Home Advice Page 201

Advice

Jump the Domain Market

In the investment world, once a story hits the press, the price of the affected company’s stock is impacted almost immediately. In the domain industry, news travels less quickly, and because of that, you could possibly get a jump on news before price increases are made. Timing is everything.

One way to get a jump on the news is to review the list of domain names that are scheduled to be auctioned in an upcoming live auction. Do your best to determine the value for each live auction domain name based on the venue, comps, current market value…etc, and compare your calculations to the reserve prices. Should your valuation be significantly higher than the reserve price, there may be a strong chance the domain name will sell at auction.

When a domain name sells at auction for a significant price, the demand for similar names may increase as a result. In the week or so before the auction, if you are confident that a particular name is going to make a big splash in the auction, attempt to acquire similar domain names using Whois searches or via domain marketplace. If you don’t have the opportunity to do this quickly enough, you can do the same thing immediately after the auction. I recommend this strategy if you have a strong feel for the domain market and are willing to take a financial risk.

Of course, the caveat is that not all domain names are similar, even if they look the same. You need to know the market well enough to feel comfortable going out on these types of limbs. Also, the demand for similar names may be short lived, so this is a short term strategy.

Beware of Inflated Domain Prices

Investors were selling to one another, inflating prices. When the market figured this out in late 2005, it retreated with punishing speed.

While this quote from a New York Times article is in reference to the real estate market in Cape Coral, Florida, I think this should strike a chord with some domain investors. I believe some parallels can be drawn between the Cape Coral real estate market and the three letter .com domain market, where many domain investors speculate on these names by purchasing them for great sums from other domain investors.

As strong as the domain name market has been, the three letter .com market may be susceptible to dropping in value, and domain investors should use caution when buying at current levels. On average, three letter .com domain names have made incredible leaps in valuation over the past few years according to the price guide at 3character.com. From just a few hundred dollars a few years ago to several thousand dollars today, average prices for three letter .com domain names have seen extraordinary increases in valuation. In my opinion, we are in a period of inflated pricing, not really supported by any reasoning, other than the perceived rarity of the names (there are 17,576 in existence).

These short, easy to remember names might have tremendous value to a few companies, but many of these end user companies wouldn’t be willing to pay close to the current sales value for them. It can also be difficult to monetize these domain names. Frequently, consumers are looking for a particular product or company who may use that particular acronym officially or unofficially when they navigate to that domain name. If the domain owner uses the domain name for parking, and the parking company shows links for the company who uses the acronym, the domain owner may be at risk for a UDRP.

Inflated prices may also be affecting other types of domain names within the industry, however, it seems that this is one area where people are paying large sums simply because of the type of name, rather than what can be done with it, especially when the 3 letters don’t necessarily mean anything or stand for anything particular. In my opinion, this is like people buying houses in Cape Coral, Florida simply because the values continued to increase without a real impetus for the jump in perceived value.

I am not saying that all or most three letter .com domain names may be overvalued. I am merely suggesting that domain investors proceed with caution as the values of these names continues to increase. I would also say that like most nice generic domain names, I am a buyer if the price is right.

What do you guys think? As always, I welcome your comments…

Mike Berkens on the Biggest Threat to the Domain Industry

5

Mike Berkens, owner of one of the most valuable private domain portfolios, touched on it in my interview with him, but he expounds on what he believes is the biggest threat to the domain industry on TheDomains.com blog. Mike feels that as an industry, we need to police ourselves or a governmental agency will step in and potentially impact more than just the trademark domain issue.

Here are a few suggestions that Mike makes in his post regarding what we can do:

1. Do NOT register, backorder, or participate in any auction containing these types of domains.
2. The drop services have to stop taking backorders for these obvious trademark infringing names.
3. Stop domain tasting.
4. Join the Internet Commerce Association (ICA)

Check out TheDomains.com to read more about this important subject.

2008 Goals and Beyond

4

It’s the time of year when I evaluate everything that happened during the past 12 months and set new goals for 2008. This is always a great time of year, because it allows me to briefly reflect on the positive things that have happened, and allows me to think about the things that could have been better. There is no point in sugar coating things, so deep personal reflection is essential in order to grow.

Although I think this reflection should be made internally, I will share a few of my goals for 2008, and if you would like to share yours as well, I welcome it.

