There’s been two sales of domain names that have happened recently and both of them had me trying to read between the lines and see if there is more to them then meets the eye. I think it is a smart move for anyone to do this instead of solely relying on articles that are written because reading the articles puts you on par with everyone else who is literate and you always want to be one step ahead when possible.
The first sale was the sale of Media Options domains through Namejet. This was publicized on the Namejet site with one of their big rotating banners so without evening needing to do a Whois lookup you could tell Media Options was unloading domains. There’s two questions that instantly came to mind when I first saw this:
1. Why is a successful brokerage selling domains in a venue that is filled with resellers and not end users?
2. Why are they selling these specific domains and what does it say about these domains?
One group of people who have a very good pulse on the domain market are the large brokers. They are dealing with a steady stream of high quality domains and they are in constant communication with end users so they understand the end user sentiment better than any other group IMO. The domains that Media Options were selling through Namejet had a lot of high quality domains (good LLL.com’s in particular). So why sell them now at Namejet? My guess is that they believe the LLL.com market is at a peak. That’s not too hard to believe given that I’ve seen crappy letter LLL.com’s selling for high four figures consistently now. A year ago they would have been getting $3,000-$4,500. What can I take away from this? If I have any LLL.com’s that now is the time to sell them, and if I’m buying LLL.com’s then I may want to hold off a bit because I may be buying at the top if I buy today.
Secondly, why these specific domains? Do I think an established brokerage would auction off high quality domains without first attempting to sell them directly to end users. My guess is no. For myself, before I send a high quality domain to any auction I have exhausted my attempts of finding an end user for it. That doesn’t mean that an end user doesn’t exist out there, it just means I don’t have a high confidence level of finding one. If a brokerage is selling a quality LLL.com domain through Namejet I would assume they have done the reaching out and couldn’t find an end user. Because this is their 9 to 5 full time job they already have a solid contact list and more experience finding end users, so if they couldn’t find an end user for a domain then what does that say about my chances of finding one for that domain? Even though there were some nice domains being sold I personally stayed away from buying any because of both reasonings I came up with.
The second sale is this BuyDomains sale of 950k+ domains for a price of under $50 a domain. Unless BuyDomains needed cash quick, or unless the portfolio was filled with complete trash, this sale is pretty troubling if you’re a domain investor. Having a million domain portfolio gives you a look at lots of useful information and a gives you a good beat on the aftermarket. What is the average selling price now compared to the past, what is the number of inquiries coming in now compared to the past, what is the close rate now compared to the past, etc… I would assume that a lot of these statistics came into play when BuyDomains was calculating how much they’d let their portfolio go for and if they were happy with less than $50/domain on average that is not a good sign. When I think about this in the macro sense of the domain market I may now be more inclined to accept a $2k offer on a domain instead of holding out for $4k as an example. There’s quite a few levels of thinking I’ve done about this sale and I’m not going to share them all here, but if you see something like this and you’re not questioning what it means in the market and what it means for you then you’re going to fall behind.
Whenever I see a solid domain on Namejet with a reserve price I do a Whois lookup and I have seen quite a few well known names selling their domains on Namejet. I personally think the gTLDs have a lot of people spooked. I think domain investors are questioning now what impact on .com prices will the gTLDs have. And what impact on demand they will have. I personally think very few gTLDs will find long term success. I think that people won’t be able to remember if that new site was Car.deals or Car.NYC or Car.directory or Car.online or Car.web. Too much fragmentation in an already fragmented internet. There may be some short term pressure on .com domains until it all shakes out and the market can begin to see a clear direction but now may be the time to start placing all your chips down on one direction or the other if you want to try to cash out big in the next five years.