It’s easy to overlook bad times when times are good but we all know, things change, markets go up and down, and sometimes burn to the ground just to come back later stronger then ever. Yesterday I read an article about the real estate market where the large majority of foreclosed homes do not sell, even at huge discounts. So, we already know times are not that great now in the markets but what if it goes very bad very quick? How would you liquidate your domain portfolio if you needed to? What strategies would you use? And realistically speaking, if you were to decide to liquidate today and sell all within say 15-30 days, what do you think you would get in terms of % of the ideal price you would get in good times?
Why is it all so important? Because you just never know what will happen tomorrow, or even later today. We all need to look forward to great times and be prepared for bad times.
Yikes. Just like stocks. If everyone wanted out on the same day there would be very few buyers with enough interest or “dry powder” to step up to the plate and buy. If they did have the interest and “dry powder” you can be sure that they would want EXTREME discounts and would be VERY selective chasing only VERY high quality domains.
So, that means most domainers are shit out of luck. This is not a very liquid industry. It is more like real estate than the stock market and I don’t ever see that liquidity changing.
One thing is for sure, there would be some FANTASTIC deals in the drop game again.
Now if someone has a portfolio of domains that actually make decent money, one would have to ask, if things are going to hell, are the advertisers going to be there to generate those revenues for good PPC revenue domains.
Buy quality and diversify I guess would be the best insurance against a meltdown.
Sahar,
Have to draw some comparisons here. Speculative real estate in a down market is not liquid. Unlike domains or stocks, you can’t simply unload it, even at a fire sale price. You need to go through all kinds of hoops. Then there are carrying costs, taxes, mortgages, maintenance, etc. It’s physical property.
Domains, as you know well, are a limited commodity, especially if you stick to non-hyphenated dot coms. We don’t currently buy existing domains- all of ours are new registrations (yes, they are still out there if you like the long tail!), so our sunk costs are limited to our dev costs. Those of you with substantial cash invested in buying existing domains are in a different situation so your question becomes more relevant.
Maybe this just indicates that there are two kinds of domain investors with two sets of concerns regarding liquidity. If a market like FUSU.com ever gets off the ground (anyone know what happened to them?)then things change- we get real time, market-driven feedback on the value of individual domains, just like stocks.
That’s when this business goes ballistic.
Happy holidays all,
Martin
Strictly answering you question, domaining is more stable than the real estate market because global players are involved.
If the US economy will continue with the current trend, Europeans or
Asians will have more power to buy.
Domaining would be affected by a weak US economy, but not on such a great scale as real estate.
Still, a decline is imminent in any industry, but I cannot see a catastrophe coming our way.
Online advertising is about as recession proof as you can get.
They will want to get more bang for their buck so advertiser will move more online, but the one thing they simply cannot afford to do in a recession is to stop advertising. That is the corporate equivalent of rolling over and dying and they all know it!
Timewise, in the absence of a forum that facilitates such transactions, this could be very difficult to accomplish within 2 to 4 weeks unless you’re well-connected, but…
I would seek to identify some honorable and fair domain investors who have successful domain development and monetization track records, who see opportunity, who are able to seize it, and who are willing to build a long-term, mutually-beneficial relationship by engaging in a Fractional Domain Ownership arrangement.
Then, we would bargain for a “fractional” deal that makes all parties involved feel “whole”.
[BTW, with the “right” players, that’s a scenario I would be interested in entertaining anytime!]
…Potential for greater liquidity is one of the reasons why I think Fractional Domaining will interest more domainers in the months and years ahead.
I expect that more and more domain portfolio owners will be willing to sell either majority or minority interests in some or many of their domains to gain liquidity, reduce risk, and to partner with other players who bring capital and/or monetization skills — while retaining fractional ownership and the chance to continue to realize ongoing value from the domain(s). With the right players, this approach could help move domain owners’ non-performing, stagnant, and underperforming domain inventory towards greater profitability and, ideally, a long-term win-win relationship.
For individuals or companies looking to invest, purchases of fractional interests in domains could extend and leverage their purchasing power and enable them to increase and diversify their domain holdings while forging relationships with one or more fractional co-owners who also have a vested interest in the domain’s short- and long-term success.
Is Fractional Domain Ownership the best approach? So many variables can impact such an arrangement that it’s tough to predict until fractional domainers develop track records of their performance… but it may be a solution worth considering very seriously.
Let’s not forget CNET, who still have one of the most impressive domain portfolios in existence (news.com, tv.com, search.com, help.com, com.com, download.com, radio.com) to name just a few of many.
Sahar,
I’d like to share some observations and experiences I’ve encountered in my close to 15 years experience in collecting domains. I’ve experienced the ups and downs of a domainers life, through up and down stock and commodity markets and real estate markets.
