Sorry to Say, But The Domain Name Industry IS in Decline! My Take.

Morning Folks!!

As I look at the current conditions of the domain industry I can only come to the conclusion that the industry is in major decline. It did not start yesterday or even this year, it started a few years back and it is just getting more noticeable. My vantage point may be different and probably much longer than most readers.

Looking back I would say 2005-2015 was the epicenter and also the peak for domain name investing. At least so far. Business is cyclical. Ebb and Flow. The very essence of business.

Now that does not mean domains won't roar again or continue to roar. But what it does mean is the market gets much more choosey and that affects our marginal domains. The domains of value will always rise to the top. Difference is the ones with no value will now fall all the way to the bottom as there will be less domainers to catch them and less cash chasing that garbage.

Now there are many opportunities that will come down the pike. All these Mergers will help to spinoff new companies and entities. These startups start out with $$$.

The Life, The Death and The Rebirth of the Industry of Domains is still how I see things. I just don't have a timeline for the rebirth mostly because of the new GTLD detour. But that detour is about to expire. That detour went nowhere. It wasted the time and money of domain investors and that is the primary reason for the decline. All those $$$,$$$,$$$ transferred from the wallets of domainers to the wallets of those that pulled the wool over your eyes and convinced you to buy a bag of worthless .crap. And btw, the majority of GTLD registrations I have seen are so bad that even with a .com on the end they would be worthless because just look at the junk posted for sale yesterday on my blog. Only a couple even made any sense.


Registries and registrars are doing just fine except for the 400 GTLD's that are insignificant and have less than 25,000 registrations. Only 6 GTLD's have more registrations than .Mobi. But that does not help domain investors who never learned that lesson about adoption and value. Along with .Net, .Info, .Biz and all the other garbage that are worth 1% or less of what the .com counterpart is worth and few will even buy them at that price. There is simply no demand, no circulation, limited advertising and not synonyms with the Internet as .com is and will FOREVER be.

Since 2004 I have maintained that registries and registrars are not your friends. They are nothing more that the Division of Motor Vehicles where you pay your damn tax and get your license plate and get the hell out. But Domain investors allowed them way too much control and influence and what was a thriving industry is now a totally splintered industry without direction or meaning.

Perhaps the thing that saved domainers last year was Bitcoin and Crypto. Does not look like that will repeat and demand/interest in those items have fallen considerably. The next big thing is not domains and it won't be crypto either. Those were the last big things. The ones losing their asses are playing a game that is already over. They don't look forward to tomorrow, they just keep chasing yesterday. They should just buy hula-hoops. That fad started in 1957. They still sell today. They would have better results even with that!

That all said, many of us will be domain investors for our entire lifetime. We have domains of great value that we plan to pass on even after we pass. We have to think like that. We play the long game and we play with blue chip .com names. We don't worry about making sales. We know they will come when they come. Personally, I look to just sell 1, 2 maybe 3 names a year. But for the rest of the group that has to hustle every day to make ends meet, that's a game that will get harder and less profitable as time passes. The steam roller of financial devastation is always close behind for so many. That's the decline I can visibly see.

Rick Schwartz

 



13 thoughts on “Sorry to Say, But The Domain Name Industry IS in Decline! My Take.

  1. Kees Kroos

    Hi Rick,

    Can this period also be good for the people who own the great value domain names?

    The good domain names become more scarce so they become more valuable?
    (supply and demand)

    Or do you think the discline in the industry will also partially reduce the value of the great domain names?

    Have a great day!

    Kees

    Reply
    1. Rick Schwartz

      Money will find its way back to quality. They are abandoning GTLD’s and as reported today, the largest Player in GTLD’s, Famous Four, may be going bankrupt.

      It’s been a giant detour of $$$ for the past 5 years. The detour is coming to a close. But not before it is financially impacted most domain investors looking for the second coming and put others out of business completely. So from the ashes it rises again, but the burning is just starting. Will take time to recover. Not sure how long. Probably a few more years. It took 5 years to do the damage, it will take a few to clean it up.

      http://domainincite.com/23102-has-the-worlds-biggest-new-gtld-registry-gone-bankrupt?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DomainIncite+%28DomainIncite.com%29

      Reply
  2. BullS

    :A pessimist sees the difficulty in every opportunity; an optimist
    sees the opportunity in every difficulty.”

    Reply
  3. Ryan Zales

    Rick,
    I found your thread while using my aol browser to get online with a CD I got in the mail via a phone line modem connection in the late 90’s. Up until 2001 I would read your blog, and your example of property.com etc… I believe it was domainking.com

    Every year since 2011 I have been doing more, and more sales, for bigger, and bigger amounts. I can’t even afford domains on the aftermarket anymore because they have gone sky high.

    GTLD’s will have weakness, but great .com’s, have more but requests than ever, albeit that equals more low ballers, but the serious players know they have to step up also.

    If it isn’t 3D printing, drones, self driving, crypto, it will be something else, and I’ll all comes full circle.

    From people who thought tokens were for amusement parks, and ledgers were for boring accountants, they went from zeros to heroes.

    I think the industry is stronger than ever, try to buy a 5 letter brwndable prounacable domain, you are going to pay hundreds if not thousands in the aftermarket whereas they used to go for min bid prior.

    Reply
    1. Rick Schwartz

      Thanks!
      It’s a tale of 2 cities.
      Quality .com will always have value and likely increase.
      But the industry went from very strong to very weak because the dollars that domain investors had for .com have been diverted. They will eventually be repatriated.
      But during that diversion .com prices have been a bit depressed. They would have been much higher and investors financially stronger without the detour.

      For me, I took advantage of the lower market by loading up on new domains. I bought about 150 at auction in the past year or two. I could not have done that 4 years ago and I doubt I will be able to do that again 4 years from now.

      Reply
  4. Travis

    Rick is right we have given to much power to the registries, allowing them to charge 20-30 percent to
    Facilitate an electronic transfer.

    Realtors have to do so much more for a fraction of that, commissions should not exceed 10 percent to be honest.

    I have seen a lot of new blood enter the space,
    In terms of people building mini warehouse portfolios. Turncommerce has made things very expensive for domainers albeit while boosting the bottom line for godaddy.

    Reply
  5. Tom Twitty

    Rick,
    Nice summary of what’s happening to the industry. I agree having inventoried a few hundred of what I thought were good .com’s starting in the 90’s.
    We used several Domains in our own business I.E. INKandIDEAS.com CombatVets.net LovedOnes.com and banked the others. We have only sold a couple since 1997. INCA.com that year for $17K and later GigIt.com with a lease option for $45K, which we got back after the buyer defaulted and lost $30K in lease payments?
    Anyway, I agree with your idea of leaving the assets to our kids. I don’t know if we have the time to spend the money if and when the value returns?

    Reply
  6. Kevin

    Rick, as always, is 100% correct.

    Yes there are still some opportunities here and there if you get lucky, but you can’t run a business depending on luck. And every now and then we all see a nice big sale that gives us a shimmer of hope, but from my perspective also, things have been declining for the past several years.

    Best advice in times like this is to get real creative like Rick does and structuring JV’s, long term seller financing, and pick one of your best names to focus on and develop it into a business.

    As for gTLD’s Rick was right on that too. There just is not a vibrant market for them yet, and I’m not sure there will be anytime soon. Even exceptionally great one worders are hard to sell.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.