Domain Market Flooded?

[DomainSlayer]

With all these new TLDs whats everyone's opinion as investors or collectors on the vast plethra of domains out there? When I was a kid I collected about 40,000 Baseball Cards Unfortunately I was born In the late 70's so most of my cards are 87 and up. So the baseball card market was just getting flooded so I'll probably never be able to retire off my cards. What's everyone opinion on the future worth of domains? Just an open ended subject intrested in opinions.

 

[.X.]

It's definatly a really crowded market,But these days so is everything else,I choose to domain as a hobby more than a seller.And developing and parking my names is what i do for the most part.There is plenty of room in the niche for everyone,Right now the industry is full of people that soley reg a name to resell it,Bad idea imo unless you know the industry extremly well and the industry trends.That takes years to develope the knowledge to be able to do.But just as ebay and othe niches,People with no knowledge will jump in head first seeking that $.The number of TLDs now available is not really an issue imo,I have my preferrences of staying within a few TLDs only,Funny enough,I collected sports cards aswell in the 60'-70's-80's,I think quality before quanity is the best appraoch in this industry.

 

[mole]

The domain market seems to be flooded with domains for sale. I see many old timers releasing huge inventories in an attempt to cash out as best as they can on the whift of any temporary upswing. It seems people are starting to see large inventories as more feather filling the pillow than real business sense.

I think Yun Ye (Ultsearch) made a very good move to ditch his 100,000 collection when he did. The model that drives PPC is tainted with heavy fraud, and this business model is starting to implode into itself. Parked domains are going to be hit hard in the coming year.

Interesting times, indeed.

 

[CrazyTech]

I think for the reasons above the industry itself is flooded to an extent. However, despite all of the new extensions, certain extensions such as .com still hold a lot of value for many people. There are only so many extensions and so many good names in domains, unlike baseball cards where there are literally thousands of the same card out there.

There are a lot of people jumping in with names but I agree that quality is often worth much more than quanity.

 

[RogueWriter]

Anyone that is looking for type in traffic still has to rely on .com , and to a much lesser degree .net. No one is going to type casino.bz , but zillions type in casino.com , just to see what is there.

 

[EbookLover]

Domain Market Flooded?

Totally

 

[mole]

For nearly two decades now the world has grown up with the .com and yes .net.

For most people, mainstream consciousness of the Web and .COM began about 10 years ago, around 1995.

It may sound surprising, but the Internet is only in its second innings right now.

 

[mf]

The market is currently flooded with domains, but you have to remember that domain name investing is a very tricky game. Next year, I agree that the market will be screwed and everything will go downhill. Then people will let their domains expire and within a year (2 years total) we will begin to see a shortage of domains and the same cycle will begin to repeat. By the third year speculation begins to speed up. Fourth year the market reaches its peak point. Fifth year everything goes down again. (my timing may be somewhat off, we have to live to see what will really happen)

The high-profile domains based on keywords will always live. We will see less of them on the market when the bust comes, but the people that own them will still be making money.

Here is my two cents in real estate: It’s like the Florida real estate market. A hurricane comes through; everything is destroyed, property prices drop. Investors begin to slowly realize that prices are very low and that they can buy a good property very cheap, price starts to go up due to buying. Speculation begins. Prices reach a peak, hurricane comes destroys everything. Miami homes are still expensive.

 

[wasistdas]

The domain market is flooded with domains offer for sale becuase many people consider it is one of the easiest ways to make fast money. Who doesn't hope? Well, if a market would be open to serious players only it would not be a market. Why Forex exists? Because 99% of fast-money-seekers loose their money to serious players.

 

[Nerz]

The bread n butter for most of the domainers on these forums is your $30, $40 sales, and the odd sale into the hundreds. Despite the hype, big dollar sales are such a small fraction of the industry. New players need to realise this and accept that as reality. If you focus on these smaller sales and learn about the domain game at the same time, then a couple years down the road youll get some good sales. Sales that can drive a nice little network of websites, or the purchase of some quality domains.

