When the Internet bubble burst in 2000-2001, many people gave up on the Internet as a viable place to do commerce and there were great domain deals and domain drops that followed. Companies had lost vast fortunes on their Internet ventures (much were paper gains), and many wanted to dump anything they could that would yield some value, and lots of domains sold at rock bottom prices and many more were dropped.
I know of a few million dollar domain names that were sold around then for 5-figures each. People got burned by the Internet, and many were reluctant to spend more money on it. This is when many of today’s premium domain owners acquired their best assets, and these “bets” paid off, as the Internet has become a viable source of commerce. Sometimes buying assets when everyone else is selling can be a bad idea – like “catching a falling knife.” However, it can also have great payoffs, which made many of today’s domain investors very wealthy.
As we head into 2009, things seem to be much different than they were in 2000-2001. People know there is plenty of money to be made online, so they are more reluctant to give up their domain names – even if they need cash. This makes it difficult to buy “cheap” domain names to sell quickly at a profit. Making it especially difficult is the fact that most of the big buyers are on the sidelines right now, spending money sparingly or not spending money on acquisitions at all. Some of the big buyers have even quietly become big sellers.
I don’t consider myself a big buyer, but I have not been making many domain investments lately. I would rather have cash in the bank than a domain name that doesn’t generate much revenue but should be worth good money based on the name value alone. With the economy in its current state, I think most domain names of significant value have value if there is a buyer who has a plan for the domain name. I don’t think there are as many people out there buying domain names at market value believing the value will increase. Most people I know are buying domain names only if they are at a steep discount.
Had I not built Burbank.com and Lowell.com, I might be panicked. Judging by the number of Yellow Pages submissions and inquiries I have received in the last 2 weeks alone, I know the revenue is going to be there in 2009 (at least I assume so). My development company now has a sales representative (albeit not on the ground), and we are going to get in contact with these leads and new prospects almost as soon as the calendar changes to 2009.
At the moment, revenue isn’t huge on these geodomains (under $1,000/month in revenue), but it’s growing as is the traffic and interest in advertising. The point of this post isn’t necessarily that you need to develop websites to make money, because that might not be true. The point is that if you rely on domain investing for a chunk of your revenue or for all of your revenue, you should make contingency plans to generate money in the downturn. Like a duck on a pond, all might seem calm on the top, but there are some pretty strong things going on just below the surface, and 2009 is going to be an interesting year.
What are your thoughts?
Since launching Lowell.com, I’ve constantly been asked who I use for a designer. Knowing how difficult it is to find a reliable designer who does great work, I have always been reluctant to give most people his details. With the new year approaching, my efforts will be on monetizing my websites rather than development and design, so consider this an early Christmas present. Under normal circumstances, I wouldn’t give out his contact information, but Mike has been great for my business this year, and I am happy to highly recommend him to my friends. 🙂