If domains are so valuable, why are many good ones still dropping?

I started following domain drops in 1997.

Back then there was no domain name industry, no trade shows, no blogs, no industry auctions. Very few people knew what a domain was, how to use them, and how valuable they were.

Now 11 years later, with countless articles, press releases, blogs and reports of domain sales, why are so many good domains still dropping?

Here are just some of the names that have dropped and were auctioned off in the past 30 days:

GreenMonday.com $76,000

Helpline.com $70K

Surveyors.com $69K

Atty.com 49K

Quickly.com 45K

toa.com $35,300

Well.org 29K

ApartHotels.com $27,100

ftn.com $15,100

iart.com $16,694

mkc.com $11,000

Beds.net 9K

ewomen.com $9K

8-0.com $7K

backyardwrestling.com $6,550

woodenflooring.com $6K

sailplanes.com $5K

eteens.com $5K

bookmaker.net $4K

devastate.com $4K

casinooffers.com $3,157

giftcardshop.com $2,351

depiction.com $1,600

cosmeticbreastsurgery.com $1,550

irb.net $1,500

assholes.org $1,310

ftn.com $15K

floatplanes.com $13,500

cancersupport.com $10,600

silos.com $8K

snq.com $7K

kera.com $5,200

hometrainer.com $4,500

testingequipment.com $4,300

coloradoguide.com $4,100

telescopes.org $3,900

compactrefrigerator.com $3,400

panamacitycondo.com $2,800

sittingroom.com $2,400

cheapprojectors.com $2,200

trh.net $1,700

filedivorce.com $8,200

chilling.com $7,900

usnationalparks.com $7,770

beardtrimmer.com $6,500

collegerental.com $6,300

poptop.com $4,900

missourilawyer.com $3,400

alergia.com $23,000

yemen.org $12,400

cyberstore.com $8,255

shoeexpo.com $5,400

apartmentnews.com $4,100

soldieroffortune.com $9,700

nopainnogain.com $9,300

sumtercounty.com $6,500

writingservices.com $5,600

warfield.com $4,100

mountaintravel.com $4K

outsourcingservices.com $3,600

mintchocolate.com $2,860

hivdrugs.com $2,700

negotiated.com $2,700

bail.net $4,150

emedical.com $10,700

azimut.com $12K

The list of course goes on and on.

Three letter domains.

One word domains.

Products domains.

Geo Domains

Profession Domains

All dropped by the previous owner.

And it’s not just the big money names.

At publication, NameJet.com has approximately 2,000 domains backordered at a minimum of $69.

SnapNames.com has over 3,000 domains with at least one bid at $59.

Although there are some duplicate domain backordered at both services and even taking into account snapnames.com auctions of domainer owned domains, it still amounts to say 4,000 backordered dropping domains that are worth at least $59 to somebody.

Then there is godaddy which has 1,000 names backordered by at least 2 people (godaddy only shows domains backordered by 2 or more people and there backorders are only for 4 days out)

So why in this day and age with all the publicity that domains have received why are so many people not spending $7 to renew domains that by the thousands, others are willing to spend $59 or more to get?

Is this the true indication that the message of domain valuation that we preach is not making it to main street?

I received an e-mail this week from a domainer to our blog which asked simply:

“””””At what point are these auctions going to attract real end buyers with deep pockets who have a real intent on developing these names?”””

A fair question and one we hear a lot. Why has our message not gotten out to main street and wall street to the point that we still do not get a lot of non-domainers buying at industry auctions.

However, can we really wonder why main street has not come to industry auctions with an open checkbook, when the general public is still letting so may domains go, rather than writing a $7 check to renew their domain?

On the other hand I see a lot of sentiment that the domain industry is in a slump because domains are not selling at the shows in the seven figures.

However can we say the domain industry is in a slump when so many domains are backordered and purchased at 8x the cost (minimum) of a new registration by the tens of thousands each month?

Never mind the “big” price sales.

What is the dollar amount of total domainer purchases each month, though SnapNames, NameJet and GoDaddy’s TDNAM for dropped domains?

I think we would all be surprised at that number.

Comments

  1. Mark Powell says

    Great question re end users.

    All other B to B industries proactively SELL their product & services. An auction is not a proactive sales process. Get on the phone and make some cold calls to end users who will find the greatest value in your domains.

