When Sahar writes, I generally listen. This morning, Sahar made some predictions for 2008, and the following predictions worry me a bit:
“1. Top prices will drop: As the top of the domain market is driven by a handful of buyers (Frank Schilling, Kevin Ham and Co., Anything.com), I see those coming to the conclusion they either have enough to develop or have better returns elsewhere, therefore stop paying top dollars.”
“5. Top portfolio owners to diversify away from domains, investing in other technologies (Search technoligies, others), services ( arbitrage, others).”
Sahar has a great feel for the domain name market, better than most, so when he makes a prediction like this, I would take some time to evaluate your holdings.
I’ve noticed that many of the mid-level to highest-priced domain auction acquisitions end up in the portfolios of the big players. They control quite a bit of the money that is invested in domain names. If one or more of these companies drop out of the bidding at domain auctions, we could see what would appear to be a market correction. Of course, another company could come in and fill the void, but it would take a whole lot of financial power to do that.
Regarding the prediction below, I know that Owen Frager has also been saying something to this affect for a while:
“4. Top portfolio owners to collaborate more with marketers outside the domain space (such as Scott Day/Seth Godin The “ever” project), SEO folks.“
This is a smart approach to domain development. If you look at some of Scott Day’s domain names (like Chairs.com as an example), you wouldn’t know that each wasn’t a full business. Not only does Scott seem to have one of the nicest portfolios assembled, he also has one of the smartest development strategies.
At this time of year, it’s always good to evaluate your portfolio and make changes if necessary. It’s smart to have a diversified portfolio in case there is any type of domain market correction. When it comes to domain names, content is king (for monetization and protection), so now is the time to consider your development strategy.
I don’t agree with Sahar’s prediction about top domain name prices dropping and I posted my reasons on his blog.
However, I do agree with Sahar that the frequency of moderate-upper priced domains may drop because the most frequent buyers at the auctions are domain name owners and now they have more important things to do (like developing their portfolio instead of parking it).
I believe that the future lies in auctioning options for domains. For most of corporate America it is a severe leap of faith to buy a seven figure mega-generic domain. But if they could option a $2 million domain for only $2,000 a month for a year, it would open a whole new world for domain sales (it’s basically a lease with an option to buy for a year).
Most domain name sellers would accept it and it would make it 100X easier to pull corporate America and Madison Avenue into our world.
I think domain prices will take a very minor dip if any b/c it is too hard to pass up a good domain deal these days. This market will probably keep rising even in a recession – especially with “recession proof domains” like cigarettes, alcohol, sex, diapers, health care. 🙂
Regarding big corporations, I have found it hard to get corporate America involved in leasing domains. It always seems to be the hustlers that are trying to put a multi-party deal together or create an empire of their own that are really interested.
Corporate America is still so caught up in their own brands that they can’t see how a generic domain brings in direct navigation traffic that is a separate source of branding for them. Also, many times they want really big numbers and can’t understand how 50 uniques a day is a good thing.
Check out this link on CNN Money
Good Article about what is coming in 2008