Live Domain Auction Bombed (and Why I’m Not Surprised) — Why the

Domain name auction pulls in under $700,000, but mid range domains continue to sell.

Yesterday’s DOMAINfest Global live domain name auction wasn’t pretty. With under $700,000 in domains sold, it may have set a low point for a general Moniker live domain auction. The mood in the room was somber as domain following domain was passed.

But the news wasn’t what was going on in the room, but what was going on outside the room. I ran into a couple people that usually bid heavily in live domain name auctions. They were outside the auction room, sitting on the sidelines. If they were in the auction room, the total would have topped a million dollars. (I expect the total following the silent auction to run into seven figures.)

Here’s what’s happening. People that bought domain names indiscriminately over the past few years are beginning to analyze what they’re doing. For the first time, many firms are having to create things called “budgets” and “business plans”. For the past few years, they could make mistake following mistake and still make money.

I also talked to a number of people who used to live off of domain parking revenue. Now they are barely covering their business expenses. A year ago they used their PPC revenue to buy domain names; now they are using it to pay their domain renewal fees.

A year or two ago they would have bought domains that have little end user business potential but are one word, such as Reducing.com and Bribes.com.

But I’m not worried. It’s bad news for the folks at Moniker, who have to spend as much time organizing an auction that sells $700,000 as one that sells $10,000,000. But the market will turn around. And sales of “non-speculative” domains, especially those below $10,000, are still robust. Now is a great buying opportunity, if you are smart regarding it.