Domain Downturn be Different from the Last? — Will This
Hard economic times may suppress domain prices, but how good is the buying opportunity?
I’m generally bullish on the domain name market. And I’m excited regarding the possibility of buying domains cheaper tomorrow than they were a year ago due to the dismal economy.
But there’s a flipside to this story that domain name investors need to think regarding ahead of jumping in.
The last time domains were a great bargain was following the tech bubble burst earlier this decade. Dot.com firms and speculators dropped their domains. Savvy people like Frank Schilling snapped them up.
That downturn and the ensuing opportunity were very different than what we’re seeing now. People like Shilling saw how much money they could make from domain parking. The fundamentals of domain values had changed. It wasn’t just speculation; there was real income behind it. Also, the downturn was based on over investment (and unwise investments), but was mostly limited to technology with a trickle down effect to other parts of the economy.
It hurt, but at least everyone understood what was going on. I sit here writing this following the stock market dropped another 400 points today. The feds just gave a loan to AIG to help dismantle the the firm in an orderly fashion. One of the world’s biggest money market funds “broke the buck”, meaning its value has gone down to owners who look at it as a cash equivalent.
What’s the next shoe to drop? This isn’t as simple as saying “yeah, selling forty pound bags of pet food over the internet is stupid”. It’s “we extended too many subprime mortgages, but that market has tentacles stretching far into the market and we have no idea where.”
With domain parking revenue down, is there another hidden gem for domain names that will create another wave of value? Or is the only value in buying during this downturn to get domains at suppressed prices from anxious sellers? I wish I knew the answer.
