search industry

Domain Prices Are Going Up and Down

I was recently asked by a fellow domainer how I felt about the current prices of domain names in general. Here’s my take on Generic Domain Names, International Domain Names, Typo Domain Names, and other factors such as financing and the dissemination of knowledge.

I think domain prices have the potential to go up and down, and the type of domain which is affected has some very distinct qualities.

– Generic Domain Names
Generic domain names are always great for a business that wants to build its brand. However, as more and more companies get in tune with the domain name market, they will want to lock-out their competitors from buying related domain names. Just as Carls Jr. owns Burgers.com, they may also want to buy Hamburger.com and Hamburgers.com, or how about frenchfries.com or cheeseburgers.com. Not only is branding a factor, but companies are beginning to engage in a game of web site monopoly.

Further more generic domain names have the traffic that every business needs so that they can convert a visitor into a lead and eventually a sale. What better way to “buy” advertising than to buy a domain name that has residual traffic for the next 100 years! Generic domain names will be skyrocketing in value over the next few years.

– International (CCTLDs, IDNs) Domain Names
As the international community starts to move online, there are many challenges that content writers will face, the biggest being, how to provide content in the language and format that someone from a different county, culture and languge can understand.

IDNs are one way to do that, these domain names are actually domain names that use the different language characters, giving the chance for someone in Japan to have a Japanese character domain name, instead of just Latin script letters. I believe these domain names will move up in value dramatically, they may be the next gold rush online, but the traffic MUST be there, without traffic, they are useless.

Domain names in specific CCTLD sets will be moving up in value as well. We’ve already seen the .es and .fr extension do well, and I think that .in, .jp and .br will begin to do well in the resellers market.

– Typo Domain Names
Oh, the typo market, how that has changed over the last few years. Typos are like a hot-potato right now- everyone that has one is trying to pass them along to the next buyer at 2-4 years revenue. The problem is that if you continue to invest in typo domains and not in another class of domain names, you’ll find yourself sitting there with many high-risk domain names when the shit hits the fan. Typo domain names are ok to own as long as they are not being used in a confusing way. If you own a domain name that has a brand name + a product or service that they brand offers, then this domain name will be useless in 1-2 years as big brands get smart about domaining. Just as generics will increase in value due to big-business becoming more aware, typo domains will loose value as big-business becomes more aware.

Financing Will Change the Game
Sedo already offers financing for up to $10k, and DomainCapital is trying to corner the market. Jay Westerdal touched on domain financing a few days ago, essentially saying that domain names are an asset class where there are no large institutional lending players yet. When Wellsfargo offers loans for domain names, can you imagine the number of people that say “Hey, I want thisdomain.com and I’m willing to take out a $10k loan for 5 years to buy it.” This will cause the prices to skyrocket simply due to supply and demand. More people will have access to funding, which means more demand, and higher prices.

Shifting Knowledge
I have a background in SEO, then I played around in the domain space for a few years and now Im back as Director of SEO with a full service marketing company. What happened over the last 2-3 years is critical, I now have experience in the direct navigation business and in the SEO/natural traffic business. How many other people are crossing the lines? This shift of knowledge between SEOs and Domainers is happening right now, everyone wants both pieces of the pie.

So Whats Up and Whats Down?

–  Generic & high traffic domains are the best combination.

–  Typo & high traffic domains are waining, they should loose value over the next few years due to higher risk factors.

– International domains will have to prove higher traffic levels before their prices catch up to the rest of the market.

– The domain financing industry will start to boom, and then the snowball effect happens, causing the right domains to gain in value.

– More buyers: shifting of knowledge is creating more buyers of domain names as businesses and industries, like the SEO industry, want both pieces of traffic.

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