Daily Poll: Will the Domain Market “Crash” Within the Year?

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Keith deBoer published an insightful article yesterday discussing how to make money if the domain market crashes. There are some people who would likely say “when the domain market crashes” rather than “if the domain market crashes.”

The domain market has been relatively strong for the last several years. Off the top of my head, I recall 2009-2011 being difficult, but I think there has been improvement since 2012. The challenging thing about analyzing the business as an investor is that a few major sales in a year can shift perception from an okay year to a great year.

If I were to guess, I would think the US midterm elections this November could potentially make a big impact on the general economy and consequently on the domain business. If the US House and Senate flip from red to blue, things could get messy with lots of political gridlock and potential for some fireworks. Uncertainty in the political spectrum could pose problems for the economy. I hate politics and I am certainly no economist, so I could be totally wrong about what happens (if anything). Even if the markets head south, the domain market could continue to hum along.

There are often ups and downs in the business, but do you think we will see a “crash” in the domain market within the next year?


19 COMMENTS

  1. I’m bullish on the domain name market thru 2021. I’d speculate that the U.S. stock market/economy will enter a deep recession in 2019-2020. Yet, this will be the 2nd Golden Age for the selling of premium 1-2 word dot-Com domain names. This period will see the most valuable dot-Com portfolios and other first tier dot-Coms sold off to end users.

    After 2021, I believe the domain name market will crash (because 80% of registered domain names are pigeon shit). But there will still be new products & services that create opportunity for hand regs for the remaining speculators.

  2. Shoddy work all around. This guy is part time investor, and only speaks of “brandables” that have little to no fundamental value in comparison to exact match keyword domains.

    Keyword domains can be used as complimentary brands. “Brandables” not really unless you want to dilute your primary business brand with a secondary brand that has no immediate recognition or meaning to consumers.

    Economic downturns might hurt domains that have no meaning to consumer (ie typically “brandables”) but have little correlation with keyword domains. Keyword domains in much stronger hands.

    Investors need to understand the difference, and this “insightfullness” does little to educate new investors.

    • Some people refer to keyword names, such as Guava.com or Midnight.com, as “brandables.”

      I agree that names are in much stronger hands right now, but I do see people, myself included), paying much more for names these days than in years past. People who are not cautious could be caught in a bad situation if things tighten.

      • They need to be educated then. Midnight is a dictionary word but not a keyword domain. Brandable sure.

        Who exactly is paying per click on the keyword “midnight”? And how much are they willing to bid? Can’t sell “midnight”, can’t buy “midnight”, and cant sleep in a “midnight”. Has no fundamental value in ecommerce besides fact that it’s easy to remember. Therefore, you have to spend $$$ to inform consumers exactly what “midnight” offers. In a recessionary environment or economic downturn there are little to no extra dollars available for spending money to create a new brand.

        However, there are defensive domains (ie exact match product domains with high search counts) that can be used to drive incremental revenue at a low cost. Much easier to justify expense to CEO or CFO.

        How many exact match product domains with searches in excess of 20,000/month do you see publicly for sale? I don’t see many unless the product sells for a few bucks or is a fad. These domains are already in very strong hands. There is a big difference between Cars.com, Diapers.com, Hotels.com, and Midnight.com.

        .com has truly become a top tier international brand with the failure of new Gs. That’s probably why you have to pay more for a great domain like midnight.com now than 2-3 years ago. It’s not a value or defensive domain though, its a growth domain. Just like the stock market, growth stocks get hammered in a recessionary environement due to their high P/S ratio or P/E ratio. Same with growth domains, they are dependant upon marketing dollars to effectively construe their meaning.

        • You may be right but FWIW, I turned down $40,000 from a gaming startup and $20,000 from a supplement startup within the last month. Both of these were opening offers that did not counteroffer when I laid down my price expectation. Since July 21, I have received 17 inquiries/offers for this name.

          My portfolio ranges from “brandables” like Midnight.com to keyword names like EventPlanner.com and Travels.com. I also have hundreds of other keyword .com names that are priced in the low 4s to low 5s. In that sense, my portfolio is diverse.

          Of course I am concerned about the prospect of a downturn and continue to invest cautiously.

  3. Real Top-Domains are bulletproof. People with CASH to spend are waiting for ANY sign of slowdown to buy whatever they can get their hands on. That concerns the top 1% of registered .com domains. The rest is doomed and worthless (some top country code names will also be fine though)

  4. The last downturn was 10 years ago and we all know history always repeats itself. At no point in time has a cycle gone longer than 10 years. I’m not much of a gambler but I would be all in saying that either 2019 or 2020 at the latest it will happen. Odds are more in favor then against in my opinion.

