Dominion.Domains

State of the Domain Name Business : A Typical Day

Labeled as analysis in General Domain Discussion started by MetBob, Aug 6, 2018.

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  1. MetBob

    MetBob Active Member VIP

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    I wonder if we could discuss whether these numbers are concerning.[​IMG]

    • 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.
     
    The views expressed on this page by users and staff are their own, not those of NamePros.
  2. garptrader

    garptrader Top Member VIP ★★★★★★★★★★

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    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.
     
  3. Jurgen Wolf

    Jurgen Wolf Top Member VIP

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    Tons of Afternic and Sedo listings are obsolete... the domains which were dropped and are available but listed there.
     
  4. MetBob

    MetBob Active Member VIP

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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.
     
  5. garptrader

    garptrader Top Member VIP ★★★★★★★★★★

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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.
     
  6. Recons.Com

    Recons.Com Active Member VIP

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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).
     
  7. garptrader

    garptrader Top Member VIP ★★★★★★★★★★

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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.
     
  8. MetBob

    MetBob Active Member VIP

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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!
     
  9. garptrader

    garptrader Top Member VIP ★★★★★★★★★★

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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?
     
  10. HotKey

    HotKey Made in Canada VIP

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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?
     
  11. MetBob

    MetBob Active Member VIP

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    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.
     
    Last edited: Aug 13, 2018 at 5:22 PM
  12. MetBob

    MetBob Active Member VIP

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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.
     
    Last edited: Aug 13, 2018 at 5:33 PM
  13. garptrader

    garptrader Top Member VIP ★★★★★★★★★★

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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.
     
  14. MetBob

    MetBob Active Member VIP

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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.
     
  15. Smiles76

    Smiles76 Established Member

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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.
     
    Last edited: Aug 14, 2018 at 5:31 PM
  16. Kate

    Kate Domainosaurus Rex VIP ★★★★★★★★★★

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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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