FoxBusiness.com just covered the new Domain Pricing Index (IDNX) Sedo.com released yesterday with economist Dr. Thies Lindenthal, in an article entitled “Can Domain Names Predict the Next Recession?”
FoxBusiness goes on to say:
“The index, called the IDNX, was calculated using data from SEDO, the world’s largest virtual marketplace for domain names, including more than 200,000 domain transactions over the last six years. Since it will be updated on a monthly basis, the index opens a new door to the economy that has never before been.”
“It provides a reliable benchmark for domain name traders and investors looking for information on price trends, returns and fundamental risk of Internet domain names,” he said in a note on the IDNX web site.
Not Just a Cloud-Cuckoo-Land
“Domain markets are not a cloud-cuckoo-land where dreamers trade esoteric goods at imaginary prices,” Lindenthal said. “The strong correlation shows that domain name buyers and sellers make economically motivated price decisions.”
“Domain prices rapidly gained in value from 2006 through 2007 before peaking in September of that year prior to the recession. Not surprisingly, so did the Nasdaq.”
“Shortly after, when valuations across the board started to fall, both tumbled. The biggest drop was in the heart of the recession between September 2007 and January 2009, with the IDNX and Nasdaq sliding about 31% and 50%, respectively.”
“Both started to gradually rebound in the first half of 2009 and now sit at their highest valuation since the IDNX began tracking domains in 2005.”
“While the two are neatly aligned, the IDNX always seems to stay ahead of the Nasdaq and remains stable when compared with Google (GOOG), showing it is less volatile in the face of severe economic headwinds. Google’s stock plunged a whopping 59% from September 2007 to October 2008.”
“The index’s launch comes a month after the Internet Corporate for Assigned Names and Number [ICANN] overwhelmingly voted to increase — by an unknown amount — the number of domain endings that include .com, .net and .org from the current 22.”
“Industry experts have predicted the release, slated for sometime next year, will spark a virtual gold rush, with companies and entrepreneurs alike trying to scoop up new domain names in a bid to protect their brands and expand their reach over the web.”
“While it’s hard to tell the kind of effect a flush of hundreds of new domain endings will have on the new index, Schumacher predicts it will have little impact on overall prices.”
“My gut feeling is it won’t change much,” he said. “Only some may actually get some traction.”
The article is great coverage for the domain business especially in it discussion of domain names as investment quality assets, which we all know them to be.