Domain Investing
– Purchase 1-2 premium domain names with the goal of developing them in Q4 2008
– Trim down my portfolio, only keeping strong generic domain names and a few speculative names

Domain Development
– Successfully launch Lowell.com
– Create strong relationships with Lowell businesses and civic leaders
– Begin phase two of Lowell.com, including some social networking capabilities and newsletter
– Build several miniature websites using the hybrid development concept I discussed a couple of weeks ago

Blogging
– Continue to write 1-3 original blog posts per day to give advice to readers of my blog
– Teach people about the value of domain names using well-executed examples
– Forge advertising relationships with industry leading companies

While you are thinking about goals, it is important to think about more than what you would like to accomplish in 2008. You should also take some time to consider (or reconsider) your life goals. What do you want to accomplish in life? Where are you now compared to where you want to be? What can you do in 2008 to make it easier to achieve your life goals?

This will help you stay in track in business and in life.

Creating an “Out Strategy”

0

Reading Sahar’s post this morning has me also wondering what people have in place as an “out strategy.” What if domain values suddenly dropped (due to a number of possible factors), and the value of undeveloped domain names suddenly plummeted? I can’t even imagine this happening on one and two word category killer .com domain names, but this is something to think about for people whose portfolios may be made up of decent, but not killer domain names.

As with any market crash, panicking will only make things worse. I would advise against rushed selling just because the perceived value has decreased. The domain market is always in somewhat of a state of flux because there is no completely accurate price guide.

Here are five recommendations I would make while you evaluate your portfolio (which is always a good thing at this time of year)
1. Cash in hand is very important – (you can’t pay your taxes with domain inventory)
2. Have a development plan for each name you own. If PPC advertising drops, you will be more protected
3. Trim down your portfolio ($8/year x # of names is expensive).
4. Drop names that realistically have no chance of making money unless someone random wants the name to start a business. A few names at $8/year is nothing major, but if you have 500 or 5,000 this is a huge sunk cost.
5. Make less speculative purchases. Just because Brittney’s sister is pregnant, doesn’t mean you need to try to guess the name of the baby and buy 100 .com names.

As an aside, if you are concerned about this and want to cash out of your one word category killer .com names, drop me a note 🙂

Giving Advice is Better Than Giving Money

4

I sometimes reflect on just how incredible the Internet is with its reach across the globe   I am doing some work at Starbucks right now, and the guy who stands on the corner collecting money for the homeless walked in to get a cup of coffee. He and I frequently nod to each other and wish each other a good morning, but I know absolutely nothing about him.

As he was leaving Starbucks this morning, he saw me on my computer and asked if I had heard of YouTube before.   After telling him I was familiar with it, he gave me a piece of paper with his name on it and told me to check him out on YouTube.   Low and behold, there he was beat boxing. His seven videos garnered a few hundred views in about a month, no doubt intrigued by his beat boxing skill and cool personality.

On my way home today, I am going to give him something more valuable than a dollar or spare change.   I am going to make a suggestion to him. He should buy the .com of his beat boxing persona (I will even buy it for him). He should then overlay this domain name on his videos to bring traffic to his website. If he adds his contact information to his new website, perhaps someone across the globe will be intrigued by his skill and offer him some work. Even a simple blog site with contact information could give him the exposure he needs to break out of anonymity.

Assuming he takes advice, this will be one time he is happy that I didn’t give him a dollar.

Recent Posts

Samba.com Now Forwarding to Samba.tv

3
Three weeks ago, Samba.com sold for $143,000 in a NameJet expiry auction. Samba.com is an exceptional domain name, and there are many branded companies...

A Good Afternic Broker Negotiation (Updated)

7
If you use Afternic and its landing pages for your domain names, chances are good that you have a Lead Center filled with leads...

Videos: GoDaddy 2025 Super Bowl Commercial

0
GoDaddy issued a press release this morning revealing its 2025 Super Bowl commercials. As expected, the focus of these two commercials is on GoDaddy...

Big Changes for .AI Expiry Auctions

3
Namecheap CEO Richard Kirkendall has shared many .AI domain name sales over the last year or so. NameBio lists more than 1,000 .AI domain...

ICA Meeting Keeps Getting Better

1
I went to the ICA meeting in Las Vegas last week. I don't particularly enjoy leaving my family when they have many different activities...