  2. Tony says

    This is why Frank Schilling likens this to California land in the 1960′s (10 years ago it was 1900′s). In 1997, some people said it was too late to get good domains, in 2002, people told Schilling the same thing. Even today, it’s not too late to get in this business. It’s still an industry where less than 1% of the population is actively investing. There is plenty of room to grow.

    What I have noticed these past few months is that a lot more good drops can be had for just the minimums than say last year. Of course, the best names are still going for sky high prices. As with any market, the high end is rarely affected but the middle and low ends I see a lot of opportunity.

    There are still good names to be hand registered also not just dropcaught. I’ve been able to flip several just in the last few months for an avg of $500.

    To answer your last question, I personally spend about $10K a month on drops (about 2/day). I assume there are thousands of other people that do the same. It must be good to be these auction houses.

  3. Seyi says

    As the old saying goes “one man’s meat is another man poison.” Many people are sleeping on “acres of diamond” day in day out they can’t even see any. People struggle every they looking at the wrong place (9 – 5 ) for their fortune and that gem-of-a-fortune is right in @ their nose. I wonder what people were thinking to let those quality name dropped. I bet many people don’t read news or tech articles.
    History has it that many of the world most successful individuals are avid readers; because that was how they gain knowledge, wisdom, and inspiration. For those ignorant who let those name slipped, I have these Albert Einstein message for them: It is only insanity that would make you thing if your keep doing things the same way you would get different results.” Simple put, some need to overhaul life and look inward a little bit..

  4. admin says

    Seyi

    “”””History has it that many of the world most successful individuals are avid readers; because that was how they gain knowledge, wisdom, and inspiration”””

    You hit the nail the head.

    The message has gotten out, the newspaper and magazine articles, blogs and now even books that been published educating the world as to the value of domains, but people are too busy watching American idol, Survivor and Hell’s kitchen to read, learn and comprehend what is going on.

    You can only educate those who are interested in learning.

    People drop of school, then they drop out of life, at least the part where they take the time to investigate and learn.

    Lack of knowledge.

    This is why people let three letter .com’s go for $7.

    They have no idea they are worth 10K or more.

    Great post

  5. says

    Great post – nice response to it

    You can only educate those who are interested in learning.

    Lack of knowledge.

    This is why people let three letter .com’s go for $7.

    They have no idea they are worth 10K or more.

  6. says

    If your in the (very successful ) economies of scale domain model buy a high percentage of them or not if your already so far ahead of the game it’s a line call, if not. IMO Surveyors.com is the only one worth the registration fee

  7. says

    This is a great time to be buying good domains. It seldom dips to these levels, the first being 1997, second 2000 and now 2008. Be selective with a purpose. The general public is actually starting to understand what a “domain name” is and they are also curious as to what it can do for them. The downturn in the global economy will move them to listen more as the knowledge of this industry gets more “successful” press. Take advantage of this period.

  8. says

    good posts. as a relatie newbie, I see it much like the California land analogy given in one of the previous posts. It’s very much like buying uneveloped land. re the one that suggested contacting the end users for the highest prices, how can one really evaluate the domain’s value w/o an auction scenario?

  9. says

    Just like in real estate, comparables are a good place to start. If you are contacting an end-user you can send a link to the DomainJournal.com or other sites that list domain sale prices. You can point out ones that might be similar to the domain that you are trying to sell.

  10. says

    Here is another idea.

    Go to this link and see what it costs to buy the top positions on Google’s search page for the keyword term that describes your end users need. For example: Let’s say I own http://www.ClinicalTrials.com. Let’s say I want to sell the domain to one of the sponsored links on the search page for “clinical trial” or “clinical trials”.
    I just plug in those words with quotes, into the ad traffic estimator, and it I can get an idea of what it might cost them to maintain that top position per day. Multiply times 365 and you have their yearly expense. Multiply that times 3-5 years and you could have a basis for a price.
    https://adwords.google.com/select/TrafficEstimatorSandbox

    Here is my example:

    https://adwords.google.com/select/main

    You can see that you have to do a little averaging… but let’s say at $600 a day multiplied times 365 days in a year = $219,000 for an ad budget….for a year. Give or take. Let’s say they plan on spending this for the next 10 years…that is $2,190,000…
    They might think that buying a domain with the “exact keyword match term” not only gives them very targeted leads but also will likely put them more naturally at the top search position with a decent SEO strategy. I am assuming that if they are already spending that kind of money on adwords they probably have someone working on search engine optimization as well.
    Think of the money they will save over the long term by owning the keyword(s) fo their search term!
    “If you own the word you own the search” -you can quote me on that!
    So even if you only ask for one years worth of ad dollars for that domain it is a great return on a hand reg… Of course you will see that alot of search terms cost per click are not as high as “clinical trials”, and if your domain happens to be http://www.ClinicalTrialSsites.com you will have to settle for considerably less.. but it does throw some light on to the whole valuation process.