The market is definately flooded, i think theres a lot of confusion about these new tld's and there worth, and naturally enough theres a lot of experimenting and land grabbing (Ive done a bit of that myself). People seem to register domains that have absolutely nothing to do with the tld or country it belongs too..(again ive been guilty). Beyond the confusion and flooding, there are some fundamental problems, especially for new players:

1) The backordering system is ridiculously expensive. Its a joke quite frankly, and its pretty obvious ICANN have let the backordering situation get completely out of hand. Its designed for fat cats with fat wallets. We have these snapcatchers making squillions, catching pretty average names for now hundreds of dollars. I know whos winning, and it definately isnt the end-user. The end-user is getting worked over bigtime.

2) Continued confusion about future control. I cant see the demands for ICANN and other official bodies to open up to "internationalization" going away any time soon. Certainly its not something im thinking about constantly, but it is tucked away in the back of my mind.

3)But to be honest i think the biggest problem for everyone, isnt the rules, the confusion, or the backordering system, its the basics of finding customers for our domains. Whether you take a look at domain forums, auction sites, or ebay, the strike rates for successful sales is dismally low...Ya i know a lot of it happens in private. Its still a very low percentage of domains listed, or promoted.

What we all need is the ultimate b2b system that connects us, the domainers, with them, the webmasters. Nobody has really come up with that ultimate system yet. Sites like namepros represent a terrific community site for domainers to hang out and discuss business, but i dont think any of the forums or auction sites draw in the end-user or companies looking for a domain with a great deal of success. Sedo is a step towards forming that connection, but a lot more needs to be done.

 

[Shorty]

I have to say, threads like this are really discouraging for guys like me.

First of all, let's look at this in economic terms. There are way more people registering names than people buying them. Hence, supply is higher than demand. The market no longer is at it's equilibrium and to change that the only thing we can do is lower the price to increase demand.

Different TLDs and ccTLDs can be seen as both close substitutes and complimentary goods, which makes seeing their effects difficult. On the one hand anybody smart will want to own his domain under every extension, which makes them complimentary goods (because they're purchased due to purchasing another). But, someone might only want just one domain and he might just choose which one he likes best, making them close substitutes. The economic problem there is that if they're complimentary, it has a negative effect on your profits, but if they're close substitutes, it has a positive effect. So from that standpoint, it's hard to tell.

I hope at least some people were capable of following that! :P

What I think is that domain prices in general will rise, and will be worth more in the future. Why? (more economics coming here) Because demand is slowly rising, perhaps not fast enough to catch up with supply for now, but it may one day. The fact is there is ultimately a limit to how many domains there can ever be (excluding new extensions) and that means supply will weaken once every word combination is taken. That will give demand the opportunity to close in, and with that prices will get higher and towards equilibrium.

For those reasons i'm confident domains are still wise investments. My only worry is there will be an alternative available before economic stabilisation can come into effect.

 

[mole]

What I think is that domain prices in general will rise, and will be worth more in the future. Why? (more economics coming here) Because demand is slowly rising, perhaps not fast enough to catch up with supply for now, but it may one day. The fact is there is ultimately a limit to how many domains there can ever be (excluding new extensions) and that means supply will weaken once every word combination is taken. That will give demand the opportunity to close in, and with that prices will get higher and towards equilibrium.

Domain prices for new gTLD namespace will definitely rise higher, and thats where speculation is a surer win - low acquisition cost + very good key words = high profit conversion.

It's the aging namespaces like .COM that will suffer the most - high acquisition cost + so-so keywords = low profit conversion/potential loss.

I think when buyers look at how pervasive search engines and alternative navigation systems are with the way people use the Web, type-in value (excluding repeat site visit traffic type-ins) in comparison looks like a bad joke.

The sales you see are a very very small percentage of names being offered for sale, I estimate that only 0.002% of all .COM domain names will ever see a resale above $1,000.

 

[SimpleDomaining]

yea (beating head to the wall ) its looks like it is going to flood. Cant forgive myself. by the time when people was active buying domains 10 years ago, i was not even close to think about this market. And i should... Now it is seems too late. I buy domains, they have traffic, but cannot find right buyers for them. Probably because market is overloaded with domains for sale. Probably some another reasons, but yes it is sad to say this: market will flood. What will be after flood?