As to comparing domain names to all these other traditional asset classes, good luck, because in reality domain names are not, real estate, nor commodities, nor stock! If you don’t beleive me look up their definitions in the dictionary.
To be quite honest with you this industry still has’nt got a true defintion that describes the actual value of top level premium domain names!. There are many comparisons being thrown around out there. None of them explain the one of a kind uniquness of these Intellectual properties.
Let me just say this! To try to draw comparisons between domain names and, the stock market or commodity market or real estate markets makes no sense. Let me add that those who did in the past, were terribly mistaken, and lost faith in their committments towards domain names as long term investments, whose values can only go up after each corrective market cycle turns up again. Just ask some of the people who lost heart in the last market downturn, how they feel now about leaving their leases go on some invaluable names. Only to be scooped up by savvy investors with long term objectives.
Which brings up another point! The most valuable premium domain names are often missing from public auction blocks!
If you want to know why check my blog article “The Most Valuable,Premium Domain Names” for the real scoop. http://domainlair.blogspot.com/
Martin Edic
Dec 19th, 2007 at 1:14 pm
Sahar,
Have to draw some comparisons here. Speculative real estate in a down market is not liquid. Unlike domains or stocks, you can’t simply unload it,….
Sahar,
My views are somewhat in line with Martin. Unfortunately, should there be a massive downturn in this domain market partly due to the ever expanding credit crunch or just boom bust cycle inevitabilities, my guess is domainers with large aftermarket portfolios are likely to be hit very hard indeed. However, this inevitability does not have to be so severe if by some measure domainers currently with deep pockets care to invest in ideas by some of us small domainers. Perhaps it’s just my bad luck, but i have not had any feedback from suggesting my ideas along the lines of what FUSU.com maybe trying to do assuming its similar.
I honestly believe contrary to a comment made by jeffery on this thread, domains can actually trade like stocks. Its simply a question of creativity, logistics and innovation. Ok, perhaps there have been a couple of false starts, but I’m not sure they had the right metrics in the first place.
Here is my personal idea of how i see it working:
The software platform to create a real Domain Share or Stock Exchange(DSE) similar to NASDAQ does exist, will cost about £50,000 to do an alpha launch. Now, to do this properly, we will need FSA(Financial Security Authority) approval. Notice i mention FSA and not SEC, this is because the DSE will be mostly viable offshore of the united states. SEC is full of red tape, somewhat parochial in the 21st century and too expensive, while the UK FSA will most probably give it the heads up very quickly! We have legal betting exchanges in the UK and europe and besides, the UK has the largest foreign exchange markets and international credibility anyways. my preffered city for the DSE is Barcelona for a number of reasons. Ok, now you have your DSE alpha platform and FSA approval to launch. The new DSE will have 3 components:
A. Domain Listings from registrars, auctioneers and domainers in general.
B. Active Domain Shares Trading
C. Domain Derivatives or options.
Now, the A component allows any novice to initiate an intention to buy a domain either as a straight purchase or as a wrapup in component B where capital is raised like an IPO. E.g, if
CARBMW.com is listed in A for $25,000, I could purchase it as part of an IPO and raise another $75000 in the IPO for a total of $100k …get the picture? ..ok, now CARBMW.com starts to trade just like shares in component B because it raised $100k and now has share holders buying and selling using its prospectus and research estimates to give some idea of where CARBMW.com is heading as a new startup. Now, component C kicks in because speculators can measure potential earnings based on estimates and multiples etc.. therefore the derivative of CARBMW.com motivates share buying in component B and vice versa, just the same way it does on the stock market. So what would we have accomplished here?
1. 146 million destitute domains now have a real home called the Domain Share Exchange or Domain Stock Exchange (DSE),
2. the New DSE instantly creates what is severely lacking…LIQUIDITY!!
3. GLOBAL UBIQUITY as the DSE becomes common sense to everyone regardless! everyone knows what the stock exchange does, they will know what the DSE does too!
4. This is the most important bit in my opinion… the DSE becomes the next disruptive technology because it is simply the stock exchange of the future where small businesses come to raise as little as $50,000 to start a real business on line, beginning with a DOMAIN!! just imagine if that company was GOOGLE 10 years ago!
I have deliberately left out alot of elements and metrics here, but you get the gist. I envisage a DSE Board and Seat membership just like the NYSE, primarily made up of domainers who want in on this exchange of the future. Remember the NYSE started under a Walnut tree in the 1800’s by traders who were domainers like us. There families are still reaping the rewards of their innovation and foresight today.
If you are a real investor and want to explore this further, then kindly contact me.
Enjoyed your subtle reference to the tulip mania 400 years ago.
http://en.wikipedia.org/wiki/Tulip_bubble