    I have been studying this method for quite awhile now and I would REALLY be interested in other people’s thoughts on this because nobody ever seems to mention anything along these lines so am I tototally off base???

  11. Tony Lam says

    Kelly, you are not off base at all. This is the perfect pitch for the end user/madison ave corporations. However, even your thought process doesn’t take into account the total worth a good domain would bring to a business. You are only looking at ad expenditure savings which is a baseline. If you look at the actual revenue or profit the business gets from the additional traffic the domain gets, it would bring another order of magnitude to the valuation. For example, say you own newyorksurgeons.com. It might not get that many natural type-ins, say maybe a couple of visitors a day. But of those, couple of visitors a day, one a week becomes an actual patient of yours. That extra patient of yours is an additional $2,000 in revenue for argument’s sake (not unusual for a surgeon). Over a year, that’s an additional $100,000 in revenue just off the type-in traffic. If you use SEO and put other relevant content, it would only increase. How much is the goose that lays eggs worth? My answer would be priceless. That domain hypothetically puts an extra $100,000 in your pocket a year. That’s why you can’t just look at ad cost savings and traffic frequency of a search term. You must look at what the asset brings to the business.

  12. says

    I wanted to say in my last post: “how much is the goose that lays GOLDEN eggs worth?” If you are a New York surgeon, newyorksurgeons.com would be priceless.

    We are still very early in this industry. Valuations are very primitive and based on PPC or natural traffic or some other metric that has little to do with what a good domain is actually worth to a business. This is why Frank Schilling thinks a name like ceilingfans.com will one day be worth a million bucks. And why he had trouble sleeping hoping that someone wouldn’t outbid him for rumcakes.com (which he won for $4,100). You own a good name and you have an inherent advantage over your competition. You can become an instant contender even if you are just starting out because you’d have a steady stream of free visitors and word of mouth viral advertising from those visitors. You can scale up if you do additional advertising. With any of those types of names, you can build a million dollar or higher business around.

    This is what happened with 1-800-Flowers when they bought flowers.com and built their business around it. They overcame the leader in that space (FTD) a few years later. Much of corporate America still does not understand. If I’m Papa Johns, I’d cut $5 million out of my ad budget and buy pizza.com and pizzadelivery.com. I’d leverage those domains to catapult myself past Domino’s and Pizza Hut. If a domain name can help add $100 million to a company’s stock market cap, how much is it worth to that company? How much is flowers.com worth to FTD or 1-800-Flowers if it were on the market now?

    I just saw celluliteremoval.com sold for $10,000 at the Traffic live auction. That’s another name that will be worth at least 6-7 figures to the right company who gets it. I own cellulitereduction.com and would not sell for anything less than 6 figures for that. That is a huge industry and it will only get bigger. The right cosmetics company can add immensely to their bottom line and market cap with those domains. To let it go for $10k is a shame.

  13. says

    I agree that you have to take a very comprehensive 360 degree look at the domain in order to assess any evaluation to it. I think that a lot of companies need these kinds of examples to wrap their head around the power of a good domain.
    Love the CelluliteReduction domain. I have a lot of friends that would spend 5 figures to get reduce theirs! In fact I could probably get about 1,000 women in a Kansas City minute to pony up ten grand for a cure!!! That domain will be worth a mint to someone!!!

  14. says

    Thanks, Kelly! As a side note, I outbid Frank Schilling for that domain!

    As an example of good names still available for registration. A few weeks ago, I hand registered enhancelongevity.com. This is another industry that will only get bigger with products like Resveratrol and others hitting the market now and in the future. Always keep reading and it’s really never too late to get started!

  15. admin says

    Kelly

    I don’t think your valuation model is off base at all.

    However the point I was making by the post was that your message, my message has not reached the general public as evidenced by fact that they are still not spending the huge sum of $7 to renew their domains.

