Dying Domain Name Game
The Good Old Days.
When I first started working on the web, back in the ’90s, the web seemed wide open. There were opportunities all over the place. There was no Facebook, Myspace, YouTube, or even Google! It was like the wild west where you could get away with anything.
As the 21st century unfolded, more and more opportunities began to disappear. Some of the most adventurous and advanced sections of the web, like adult, began stagnating. The corporations took over and everyone found what they wanted using Google. By 2004, once Google, went public, it became clear the web was maturing.
Speculating with Domains.
Before the corporate domination of the web, one way to do well was by speculating with domain names. In the 1990s, there were so many domain names available, the challenge was keeping them all without going broke on renewal fees.
There were only a few registrars, so prices were high. Imagine the lowest price for a domain name is $35! Keeping 10 or 20 domain names became a very expensive proposition in those days.
One advantage to the high cost of domain names, for the speculator, was an abundance of available good names. If you had the bankroll, you could do quite well. In fact, very few investments did as well as domain name speculation from the late 1990s to the mid-2000s.
A Changing Market.
The ease with which people were profiting from domain names created a demand, by registrars and speculators, to enter the domain name market. The registrars wanted to get some of those domain name registration and renewal fees. The speculators wanted to get rich by getting the right domain and selling it for a fortune.
With the appearance of new registrars, domain name prices dropped dramatically. It created a sort of a “golden age” for speculators. There were still many good names left and it was not hard to find a buyer willing to pay an exorbitant price for the right one. Plus, registration and renewal fees were getting cheaper.
The Golden Age.
2000-2002 was a great time to be a domain name speculator. Many people were still typing keywords directly into their address bar and adding .com. The public had still not become dependent on the search engines yet.
Corporations were still trying to figure out the web. They had big budgets and were willing to spend on many things web-related to make a presence. For the domain name speculator, this meant high resale values for their inventory. Life was good!
The Transition from Growth to Maturity.
From 2003-2005, things were changing. Domain name registration and renewal fees were becoming ever cheaper. For .info, some registrars were actually giving them away free! However, users and corporations were becoming more savvy.
This period saw the rise of the social bookmarking, social networking, forum, and blog websites. It was the time when YouTube was created and Google had an IPO. The corporations were taking over the web.
Instead of going to an individual and buying a domain name, the corporations (and many individuals) were learning about the power of trademark & copyright infringement. It allowed them to grab domain names, at cost, from domain name speculators. Plus, more established outlets for reaching specific audiences were becoming available. Corporations did not have to depend on paying high prices for a domain name to get traffic.
The dependence on finding websites with a keyword and a .COM were ending. People now used their social network, a forum, a blog, or a search engine to find a website. The domain name itself was becoming less relevant for getting or building traffic.
The Mature Market.
Since 2005, the domain name game is not what it once was. Each year, the importance of the domain name becomes less and less relevant to a website’s success.
Corporate spending on domain names is nothing like it was 5 years ago, in 2005. Most traffic goes through a handful of websites. The web is becoming more centralized, compared to the 1990s. Today, if you want to reach people, you go to either Google, Facebook, Yahoo!, Bing, Amazon, EBay, or Myspace. That is the competition for the domain name speculator.
How Do Buyers Value Domain Names Today?
If you look at domain name forums, marketplaces, and blogs, there is still the tendency to value domain names on criteria that hasn’t been relevant in at least half a decade.
Potential buyers, speculators, and appraisers use certain attributes to decide the value of a domain name. They look at its domain name extension, its length, whether it is memorable, a dictionary word, or whether it’s popular. These are out-dated and will become more so as time passes.
Let’s Be Realistic.
Corporate budgets are not what they were. They have many options for establishing a web presence, beyond just the domain name. The webmaster has many options for driving traffic. The domain name is no longer the key piece it once was.
From the corporate standpoint, instead of pouring 4 or 5 figures into that perfect domain name, it may be better to put it into advertising, a good product, compelling content, or a viral video.
Is Domain Name Speculation Over?
Personally, I believe it is. While there are still big sales happening, they will decrease dramatically over the coming years. Many will leave domain name speculation and the big players will become smaller. With more competition from other sources for the corporate and webmaster dollar, it will make less sense holding a portfolio of domains that are undeveloped and waiting for a big fish to buy them.
For all the time and effort you spend finding, searching, registering and renewing domain names, you may as well just build a good website and get it indexed in the search engines.
So, I’ve given up on this market after watching it since the 1990s. It’s best days are long gone. It’s time to get out there and develop some content, write some good code, and actually contribute something useful to the web.
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