What is the real future of domains?

Every savvy webmaster knows that having the right domain name, is good for business. Those that are short and catchy, directly relevant to their business, or even their business name, tend to do the trick. The question is; what is the future of domain names?

Domain names are registered at an alarming rate, millions every year. It stands to reason that the supply for those that can be brandable to a business, will thin out quickly. This has taken a basic registration, which only costs £6/$10, to sale prices of $1,000,000 and beyond.

Investors

Like every industry, there are already “domainers” that specialise in the purchase and sale of domains. For many, it has been a mixture of analysis, assumption, with a bit of pot luck thrown in for good measure. The possible introduction of the .UK, will shake things up, that is for sure! Always remember that even if you don’t sell domains, you’ll still be paying for annual web hosting!

Is the future of domains, investing?

Domain valuations

Here is where the difficulty lies. With millions of domains, the same domain doesn’t get sold very often, so making an accurate valuation based on sales history (unlike property, for instance) is extremely difficult.

IDNX, we believe, will start to establish a metric for valuing domains. It’s worth downloading their report and having a read.

Without going into details relating to factors that affect domain prices (our opinion), IDNX shows that in January 2009, and the index was at around 120.00, rising to around 190.00 at the peak of January 2012.

So a domain purchased for $12,000 in 2009, should have been worth $19,000 in 2012.

Appraisals

Domain appraisals can be incredibly misleading. If an agent valued a property, it is likely that 3-4 other agents would value the property within 1-2% of the initial valuation. Think it’s the same for domains? Think again!

One generic tool might give a $1,000 for a site, with another tool giving a valuation of $5,000. The same goes for manual appraisals. Of course, when there is a fairly standardised way to value domains, like property, the market will tighten up considerably. Of course it goes without saying that any domains that have a site attached and/or SEO value and rankings will be worth more.

Top 3 domain sales of 2012!

For those that are unfamiliar of just how much domains can sell for, below is a list of the top 3 for 2012 (DNJournal). This doesn’t include some of the all time chart toppers, such as: Hotels.com ($11,000,000 in 2001), fb.com ($8,500,000 in 2010) and beer.com ($7,000,000 in 2004) according to Domaining.com.

 

Domain name	Sale price
Silver.com	$875,000
Stockphoto.com	$250,000
NYE.com	$175,500

 

Where do you think the future of domains lies?