information Cold Winds in the Global Domain Industry

[Bob Hawkes]

Danny Aerts has written a reflective, if sobering and somewhat pessimistic, view of what has happened in the domain industry and the prospects for the future. He views the market as mature, and over-sold both in .com and in too many new TLDs, with too much speculation without a solid base of reasonable expectations for profit.

He briefly outlines what drove growth in the past, and doesn't see similar growth happening again soon. Like many, he feels that there are too many new gTLDs, too many registrars, too many middle companies, and too many domain names have been sold. While Chinese domain name purchases continue to prop up the market to some degree, he does not see much growth in that. He concludes "much will decline in the future."

While much of the latter part of the post deals with ICANN specifically, there is lots to consider from the Swedish expert with a long record of domain industry service.

Anyway, it is worthwhile giving it a complete read (a summary was posted a few places, but it is worthwhile to read the original). I can't (as new member) put the link here, but if you Google the title in the heading you should come up with the article.

Bob

ps There is a certain irony in that the original article uses a picture of the Hopewell Rocks (major tourism location in Canada) in winter to illustrate the winter headwinds, when I have tried unsuccessfully to sell domain name Hopewell.rocks, now down to just $10 as it is a few weeks from expiry!

 

[Al Cohol]

Yeah I agree with most of the article. Realistically when value is higher wholesale over retail, there is a problem with a particular industry. Domain investing may not be there quite yet but the margin seemingly slims every day.

 

[Bob Hawkes]

Danny Aerts has written a reflective, if sobering and somewhat pessimistic, view of what has happened in the domain industry and the prospects for the future. He views the market as mature, and over-sold both in .com and in too many new TLDs, with too much speculation without a solid base of reasonable expectations for profit.

I just realized I have been promoted to an Established Member (thank you NamePros!) so can give the link for convenience:

https://www.iis.se/english/blog/cold-winds-in-the-global-domain-industry/

 

[Smiles76]

Yeah I agree with most of the article. Realistically when value is higher wholesale over retail, there is a problem with a particular industry. Domain investing may not be there quite yet but the margin seemingly slims every day.

This is exactly what the problem is. Many domainers are stuck with overpriced domains that real end users have no interest in at their asking prices. But, they can't lower the prices because they paid too much for the domains on the "wholesale" market. So, unless there is an influx of new domainers to pass those names off on, many are stuck with those names.

 

[alcy]

there is always hope .. or should I say potential.. as long as internet isn't going anywhere.
and it really is not.
cheers

 

[offthehandle]

So, unless there is an influx of new domainers to pass those names off on, many are stuck with those names.

And "they" whoever they are should be stuck with their garbage names.

Or be fair, admit fault and sell at a loss. Instead of this sort of thinking and behavior of the "finding the greater fool" theory which is wrong-headed. I hope newbies read this and learn about people artificially inflating values and stop bidding. Or educating themselves better about values and being realistic.

Some experienced people passing their junk names off to newbies at high prices is not a way to bring growth or liquidity. They should sell for low prices, since touting is only short term thinking and should ruin their reputation and integrity. The wholesalers market is like a field of landmines if one does not educate themselves about values.

As an example of what is good, I see the brandbucket approved names here on NP's all the time being dumped, most of them they offer them at good prices with $10. Fee included near reg fee most of them. The buyer needs to be aware that there is a reason they are being dumped. But at least they are not trying to oversell them and hype them. It's win-win. All business should be that way, smart people stay in business for years, versus the hit and run crowd.

 

[garptrader]

If end users understood how a memorable domain name could help promote their business vs alternative advertising methods and we saw an explosion in demand such that industry turn were to average 25%, then we would be talking about the need for more extensions - because in four years we would run out. But with 1% turn BEFORE new TLDs, there was no need. Before new TLDs it was very difficult to sell a .Net but since EMDs still ranked well, sometimes you could find a .Net buyer for $XXX. With the growth of social media usage many end users are happy to just use their Facebook page as their web presence or they may have a Youtube channel without any domain name whatsoever. So we went to nearly 30 million new TLDs. How many will be left in three to five years? The growth chart of new TLDs reminds me of the Nasdaq back around 2000. The bottom is a long way down from here.

 

[forge]

Wow, great solidly-written post (yours Bob, I have yet to read the referenced article).

Welcome to NamePros, (we) could certainly benefit from your caliber of membership.

 

[Kuffy]

It certainly looks as if some people are disposing of their portfolios. It seems to be a great time to pick up some good names for the future, and to clear out some of one's "dead stock" for a small profit.

 

[Asfas1000]

So, unless there is an influx of new domainers to pass those names off on, many are stuck with those names.

This is no solution, newcomers don't help with liquidity. They buy overpriced items from registries, Godaddy and other marketplaces , but not from other domainers. Just look at the prices at NP auctions.

 

[garptrader]

Agreed that newbie domainers will open their wallets to the registries for overrated names like travel.agency but will not even consider aftermarket names priced $xxx in well-established extensions.

 

[NameOmnia]

Some experienced people passing their junk names off to newbies at high prices is not a way to bring growth or liquidity.

...and create fake "trends", hype, buyouts then sell GRABAGE to less experienced domainers, it has happened many times on this forum.

As for BB ..if people do not understand that a mkt place with 40k+ listed domains in categories where many names differ from each other for one letter and that rumor has it they favour certain members over others IS NOT the place to list domains what can one do?

