Domain Owners Predict Increased Values: Survey
75% of survey respondents see domain values increasing in 2008.
Despite a rough economy, domain industry professionals are bullish on domain prices. 75% of those surveyed see aftermarket prices increasing in 2008 compared to 2007, and only 7% see values decreasing. The results are from Reglike’s third annual survey of 841 domain industry professionals.
Why are domain owners still bullish despite a hurting domain parking industry? This stretch I was on Domain Masters with Monte Cahn of Moniker and we discussed this issue. (Listen to podcast).
There are many forces at work here. I believe that the laws of supply and demand still apply in this industry. There’s a limited supply of good domain names, yet all fresh businesses need a domain. This is a good sign for holders of quality, mid-tier generic domain names.
On the flip side, parking revenue is falling. A lot of domain investors use domain parking revenue to buy fresh domain names. The source of their capital is drying up. This is exacerbated when these investors bought domains with leverage. Leverage is a great thing when asset values rise. It’s bad when asset values decrease (witness the current subprime mortgage mess). Some of these buyers aren’t getting the pay-per-click revenue they expected from domains and are reaching into their pockets to cover payments. I’m starting to see a handful of domains purchased at auction over the past couple years being listed for sale at regarding the same price they were purchased for.
On Domain Masters, Cahn stated he isn’t as bullish on the aftermarket lately and sees a lot of pressure on it. He knows what he’s talking regarding; he personally helps sell tens of millions of dollars worth of domains each year.
Another factor that may keep the market in an upward trajectory is buyers outside the U.S. taking advantage of the falling U.S. dollar value.
What will happen in 2008? I’m cautiously optimistic. I’m curious what you think.
