The Conundrum

I’ve been watching the or four letter .com scenario, fairly closely, for the longest of times. I started using DomainTools (or as it was known then) to harvest these lists for a while in 2006. In fact, thats what got me interested in domaining in the first place. Well that and the fact that our programs were churning out domains that were nice seo-wise but terrible viz brand value, but thats another story. 😉

In the beginning, around middle of 2006, there were hundreds of available for hand regs, even then though, single words were gone, so were popular acronyms and even major country code + LL. You could still find gems but you didn’t see them as that then. I got a few time and again, some for projects, some for putting turnkey sites on to resell and some for a private collection. They were short, easy to remember and .com, sold pretty well with ready-to-go sites even then.

Towards the end of 2007 there was a rush of registrations, now people might argue here that monthly regs were only slightly higher, but fact of the matter is that they were going… fast. Sites came up with countdowns – most have since been turned into parked pages. There was a general rush of registering these, even the worst ones, since nobody wanted to ‘miss the gravy train’.

To be honest, the price hike at the beginning of 2008 took me completely by surprise and I dumped almost all my 4Ls then for $35-$300 each. People jumped head first into short domains, prices went ballistic. Propagators of this philosophy became the new messiahs (A few are in my blog roll* – Michael Goldman, Reece Berg, Richard, Yofie and Italian Dragon). Every word they spoke was treated as god’s own truth. Partially they were right. If you bought a crappy in oct 2007 for $7, or reg fee as its popularly called, you could easily ‘flip’ them for $30 or so in bulk. Which basically meant you quadrupled your investment value in 4 months or so, unbelievable returns as any investment manager will tell you. [*Edit-k, I messed up here, forgot a few important names – which I’ve added now, very embarrassing, apologies to MG & Y]

Prices continued to rise, soaring to $60 ‘for the worst ones’ on any forum or sales venue till the middle of feb ’08. Then came the pause, it sent prices for the worst ones came crashing down to more logical levels and those for the best ones went through the roof. This is where the conundrum actually comes in… What really makes a 4letter .com valuable? Why have the prices suddenly gone ballistic? Why are priced dropping in the reseller market? A lot has been said about this by various people, I’ll give you my take.

Short domain values are based on applicability. What is or is not premium is directly related to the applicability of that particular domain to a function, the more the applicability the higher the value. Domainers on the other hand love to talk about premium letters.

What are and what are not premium letters are not subject to random statistics or studies. A company using that particular combination of letters will find that domain premium, regardless of what domainers think.

This of course does not take into account pronounceable names – these are more valuable as brands as they can be easily branded and promoted. Thats why premium cvcv’s have gone through the roof. If a domain sounds cool and is brandable (eg., it has great value, specially with new companies and brands being launched everyday.

So a domain that might be valuable for one end user might not be for another and vice versa. They are not going to make any new ones, the ones that are there are getting scarcer and scarcer as they slip into large portfolio holders’ hands. The worst ones might be dipping in value now, but eventually even they will be worth something to someone.

4 thoughts on “The Conundrum

  1. mediawizard Post author

    Hi Michael, thx for the comment. I guess we’re all waiting for the prices to correct, its all a question of when. I’m quite proud that you guys like this viewpoint.

  2. ballisticjoe

    I think you have called it as it is.
    The value of a name to one person can be quite different to value another has on it.

    People can always find new and inventive ways to use language and combinations of letters.

    I foresee the prices continuing to rise as with all finite resources.

  3. investor

    Hello everyone, i have been researching market for the last 3 years and made tools to know and set a value for domains at dntoolz.

    Each and every one of them will help you do the business wisely.

Comments are closed.