    So if only you and I agree on value and the general public does not, your not going to sell your domains for the price you think you should get.

  16. Snoopy says

    With the high quality stuff being dropped I think it is mainly due to lost emails, changed contact details, companies going out of business etc rather than a deliberate intention to drop.

  17. admin says

    Snoopy

    Don’t think any of those excuses are good enough.

    If you move you change you mailing address to all the people that sent you bills and checks.

    If you have a valuable asset you keep track of it and make sure you can be found.

    Moreover you can renew the domains for 10 years at a time not each year.

    If you no longer need the asset you can go on ebay to sell it.

    How many crap items laying around the house are for sale on ebay? Hell ebay was founded on people selling stuff they have that they don’t use or want anymore.

    The problem is that these people don’t regard their domain as a valuable asset.

    Therefore they don’t take th few minutes it takes to renew it for 10 years, or change the contract info or sell it.

  18. says

    I think alot of the “domain droppers” may be domainers who got into the business thinking that this was going to be “easy money” and have made the short sighted mistake of deciding the value of their domain is equal to it’s parked revenue and the traffic it gets as a parked domain.

    So much emphasis has been placed on these two figures, traffic and ppc revenue, that everyone loses sight of the true POTENTIAL of a given domain.
    Even auction companies, choose domains for the auctions based on these outdated metrics. And interestingly enough, that’s what the buyers that are in the room are still looking at..

    This is because the leaders in the industry do not know how to “sell” the concept to the end user. The auction companies who sell our assets are not getting them into the hands of the right buyers.
    For years, the right buyers were other domainers still building portfolios, but that time is coming to an end.

    We need some massive PR and marketing to boost attendence at domain auctions. It really should be the responsibility of the auction house as they are making the 15% commission. They certainly would end up the winners in the long run if they would take the initiative because 15% 0f $3,000,000 versus 15% of say $4,000,000 or $6,000,000 would pay for a nice campaign. (Hello, Owen Frager)

    If there were end users at domain auctions, or the auctions went to more of the end users events like the Affiliate Summit, CAC etc…. we might swing things around.

    Meanwhile, I am happy to pick up drops that others can’t see value in(!), and add to my portfolio… but I do hope that the day comes quickly that Mad Ave and the rest of the Ad world gets it.
    With well over 2000 domains coming up for renewal just this year, I can’t afford to renew them for more than 2 years at a time… I am still domaining under the radar at my domain(!) – pun intended!

  19. 500ml says

    domains could also be dropping not because of ignorance, or misinformation but because of other issues that deal with frail human nature, people are dying, mental health problems (dementia,depression, suicide) … i wander how many are dropping for those reasons

  20. admin says

    we are talking about like I said 4K of names at snap and 3K of names at namejet.com that other people have backordered.

    And that is just names dropping in the next few weeks

    That’s a lot of depression and suicide, don’t you think?

  21. says

    “A fair question and one we hear a lot. Why has our message not gotten out to main street and wall street to the point that we still do not get a lot of non-domainers buying at industry auctions.”

    I really think this is the key.. Are the auction companies that we are relying on to sell our assets doing their job (at a healthy 15%) to get end users in the door?

    The answer is no.

    Perhaps now that many of the big domainers may be finished buying like they have in the past, the auction companies will be motivated by profits to seek out new buyers and new avenues for sales.

    Meanwhile, we have to do our part by stepping outside domain blogs and hitting blogs in our respective niches and start talking up domains when appropriate. You can also hit up your local paper, and business magazines and see if they want to do a story on your domain business.

    In my case, I could hit it from the business opportunities of the stay-at-home mom angle. Because I am the mother of a teenage daughter I can explain why my domains follow emerging trends in mobile commerce and 3D and virtual worlds, for example. Or the reason I own clinical trial domains is because my Dad has Alzheimer’s. There is a huge chance that someone at Sprint (world headquarters here) or Kansas University Med Center (specializing in Alzheimer’s research) might read the article and give me a call.

    At any rate, I am already working with a publication that wrote about me when I was actively inventing that seem to be interested in doing a follow-up on what I am up to these days. I think we all have opportunities like this if we look around. we just need to go after them and promote our industry.

  22. says

    We have a lot of ultra premium domain names for sale – but they are not moving as quick as they used to – most are 6 and 7 figures – you never see these drop necessarily but by the same token i think the perception of value of generic domain names is less now than the last few years.

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