Have you looked at your domain portfolio recently?

[RJ]

I own 3,799 domain names. Most of my names have some greater plan or purpose behind them and I don't actively market any of them for sale.

Some might say that is a lot of names! Yet in the bigger picture I'm a small-fry next to industry heavyweights like NameMedia, Marchex, DarkBlue, iREIT, Frank Schilling and others that own 10's and even 100's of thousands of domains each.

I used to look at these massive portfolios and strive towards building my own in size and strength. Today I'm not so sure that's the path I want to be on.

For one thing let's consider renewal costs went up 7% last October, and will rise 7% again this next October, and very likely 7% again every year as Verisign is allowed to do under their new contract with ICANN.

At the same time, PPC rates for domainers are trending downwards and many domains that used to turn a decent profit will struggle to pay their own renewal costs. That 100,000 domain portfolio that once looked liked a cash cow is starting to look more like a million dollar a year liability.

What's the price of gas at nationally? Here locally in the Bay Area, gas prices are hitting $4.00 a gallon and there is a measurable increase in both public transportation usage and hybrid car sales. It's like there is a psychological breakpoint at which $4.00/gal triggers people to evaluate their habits and lifestyle.

In a similar fashion, I would not be surprised to see the increasing renewal prices eventually trigger a flood of re-evaluation for many domainers who hold portfolios of low/mid-value domain names. If not this year, then probably 2009. There has to be a breakpoint somewhere.

What will this mean for the domain industry? Portfolio sell-offs? Amazing buying opportunities? A drop in domain values? Maybe none of the above.

In our seemingly shortsighted culture of one year registrations, quick flips, and buyout trends, perhaps we could all benefit from a discussion of this nature. Just some food for thought.

RJ

 

[mjnels]

i looked once and thought "geez thats a lot of .mobi's"

there will likely be a shakedown sometime in the future... it seems to me a lot of new "domainers" (myself included) have jumped on board the last few years... that = a lot of lessons to be learned.. especially if you deal in the more "speculative" extensions.

 

[Sameh]

Portfolio sell-offs? Amazing buying opportunities? A drop in domain values? Maybe none of the above.

I will go with "Amazing buying opportunities" which is a result of "Portfolio sell-offs" but I don't see any "drop in domain values"

IMO.

 

[wot]

I definitely see portfolio sell offs as something that big business will looking at as domaining hits main stream, the marchex type sales will increase in number- if not at that magnitiude :gl:

I am building in to niches, cctld's , geo's etc with a view to offering up bulk buys when the market offers such opportunities. I am currently actively re-evaluating my portfolio, dropping names, selling off as and when seems appropriate.

Some of it is to make way for more idn exposure, some to reduce that annual liability of renewals.

 

[michaeldotcom]

Excellent analysis, RJ.

What will this mean for the domain industry? Portfolio sell-offs? Amazing buying opportunities? A drop in domain values? Maybe none of the above.

I don't see any drop in domain values. There will be an increase of demand for genuinely good domain names (not only huge .com names, but also interesting niches, solid geos, etc in meaningful TLDs, etc.).

But what we will probably see, for the reasons you outlined, is some (limited) portfolio sell-off.

People who own large portfolios are usually very experienced domainers and/or fairly big companies. This means that, if they ever struggle to pay for their renewal costs, they would just have to sell a few of their very good names to break even (the sale of one domain like pizza.com can pay for many many renewals).

That won't necessarily mean any drop in domain values or a huge amount of domains for sale. But that means that we may see a few domains on the market in the near future that simply wouldn't have been sold before.

Those will be very expensive (no discount there) but they will be available to purchase for those who can afford them. For some of the most sought-after domains, this could be a once-in-a-lifetime opportunity.

 

[accent]

Looking at the drop lists it is clear that a lot of people register a lot of junk. Poking around popular topics to see what is available will bring a similar conclusion. There may be something of a sell off at the margins, but the overall internet continues to grow at a much more rapid pace. Overall retail sales were down last Christmas but online sales again rose, this time by 20%. That rising tide may not float every single boat, but it will cover a lot of mistakes.

I am much more concerned by the chilling effect of efforts such as the Snowe bill and the LH.com hijacking to the overall market.

