Everyone will be affected by the economic collapse and meltdown, even if indirectly. While it may get better for the short-term this summer, I am afraid we are far from out of the woods. Any bad decisions the government makes will bite all of us in the ass at some point in the not-to-distant future. So while the dollar is weake, and there is justified fear of inflation, domain names themselves have not been affected to any great degree. That does not mean there aren't bargains; there are. But the bargains are a result of weak domainers, or ones with high overhead, not a weak domain market.
Those that are overextended are forced to sell some of their better domains. When there is a timetable involved in the sales process, they are not getting the premium price they could get if they had the luxury of time to sell their asset. So, any downturn in domain prices should not be mistaken for a weak market. The market is always good for great domains. Just look at the sales this year — some very big ones — and they continue as I write this. The less the quality, the more exposure you have.
Now there are those that have hundreds of thousands of domains, and that costs big money to renew. So domains bringing in income will get renewed as they are an asset. Those that are not bringing in revenue may no longer be assets, but rather liabilities. So they don’t get renewed. Even those dropped domains will be bought by others when they drop.
If you know what constitutes a great domain name and it produces income, it is a great time to invest in these while the return on savings is near 0 percent. Plus as the dollar weakens, the domain, like gold, is a great way to hedge your bets. Being completely portable, you can move it anywhere and do it in seconds.
So while there is softness in the domain market as a result of overextended domainers and companies, domains themselves are still commanding premium prices as the sale of Toys.com for $5 million and Candy.com for $3 million illustrate, as well as several others in 2009.
If you have cash, I still can’t think of a better or safer investment than a great domain name. As many know from the Ynot days, the Netpond days, and the Oprano days, I have been bullish on domains since 1996. Maybe there was reason not to believe me back then, but there is little question that you can match my exact words to how things unfolded.
You don’t have to have thousands of domains to secure your spot in history. Just one key domain can change your life, can transform your business. From theory to reality, the story on domains has unfolded in front of the adult industry first, and looking back, many adult webmasters from the ’90s became domainers in this century.
Domains are like real estate. If you bought an overpriced home in the swamp during good times, you pay for that decision when things get bad. When you buy prime land, oceanfront land, desired and waterfront land, you have a layer of protection. Your values could drop 10 to 15 percent, but the ones in the swamp will go down 75 percent and more. When things rebound, the prime oceanfront and waterfront land will sell first and those prices will increase first. It will be years if ever at all that the homes in the swamp have value again. So the lesson is: Buy quality, not quantity. Plus I always believe in focusing on domains with type-in traffic, with revenue. Follow some basic rules and it becomes hard to fail.
The last few years, I bought very few domains. I saw the market getting way too much money for worthless domains, so I decided to sit mostly on the sidelines. Now that circumstance is forcing really good domains to be put on the auction block, there are bargains. But again, they are bargains because the owners are forced to sell at below-market prices to keep their cashflow moving.
Not all. Matter of fact, not even a large part of the domain industry. But there is enough “circumstance” out there that if you have cash to spend you can get some incredible bargains. How long will that last? Not long at all. By this time next year the window of opportunity will close, and I doubt we will see another bona fide buying opportunity ever again when it comes to premium domain names. The “unique opportunity in time” that I have based everything on since Day One is about to be closed and closed forever.
Rick Latona is a leader in aftermarket domain sales and runs a popular domaining blog at RickLatona.com as well as a forum on this subject at ccTLDs.com.
This article originally appeared in the August 2009 issue of AVN Online. To subscribe, visit AVNMediaNetwork.com/subscribe.
