DNJournal is reporting that Q1 2008 sales blew away Q1 2007 sales in terms of average sale price and dollar amount of domain sales. This is good news for the domain industry and would indicate that the domain economy is in good shape. A few weeks ago, I was one of the people who stated that the domain industry was in the midst of a slowdown. I still feel that way today, despite the positive news.
I believe that it is more difficult to sell second tier domain names than it was just a few months ago. I am not talking about names like NewHampshireCheapInsuranceQuotes.com or something crazy like that. I am talking about very good names that aren’t top tier names like Funding.com or Widgets.com. From my experience, people aren’t spending as much on the second tier names than they were previously. If the name doesn’t fit into someone’s development plans or doesn’t make strong PPC, many buyers are reluctant to spend the money on these names.
I have also found that there are less buyers now than there were a few months ago. Unless a domain name is on the market at a great price, it is likely to not sell without a strong price drop. Many people (myself included) are focusing on developing their domain names rather than acquiring domain names. Sure people are buying names if the prices are great, but I see less people spending large sums on good domain names, focusing on what they have rather than new acquisitions.
One source of high value sales is on the drop auctions. As great as the value of these auctions seem, there aren’t a ton of people spending big bucks on these auctions. If 2 or 3 of the high value bidders decided to buy less dropped domain names, we would see a huge drop in sale prices. As they say, all it takes is two people to make an auction. If one bidder drops out, the result will be a significantly lower sales price.
Although I still believe we are in the midst of a market slowdown, I am bullish on the longterm prospects of the domain industry. I continue to buy domain names for development, but I think it’s important to maintain a strong cash position.
State of the Domain Industry
Price Drop: IsraelVacations.com
I just bought a mega geo domain name, which is currently in Escrow and will be announced next week. I am looking to raise capital to fund this purchase. Therefore, I am reducing the price on IsraelVacations.com.
IsraelVacations.com is now on sale for has sold
Here are a couple of things to think about. Israel is currently promoting its 60th anniversary and encouraging people to take a vacation in Israel in 2008. Tourism is one of the biggest revenue generators for the Israel economy, and tourism will remain strong.
Additionally, here are some comps for similar names that have sold recently:
CaribbeanVacations.com $130,000
EuropeanVacations.com $85,000
VacationWorld.com $45,400
VacationPlans.com $35,700
IrelandVacations.com $17,250
AustraliaVacations.com $16,000
AsianVacations.com $15,000
VacationGetaway.com $14,640
VacationAlaska.com $12,750
BudgetVacations.com $10,300
CanadaVacations.com $9,600
FijiVacation.com $9,200
BahamaVacations.com $8,188
GlobalVacations.com $7,750
SurfVacations.com $7,522
SwitzerlandVacation.com $7,500
Rick Latona on Why to Sell
Rick Latona makes some good points about why domain owners should consider selling some of their domain names:
“I think that many domainers out there have only paper wealth. I’m not speaking of Frank who has both. A good deal of domainers are sitting on names that are worth a pretty penny but generate little income and they refuse to sell the name. I just don’t see the sense in that.“
When I was in college, I opted to not apply for financial aid, as my father’s business inventory would have been counted as assets, and we probably would have been denied. Unfortunately, we couldn’t pay for my college education with curtains, just like you can’t pay for a home or a car with a domain name. Sure, he could sell the curtains and pay for college with the proceeds, but if nobody is buying a particular type of curtain, it’s just worth its value on paper.
I am not telling you to go out and sell your domain names, but I have said before, the importance of having cash on hand is immeasurable. Check Rick’s Blog out when you get a chance.
Lowell.com Project: Affiliate Sites
On the Lowell.com Blog, I discuss how I am using affiliate websites to generate passive incremental revenue for Lowell.com. I am using affiliates for hotels, tickets, and jobs, although there were other verticals I chose not to use for various reasons. With the three affiliate companies, I am able to create customizable pages within my site, and then the traffic is forwarded to the affiliate sites to close the sale. I can basically set the sites up and almost forget about them (except for minor updates).
By using affiliates, I am able to create brand stickiness at Lowell.com, as visitors will presumably find what they are looking for, and they will return to find it again. The transition to the affiliate site for the purchase is fairly seamless, and since the site has the look and feel of Lowell.com, it will make visitors more confident tha they aren’t being taken to a shady website.
One of the most important things to remember is to choose trustworthy partners. By working with well known and respected brands, I am confident they will give visitors a good experience, helping to promote the Lowell.com brand. The affiliates need to have great customer services, be reliable and give exactly what they promise their customers.
On the Lowell.com blog, I discuss which affiliate companies I chose and why. Hope this helps you in your development projects.
Not Just Newspapers, TV Suffering, Too
Most of the stories I’ve heard about the standard mainstream outlets losing ad revenue to the Internet seem to be focused on newspapers. An article in the Boston Globe this morning would indicate that television stations, even beloved and trusted stations, are losing out to the Internet as well.
To most Boston sports fans, the name Bob Lobel strikes a cord. I haven’t watched Boston news frequently over the past couple of years, but I can still hear Lobel’s voice in the back of my head, either doing to pre/post game for the Pats or Sox. Today’s Globe article announces that Lobel, who has been with arguably the most popular and well-known television station in Boston (WBZ TV 4), will be leaving as a result of a “workforce reduction.”
According to the article in the Boston Globe:
“The station, like other media outlets across the country, is facing increasing pressure to cut costs as it grapples with declining ad revenues and viewership. On Monday, the station announced plans to reduce its overall workforce of 220 by 10 percent.“
While I am sure Lobel will be scooped up by another local network because of his well-liked persona, his leaving WBZ shows that newspapers aren’t the only media outlet affected by the dominance of the Internet.
Owning a Celebrity Domain Name
I have seen many people selling the domain names of celebrities, athletes, politicians and other famous people. These people typically sell the names under the guise that they can be built into fan sites. Since fan sites may not generate revenue, it’s a form of expressing freedom of speech and protected under the First Amendment. While it may be true that owning a fan site on a domain name that uses the celebrity’s name is perfectly legal, by selling the name (or even buying it), the burden of bad faith may may be met, as the seller is profiting from the celebrity whose name made that domain name worth something.
If someone sells the domain name of a well-known person, they are presumably profiting from that person’s good name. By this virtue, bad faith may be claimed by the celebrity, putting the domain name in peril. As some WIPO panels have recently ruled, a change in ownership can be likened to a new registration. Because of this, buying the domain name of a famous person could be the precurser to a UDRP ruling.
Of course I am not an attorney, so this isn’t legal advice, but just my opinion and general domain advice.