 

[DomainBELL]

I totally identify with your thought train...

I never thought I would own more domains than the RJ...
but I plan to purge at least 50% over the next 12 months...

I have been thinking about it for the past few weeks...
realizing that the renewal fees are more than what it would cost me to purchase a new $35k car each year... or ever 2yrs I could be buying a $70k + piece of real estate to flip etc... although I love domaining... I need to refocus and be more targeted in my acquisition of names.... development... and ORGANIZATION... that's a big one for me...

I am currently redesigning DomainBELL.com.... even though a ton of names are listed there (and are available) -- I still have 1000's more I've never published... and now don't plan to keep up the site by putting all new ones up there...

I do dev. sites too...simple ones... and have around 200 + or -
but there's no way I could ever develop all the domain names that I origianlly purchased for that purpose... so it's time to adjust the plan... (smile)

Instead I am re-organizing into a handful of the most popular categories
and just publishing the category pages.. and moving more into DIRECT marketing (to buyers)...by this time in 2009 it is my hope to own less than 2500 names...

wish me luck...

oh and gas prices here in Dayton, Ohio USA are today 4-28-08 @ $3.59 gallon for regular... and groceries - prices going up on nearly EVERYTHING...

(it's a bit overwhelming where we are headed sometimes... especially the gas prices...)


~DomainBELL (Patricia_

 

[.X.]

I agree, with what you are saying Ron.

Things will get worse, before they get better, Imo. The renewal fee on a large portfolio can drain a persons pocket book. I believe it is a buyers market, there is money to made from domains still, PPC is down drastically, that has been a stinger for me this year.

I think the big players, NameMedia, Frank Schilling and ect. can only be licking their lips, they have huge capital built up, from recent years in the industry, If they can buy at whole sale pricing, I would expect people will see NameMedia and Schillings portfolios grow even larger. momentum is the key to remaining on top, Imo. these guys have a lot of it.

I expect more decreases in sales in months to come, this year has not been kind to domainers in the way of Parking and End User sales.

I am optimistic that the industry will recover with out to many scars, those that can hang on, buy very nice names, will benefit largely. once the industry recovers.

 

[ssamriga]

industry heavyweights like NameMedia, Marchex, DarkBlue, Marchex, Frank Schilling and others
RJ

RJ you mention them twice, because they own a very, very, very large amount of domains?

On topic- I believe that "half-developed" sites will become more popular, amount of traditional parked sites packed with ads will decrease and more and more domainers will build minisites, which will include not only link ads but a variety of affiliate products, if advertisers pay less for clicks, affiliate programs won't pay a smaller percentage for sold products.

Overall though I agree that lesser quality domains won't be renewed and it won't be so easy to earn money with low quality names...

 

[godolphin]

-

 

[Keral_Patel]

Have never depended much on the price rise of the domain name but yet I would say that it even might be the scenario where this large portfolio holders will sell some of their domain names to keep up with the costs.

This will set up new trends and the domain names similar to that trends might rise.

 

[barefoottech]

As the Prices for renewals /Registrations increase ,than the overall quality of the domains remaining / newly registered / resold will increase . Which should be good for the domainers who are serious about making a success from this industry. I welcome the rationalization, too much crap is being renewed and registered. I constantly despair at Newcomers and Oldtimers alike that seemly register names with almost no income producing potential either now or in the future.

Myself ,I have tended recently to concentrate less on low cost and quick return names (especially .info's). My main focus now is on a few main niches and to devote a lot of time to promote and enhance their value. This is good advice for all domainers. ScatterGun approach to name purchases, and chasing that elusive 2c Click from a Park Page does not pay the Bills.
Holding on to and developing/ marketing that name you just knew would be worthwhile one day can re-pay.
After all $10 for an Asset that can potentially make 100s or 1000's of dollars a year income is an excellent investment. If a .com makes $2 in first year and can be sold after being renewed for $50, it still has an excellent ROI. Not many shares/bond/RealEstate have a ROI approaching that of even $50 names.


