Economic Meltdown Means for Domain Names — What the

As the Dow drops below 10,000, what is the future for domain names?

Headlines like this one, on CNN.com,
are meant to scare you. You need
a strong stomach.

A few months ago I had lunch with a business acquaintance who is in his forties. The stock market was continuing its slide and he stated he would get out if the market dropped below 10,000. “It always seems to drop faster than it goes up,” he commented.

At the time of writing, the DJIA is at 9,962. I just e-mailed him to see if he’s selling.

The market is likely to continue its downward trend. People are starting to unload stocks and closeout accounts since they’re scared.

I’m scared, but I haven’t stopped investing. Hopefully in a few years this will turnaround. I don’t know how low the Dow will go, but when I spoke with my friend a few months ago I thought Dow 10,000 was a silly thought. I was wrong.

So I continue to invest monthly in my daughter’s 529 account. As a self-employed person it’s difficult to make monthly contributions to retirement accounts, but if I could I’d still be doing it. During the Great Depression the stock market fell something like 90%. It was hard to pick the bottom, but if you invested through the entire ordeal you came out well ahead.

So what does this mean for your domain names? It depends on if you have a short term or long term view. And if you have a diversified portfolio.

In the short term, some domains will be winners: credit notes, bankruptcy, foreclosure. And look further to casual gaming and other affordable things to do on the web as alternatives to expensive nights out on the town.

Some domains may see pay-per-click revenue go down. Gadget sites, computers, TVs, and other non-essentials aren’t flying off shelves like they used to. My wife returned a pair of $200 boots this stretch to the store. She figured if we’re losing $10,000s in the stock market this year, she didn’t want to spend $200 on a pair of boots when the current pair she has “will do”. Believe me, she’s not the only one making this decision.

How regarding real estate domains? Sales are down significantly, agents are leaving the business, but there are some opportunities in distressed markets.

I’ve heard some people say that online advertising, and thus parked domains, will do better in tough times. Online advertising is accountable whereas TV, print, and other traditional media are not. But online advertising is also the easiest to pull the plug on as it isn’t purchased a year in advance. If a Fortune 500 firm needs to cut advertising 20%, it will look at what commitments it can get out of. It can turn off pay-per-click with the click of a button.

In the long run I think the domain market will do just fine. Online advertising will no doubt be a bigger market in 5 or 10 years than it is now. But you need to have a tough stomach, just like if you’re investing in the stock market.