  5. I remember in late 2007 Rick S. saying that the economy (and stock market) were going to turn down. I thought he was wrong for a number of reasons. I made the major mistake in thinking that things will continue to go up with only a couple minor corrections.
    Rick was right, I was wrong.

    I now err on the side of caution. The domain market has matured. I don’t see major growth for domains that we experienced from 2000 to 2006.

    Look at the number of major players in the domain category that have sold their domains and/or company. Mike Berkens, Bob Parsons, NameMedia, etc, etc., etc.

    More importantly for me, the domain category is not a lot of fun/exciting like it was between 2000 and 2006.

  6. While I agree that the general economy could be in for a big crash anytime and that could affect the prices end-users are willing to pay for domains, I also agree with what Rick Schwartz has been saying, the last time I read him and if I understood him correctly, that the natural growth of the domain market, as more businesses become aware of the importance of domains, has been stymied the last few years by the new GTLDs, which made many people wonder if dotcoms, in particular, were going to lose their value.

    With it becoming more and more apparent, I think, that isn’t going to be the case – at least not to any huge extent, and that with that general recognition the opposite may in fact occur – I think the domain market will weather any crash in the general economy and may become an investment vehicle for more and more people as they become wary of stocks and other investments (especially cryptocurrencies, most of which I think will fail).

    But for that to happen it’s important that domains be protected from the ridiculous forfeitures which have been taking place. That’s why all domain investors should, imo, support the ICA.

  7. With one word .com brandables there are a lot of options. For exact match product domains there aren’t, so pricing power is very different.

    You know what you are doing, you’ve been successful in this business for a long time. New investors often don’t know the difference between types of domains.

    I’m not saying there is going to be a downturn soon, nor am I saying that one word .com brandables are going down in value. Simply stating during a real economic downturn chances are domains dependant upon startups, new brands, etc will suffer far more than exact match product domains that have real utility to end users selling the product.

    My portfolio is relatively small and concentrated on certain sectors. There are some domains I’m willing to sell, and others require a JV or some sort of equity or rev share. While the deals are not yet done, I have two JV type arrangements that have come along in recent months. One is sensitive to the economic environment and one is not.

    Interesting times because everyone expects another 2000 or 2008-09 event because we’ve become accustomed to these economic cycles. I sold my internet stocks in 1999 and shorted the 2008-09 stock market crash. I see different market dynamics this time around and believe it’s more likely we see a 1970’s stagflation economy vs another cyclical crash. But who knows… that’s why its good to be diversified not just in domains but all investments.

  8. The stock market will not Crash because:
    – Everyone is anticipating a Crash (the majority are always wrong)
    – There could be a correction (October) but there will be no Crash
    – Public debt markets are starting to collapse (Euro, Japan, etc.)
    – Foreign capital is pouring into the stock market because its the best game in town (Trump economics)
    – When the Euro and Japanese economies collapse that foreign capital will be looking for a new home (nyse, etc.)
    – Ultimate Dow target 35K to 40k within about 3-4 years or less

  9. Hello Elliot,
    We see a continuing fall in sub-standard extensions for sure, but an undeniable surge upward for (.COM Equimoditty Platform Assets).There is a huge changing of the Garde, on the horizon , that will be a sea change event. To those 4000 or so Corp. listed Companies. There is a message you must heed or suffer the consequences. over the next 5 years 4000+ NEW companies (95% ( .COM Equimoditty Platform Assets ), based platform Companies will arrive. They will be competing with you. ALL wanting to eat your lunch. Word to the wise stop flushing your cash down the toilet to prop up your stocks. You will desperately need the cash to compete. JAS

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger) (Former Rockefeller IBEC Marketing Intelligence Analyst/Strategist) (Licensed CBOE Commodity Hedge Strategist) (Domain Master ) http://www.UseBiz.com

  10. Hello Elliot,
    It is ludicrous, nievity, to think ALL Domaining is dead. Ask Google, who has been trying to overshadow the .COM Profit Center Equimoditty since their Inception. No matter how the SEM crowd has framed the image of .COM Profit Center Equimoditties, they have failed miserably. The .COM Profit Center Equimoditty, is still vastly undervalued because it is misunderstood.
    Now that the .COM Equimoditty Asset Class has a Wall Street Definition Recognition Classification. All those who have been impatient waiting for this Paragigm shift realization, will be aghast at the Cataclysmic increase in compounding Valuations Upwards. The .COM Profit Center Equimoditty Class Ascension Continues. The Valuation Model of .COM Equimodity Classes Crest is 20 years out. JAS 10/20/16

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger) (Former Rockefeller IBEC Marketing Analyst/Strategist) (Licensed CBOE Commodity Hedge Strategist) (Domain Master https://www.UseBiz.com

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