more hand registered than resales.

So to me that means that we have a product (better domain names) that many are passing up and either going the route of a site without a second level domain, or not a website at all. Or if they do get a name, they are just getting the best hand registered one.

So why is that? And what can we do about it?

Hopefully clearer .....but it is me, so maybe not! :xf.sick:

My probably not clearer, complete post, on the topic is on my blog here in case interested...

https://agreatnameforyou.blogspot.com/2018/08/some-numbers-and-reflections.html
 
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to me, that's something that you can't control on a global basis

only within individual contacts, negotiations can you enlighten, and then... it's only receptive when inquired about.

fb and other sm platforms take some usage from domains, simply because of the ease and lack of tech knowledge, one may think is required to set up a website, with a domain

the choices and options are greater for outsiders, than in the past

so i just take what i can get, when they step inside

already sold 1% for the year

:)

imo…...
 
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Yes there is a serious disconnect between what end users spend on all kinds of ordinary business expenses without questioning the cost as excessive vs what they are typically willing to spend on a domain name (reg fee or a free social media profile). It is not difficult to find potential buyers for a domain. It is difficult however to find actual buyers. Thus the low turnover of most portfolios.

I suppose most decision makers are domain newbies and do not understand how a domain can help potential customers remember how to find them, how a domain can help with click through rate and drive sales. Traditional corporate finance looks at a project budget or return on investment. If domain has no type-in traffic and does not help with search ranking then it is more difficult to quantify the benefit. Then again compare the cost of a typical domain against most other advertising methods. How many people does a method reach per dollar of cost? In downtown West Palm Beach I have seen companies pay to have a car splattered with banners and they leave the car parked there. Perhaps the car is leased and maybe they periodically move it to various locations. But what is the annual cost of doing that and how many targeted buyers are you really going to reach? How much incremental sales revenue will result? Yes, a domain may have to be combined with other advertising methods - television or radio or print to gain mindshare.
 
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Yes, a domain may have to be combined with other advertising methods - television or radio or print to gain mindshare.
Gaining mindshare..
And perhaps therein lies the challenge when trying to compare domains to homes or cars or jobs. Almost anyone can quantify the value of those, whereas a domain's value is not as readily understood by an end user, given the plethora of cheap options or alternatives. Add or change a letter here, a number there, even different extensions now, and viola they have a domain on which to host their site on. Domains are not so much a necessity than just a tool. Keeping in mind too, they are a rental tool at that. Domains are never truly owned. Imagine trying to develop process/standards for selling a home you don't really own.

Investors will develop their own way to quantify or display the value of their domains, and all the tools are already available in order to do so. To implement some sort of standard on this globally could and would limit the potential returns on extraordinary names, subject to them being cheapened or held to account to some flimsy appraisal.
 
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Tons of Afternic and Sedo listings are obsolete... the domains which were dropped and are available but listed there.

Why haven't they implemented a way to see when the domain expires? I could program that.
 
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