 

[VURG]

I think the domain market is growing and that there is a lot of money to be made. I think that there are definately growth areas in domain investing. However there are definately areas that aren't. The participation rate on the internet is still growing at a very fast rate but unlike previous years, the majority of the growth is outside the US. The future of the domain market is going to be heavily influenced by non US and non English influences and that is where a lot of the big growth areas are. This makes the great purchases quite confusing to work out and different cultures are quite hard to understand. In the past, it has been easier as the US culture is very predictable in many ways that others aren't.

Additionally, the younger generation of today will see the internet as always being part of their lives. They will want many domains for lots of reasons that the older generations will not. Many of these people will not see much need for the domains until they leave high school. I think that the people who are in the 10 - 20 age range will be a big market of the future but you need to understand them.

For me I've seen websites with good domain names increase in popularity extremely fast overnight. I have a strong belief that the fact that the domain name was good had a big part in the growth. If you have a good business and pull in $10000 per month and a good domain name brought in 5% more business how much would that be worth? When you consider the exponential effect of the 5% more business, how much more would the domain name be worth? What if you could pull in $500000 per month?

I still think that we are in the early days of the internet and there is still a lot to come.

 

[Nerz]

I think the domain market is growing and that there is a lot of money to be made. I think that there are definately growth areas in domain investing. However there are definately areas that aren't. The participation rate on the internet is still growing at a very fast rate but unlike previous years, the majority of the growth is outside the US. The future of the domain market is going to be heavily influenced by non US and non English influences and that is where a lot of the big growth areas are. This makes the great purchases quite confusing to work out and different cultures are quite hard to understand. In the past, it has been easier as the US culture is very predictable in many ways that others aren't.

Additionally, the younger generation of today will see the internet as always being part of their lives. They will want many domains for lots of reasons that the older generations will not. Many of these people will not see much need for the domains until they leave high school. I think that the people who are in the 10 - 20 age range will be a big market of the future but you need to understand them.

For me I've seen websites with good domain names increase in popularity extremely fast overnight. I have a strong belief that the fact that the domain name was good had a big part in the growth. If you have a good business and pull in $10000 per month and a good domain name brought in 5% more business how much would that be worth? When you consider the exponential effect of the 5% more business, how much more would the domain name be worth? What if you could pull in $500000 per month?

I still think that we are in the early days of the internet and there is still a lot to come.

Actually you bring up a good point about future growth. Its really starting to come out of Asia, India and Eastern Europe now...China's somewhat anti internet stance wont last...and that is definately a market to look into, not too mention India, and the new European States in the E.U, countries that will hopefully prosper in the future.

 

[primacomputer]

Hold on, I'm confused. Yesterday people were talking about how all 4Ls are going to be gone by the end of the year and rocket in value because of “scarcity”. Today the market is “flooded” and headed for a crash.

What is the market flooded with? It's certainly not flooded with good cheap names. Quality names go for dotcom bubbleish prices. More and more names are registered every day. And I turn down offers on a daily basis.

Perhaps the market is flooded with crappy cheap names. I see huge lists of these posted for sale all over the place. But this is not “the market”. This is a bunch of speculators trading amongst themselves. And this has been flooded for quite a while.

As mole pointed out, the troubles that have plagued the PPC market are having a major impact on names that have little other use or value. As the PPC services die off, click values decline and traffic is shaved, the value of these names is going to decline. A lot of speculators have a lot of names that could be affected by this. So if you have a piles of names like casino-mesothelioma-mortgage.com then yes, you are likely looking at a “crash”

But such a “crash” won't necessarily have an impact on the market as a whole. Companies won't stop coming up with new brands, products and services simple because some people have to let names drop for lack of PPC revenue. In fact the rest of the world will carry on oblivious.

On top of that the domain “market” isn't an independent economic force. It's highly dependant on other forces. As long as the economy is percieved to be doing good, as long as venture capitol is available for tech companies, as long as consumer demand or marketing budgets are high, the domain market will be strong.

 

[mole]

What is the market flooded with?

Investors who hoarded tens of thousands of names at a go hoping to feed PPC engines. Now thinking of letting them go, or already letting them go, as the PPC fires get dunked with fraud and traffic manipulation tricks get spotted out.

Not forgetting the massive 500,000+ domains that BD has on the PPC model that can track the type-in performance of each name, and suddenly realising that many so-called "reasonably good" names get minimal to no uniques each month, let alone click throughs.