Let's not forget that our industry is probably the only one on the planet with a potential infinite number of middle men ( domainers ) and much fewer real customers ( end users ) willing to pay the artificially inflated prices they are asked to.

 

[Mister Funsky]

If end users understood how a memorable domain name could help promote their business

Agreed...I am amazed at the lack of awareness both small and large businesses and their leaders have when it comes to branding and marketing...a domain that speaks to the industry or product someone is selling is gold but too many 'high' level executives lack insight.

 

[Kuffy]

It's because it is a virtual asset - look how many domainers reject Bitcoin, you would think that they would understand the concept and advantages.

 

[offthehandle]

...and create fake "trends", hype, buyouts then sell GRABAGE to less experienced domainers, it has happened many times on this forum.

As for BB ..if people do not understand that a mkt place with 40k+ listed domains in categories where many names differ from each other for one letter and that rumor has it they favour certain members over others IS NOT the place to list domains what can one do?

Let's not forget that our industry is probably the only one on the planet with a potential infinite number of middle men ( domainers ) and much fewer real customers ( end users ) willing to pay the artificially inflated prices they are asked to.

I read many pitches on wholesale names for entertainment.

What can one do? Invest in the future. Your future. Create your own marketplace. Form a Coop. Treat some names as a commodity. The suggestion I made to challege the 40k brand marketplace I have mentioned several times of a central marketplace for end users to arrive- much like a bazaar, like a farmers market selling vegetables to make it really simple and an absurd comparison. People shop around for the best looking tomatoes, lol. The end users discover this and buy them, the brandable prices the buyer gets are lower and the owner receives are better minus the 30% commission and the middleman is cut out. If all nameservers pointed to one ip, that nobody controlled just like a segment of a street corner on Saturday morning it is open for all buyers and sellers to know about and arrive, as long as seo is good. By sending all your inventory to one system be it a marketplace owned by others, parking, etc you are giving away link juice if any to a third party. Its a project, but other than GD, NJ that are wholesale venues and others there are no or few central markets for gathering and selling to potential buyers that are not controlled by a few owners.

 

[biggie]

the tide comes in....and the tide goes out

so,

you either gotta surf the wave....or wave goodbye



i agree that junk can get passed on, simply from not knowing or from idol worshiping, trend buying or falling for hype and propaganda.

but to think that newbies don't provide liquidity, is false

and they also help grow the "market".

newbies, despite their ignorance of the industry, do have ideas, goals, motivation, inspiration and other skills, that could take a domain and increase it's value above reg fee.

some of them also have cash and are ready, willing and able to buy!

sure, i'll talk about a newbie not knowing this from that, but i've also tried to help and give advice to them as well.

cuz, if they stick around, then they ain't always gonna be a newbie -
as their knowledge grows, and they seek higher quality names, their budgets tend to increase too.

i've seen it happen, year, after year, after year.

imo...

 

[Bob Hawkes]

I read many pitches on wholesale names for entertainment.

What can one do? Invest in the future. Your future. Create your own marketplace. Form a Coop. Treat some names as a commodity. The suggestion I made to challege the 40k brand marketplace I have mentioned several times of a central marketplace for end users to arrive- much like a bazaar, like a farmers market selling vegetables to make it really simple and an absurd comparison. People shop around for the best looking tomatoes, lol. The end users discover this and buy them, the brandable prices the buyer gets are lower and the owner receives are better minus the 30% commission and the middleman is cut out. If all nameservers pointed to one ip, that nobody controlled just like a segment of a street corner on Saturday morning it is open for all buyers and sellers to know about and arrive, as long as seo is good. By sending all your inventory to one system be it a marketplace owned by others, parking, etc you are giving away link juice if any to a third party. Its a project, but other than GD, NJ that are wholesale venues and others there are no or few central markets for gathering and selling to potential buyers that are not controlled by a few owners.

I am new here, and relatively new to holding domains, but I find a lot of merit in what you propose.

I think just like farmers' markets have found revitalization in the past decade, a market for domains of the type you indicate could be highly regarded by individuals and small businesses providing it somehow had safeguards to make sure that customers were fairly treated.

I think that the key would be to have the market at least co-driven by some organization of small business owners, and not only the domain community.

Thanks for the innovative suggestion.

 

[Kate]

In 2017, most businesses should be online and have their own domain name by now (or maybe they will never have one), so it is only natural that the growth slows down including in established extensions.
Saturation is normal, a bit like mobile phones: now everyone has got one or more. The number of subscribers cannot continue to grow like it's 1996.
Imagine if the mobile phone industry worked like the domain name industry: hundreds of operators would have entered the market at once. Today they would all be struggling and creating fake accounts (or giving SIM cards away) to make the books presentable to investors.

The only way out is to aim for quality names, for which there will always be demand.

 

[Kuffy]

I believe that there is a good market in selling "feeder" names to companies. Big organisations should own more than one name. For example, there is a chain of home improvements stores in the UK with the name "B and Q" - not the catchiest brand. However, they also own the name DIY.com, and they use that for their main site. BandQ.com redirects to DIY. I expect they own a load of other names as well. Startups are obviously one good market for domain names, but I believe that the selling of "feeder" names to rich companies to promote new or existing products can be a lucrative market for us.