Domain Truffles

Every day we receive many offers from retail customers looking to purchase domains. The vast majority of these folk still don’t grasp the concept that a domain is worth anymore than the registration fee.

Most people compare domains to real estate. I view domains more like commodities and collectibles. A commodity is something that has limited amounts and demand for them. A collectible is something that is something prized, either one of a kind or very limited in number.  Like commodities and collectibles, domain’s value, in large part, come from the fact that all of these resources are finite.  Market value is based on supply and demand. Not to say that they are not an infinite combination of letters and numbers that one can use as a domain, or using a non .com extensions, but there are certainly a finite amount of short generic .com’s.  The shorter and more generic the domain, the more valuable it becomes.

With regards to real estate,  although there are certainly very unique properties, the vast majority of real estate is not that special. Take a tract home in a community of thousands of others. You miss out on buying one of them there are 50 more for sale pretty much just like it.  A condo in a building of 500 units.  You miss out on buying one there is another just like it on the floor above or below.  They are not that unique.  Maybe that is why the real estate market has collapsed.

Yet during the same time, commodities have skyrocketed. Oil, gold, copper, silver all way up this year and over the last several years. World demand is high. There will be fluctuations in price, but the long term outlook is that commodities will be only more expensive in the coming years. There is just too many people in the world, countries going through enormous growth, more development, more need.

Domains are similarly poised. The growth of the Internet is certain, domains are needed for sites, blogs, traffic. Not just in the good old USA, but all over the world and the only universal domain is a .com

Stuff.com, there is only one of those in the world.

You can go to a flea market and pick up an oil painting for $50, yet this week in Miami over 35,000 people will gather for “Art Basel” which is expected to generate sales over 500 million dollars in just 4 days. Why pay 5 million dollars for a painting when you can get one for $50?

People in the domain industry know the answer.

Last weekend a giant white truffle weighing 3.3 pounds sold for a record $330,000. White truffles, for those who don’t know, are delicacies used to top off various dishes. Actually i am quite found of them. White truffles are in the mushroom family, grow underground in Italy and are found by truffle sniffing pigs.

So the question is why would someone spend $330,000 for a fungus, when they could run over to “Whole Foods” and grab a bottle of white truffle oil for $12 and get the same basic flavor in their food?

We know the answer.

There is only one in the world.