It only takes one domain name and lots of development money and effort to, in practice, make a fortune.

I think domainers are starting to realise that selling a "business" is where the future and real money is, more than ten thousand domain names can ever hope to bring. This was the keynote in the last TRAFFIC bash, one just takes a step back and start to wonder why.

Many domainers pride themselves on having big .COM inventories and think they can still sell each domain at 10k and see the hoards of unwashed simpletons opening their wallets with glee.

Sometimes its good to look at the rear view mirror and see the flood of new namespace like .EU and .US inching closer and closer to ursurp relevance from aging .COM web addressing. One may say that it does not matter if the big companies like Nokia and Microsoft are behind new extensions like .MOBI.

One may say that .XXX will never happen, will never become King of Adult sites.

It ain't over for sure, but the fat lady is starting to croon.

 

[Ron Jackson]

Perhaps the market is flooded with crappy cheap names. I see huge lists of these posted for sale all over the place. But this is not “the market”.

In my opinion that is exactly right. In each extension less than a million domains have any real value. Those are primarily the keywords for commercial goods and services. Words that advertisers will pay money for and that money is what fuels the market (in the form of purchasing traffic via PPC or buying the names outright). Even with the number of extensions out there, the number of commercially valuable domain names is very limited in relevant extensions. With the incredible growth rate ahead for the web I think there is a shortage of those kinds of domains - not a flood - and because of that shortage, prices will continue to rise in a variety of extensions for some time to come.

If you go into a diamond mine you'll find tons of dirt around the diamonds. The dirt is worthless but the value of the diamonds is undiminished. Doesn't matter how many crappy domain enter the marketplace. That dirt won't effect the value of the gems. Just don't be surprised that no one is making money from the dirt.

 

[mole]

Even with the number of extensions out there, the number of commercially valuable domain names is very limited in relevant extensions

According to the latest whois.sc data, the .COM namespace has 44,000,000 'active' domains;
44,164,048.COM
6,605,083 .NET
3,983,356 .ORG
2,673,259 .INFO
1,265,292 .BIZ
910,995 .US

The namespace is buried in dirt, and because speculators need to bear the burden for all the dirt they carry in their .COM portfolios, the asking prices for the so-called gems (which is a value only relative in the mind's eye for most cases) often far exceeds what the market is willing to pay. Ergo, 99% of these domains will remain unsold for eternity as their sweetheart PPC gives them an increasing cold shoulder.

Value is always relative. Diamonds are valuable because of scarcity, but extensions are not subject to the same rules, you can create them, get communities behind them, make them relevant to who you are and what you sell.

Many years ago, people thought that no other extensions will be introduced, so .COM like diamonds, was in effect, scarces.

Time to wake up from that dream and take the blinders off. New namespace is exploding like spring all around us.

The next 12 months will be a very interesting one to watch;
.EU
.MOBI
.JOBS
.TRAVEL
Even .XXX

These are new extensions that represent some of the world's largest industries and communities, and backed by top industry players.

I think denial is a good thing to have, it keeps the comfort zone cozy. The Internet will roll on, but this time, it won't be the hucksters and pirateers and hostage takers sitting their big fat backsides on .COM that will be calling the shots.

 

[Nerz]

Its great to have all these new extensions, but unless there is a broad awareness and acceptance of there usuage, they will still be given the cold shoulder. The fact is, people will type xxxxxx.com before they will type in xxxxxx.anythingelse, no matter the industry or the niche they are looking for. Its going to take a while to shove aside several years of solid .com awareness and promotion.

I support the new extensions, and several of them make a lot of sense, but until joe bloggs has that tld buried in between his ears, there still not going to receive the same attention .com still gets.

Thats at this point in time though, people with vision and forethought who can think 10, 15, 20 years into the future (providing your confident domains as we know it will even exist then) will be picking up .co in's, .cn's .us and .eu's now...not to mention existing tld's that are getting some beef, like .info. Thats where the bargains are now, and thats where the future big profits will be in terms of the differance between cost price and sale price. The days of .com dominance are numbered, but its not something thats going to change overnight, or even a year from now. 2007 onwards though and the story will be very differant