Development and Active marketing of links/ads is the answer to maximise return while awaiting that elusive sale. Indeed the New Australian rules for resale of .Com.au & .net.au which requires 6 months of Active Name Usage before resale will force most Australian domainers to embrace minisite style development vs Parking on a large scale. WIth a average purchase price of $50 for 2yrs reg. Fee it is almost mandatory to recoup cost. The same needs to be done by domainers who have .com's and similar TLD's with expected Renewals/registrations exceeding $10 usd.

Despite the potential for gloom & doom, the future is still bright. If mild site development cannot return 5c per day (5c * 365 = $18.25) per name than maybe name was probably rubbish anyway.

-RJ-
With 40K Plus worth of renewals per year ,domaining is still worthwhile for you I think. Don't you still own a least one name that makes more than that a year.
Namepros.com I think the name is.


BTW I have been paying the equivalent of $5 a US gallon for Petrol/GAS for over a year. Soon local price will be $6. Still cheap compared to most European and Asian Countries. $4 is bargain ,accept it and enjoy.

 

[Ross]

Great POST!

Anyways, i do see portfolio sell offs very near in the future. This will allow people to aquire great buys from people that need the money. Although i do see prices on some names to go up rather than drop.

I have always had a thought processes through which every domain goes through before i buy it. I have 3 purposes of buying domains: flipping, parking names, or holding names. When i look at my portfolio i know for a fact i will not sell off my hold names unless the right price comes along. So in the next year or so i do not expect to sell those ones. As far as the parking names will go, if i can find a buyer to pay atleast 6 months rev then i sell them off. When i look at my flipping port, on average i will usually sell these names within a 2 week period. If i can not sell them in that amount of time i try to get my money back or bite the loss.

So my portfolio has very little fat on it. It is very dense and i am pleased with what i have. May not be thousands of domains but atleast it makes me money.

 

[squid]

When i first got into domaining i thought "Quick! Get loads of domains". So i regged 50+ rubbish .info's and eventually sold them for a quarter of reg fee. After that i decided to concentrate on names i know sell. I've just been going after LLLL.net's recently, they are guaranteed to sell at least for reg fee, if it's a good name.

Loads of domains is silly, unless they're of quality.

 

[Shane]

My portfolio is full of garbage that I will never be able to sell more than reg fee, I suppose at the time I thought they were good.

 

[Jeff]

Excellent discussion thread, RJ! :tu: :talk:

My motto is (has been) ... Lean and Mean by 2009™! :yell: :music:

I think there will be some very good "pockets" of buying opportunities for those with CASH, as well ... particularly in the geo-targeted / local niche domain name space (for those with an eye and emphasis for future developments!), IMHO. :gl:
-Jeff

 

[dnk]

I regularly check my domain portfolio . I find selling domains very time consuming, so I prefer to register domains which should earn registration fees in a month or two without relying on PPC.

 

[kemjika11]

I think there will be portfolio sales, but they will probably remain inconspicuous or elusive. Domainers will have less time/money for trash names and names that really aren't worth 'reg fee". By "trash names", i mean names that were registered out of wishful, unrealistic thinking, naive assumptions, etc. THey've flooded the domain market with low quality, and they aren't worth anyone's while really. Traffic! is the key. Traffic is automatic value. Its my domain bible commandment. We need that compensation while we wait for sales and the next renewal fee. They make domains more liquid too. I have about 45 fresh regged names, and many get 10-20 uniques per month(these include some fresh regged .US too!). Not great, but encouraging. Encouraging enough to justify paying the renewal cost. Thats a nice way to invest in names. I'll crank it up to 100 soon. Its important for all domainers to think as thoroughly as we can about names we're about to reg. If there;s a good chance no one will want your name, its very likely you wont be able to sell your name. I still see alot of growth and sales potential in many markets(.in, .co.in, .info, .us, .cc etc)

 

[onewordonly]

I have been cleaning up myself, I have nearly 1000 domains, I would like to get that down to around 100 -200 and keep taking the quality of the domains I own up as I buy & sell. So I have marked a whole bunch that need to be renewed in June to sell, they have gone up on TDNAM at $10 - $20 each for quick sales. I'm glad I kept traffic & earnings reports so I can now quickly decide if a domain will be kept or goes.

 

[Seabass]

If true, this would cause some domainers to let domains expire - $10 gas.

http://www.nysun.com/news/business/gas-price-may-soon-cost-sawbuck

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