The Current State of Domain Sales From the Point of View of an Expert Broker
A domain name is much more than just a technical shortcut — it’s the first step to building a successful online presence for any business and not getting lost in cyberspace.
With as much as 76% of US consumers shopping online, it stands to reason that reaching potential customers through a well-developed and maintained website is critical to success.
And it all starts with a domain name.
In this article, I will touch on the current state of domain sales and the opportunities still available to domain brokers.
A Brief Look at the Numbers
Industry data reveals that domain name registrations have grown to 354.7 million across all top-level domain names (TLDs) in the second quarter of 2019, up from 348.7 million in the fourth quarter of 2018.
Of these, .com and .net TLDs had a combined total of 158.7 million in the second quarter of 2019, representing a 1.2 percent increase from the first quarter and a 4.3 percent increase year over year. The numbers come as no surprise; .com and .net TLDs have always been considered as the best on the Internet, and this isn’t likely to change in the near future.
However, new generic TLD (gTLD) registrations have continued to increase, too. Approximately 23 million new gTLDs were registered in the second quarter of 2019, an increase of 0.1 million or 0.4 percent compared to the first quarter.
Moreover, the annual growth of the industry is estimated at 4.9 percent. As more domain names are registered, domain brokers should recognize the opportunities that naturally accompany this growth.
The Rise of New gTLDs
Recent years have seen an abundance of new gTLDs emerge, threatening to replace the traditional dot-com. From .web, to .club, .shop, and .io, new gTLDs have found a niche in the marketplace, though the expected registration rates have failed to materialize.
One point against them is their relative newness. Since they have been introduced fairly recently compared to .com, .org, and .net domain names, newer gTLDs can’t provide the same level of relevance or value to businesses. Another is consumers’ wariness of domain extensions they’re not familiar with and, consequently, don’t trust.
Predictions for 2019 stated that .com domain names would be outranked by their newer gTLD counterparts due to their precision and availability, which .com TLDs lack. As 2019 has come and gone, we have yet to see more obscure domain names gaining ground.
Premium Domain Name Sales
Let’s not forget that domain name registrations aren’t solely accountable for the continuing growth of the domain name industry. Domain name brokerage, or domain name flipping, represents an important source of income for brokers and domain registrars alike. In June 2018, Block.One acquired Voice.com for $30 million from MicroStrategy, setting a new record for the highest cash price paid for a domain name.
Of course, Voice.com isn’t the most expensive premium domain name ever bought. Cars.com was valued at $872 million, whereas CarInsurance.com was sold for $49.7 million. When it comes to premium domain name sales, .com domains are considered more valuable, therefore their selling value tends to be considerably greater than their new gTLD counterparts.
A direct consequence of this is a lack of available high-quality domain names, both new and premium. Scanning through any domain name registrar or auction website will quickly tell you that most short, exact-match domain names have already been registered or sold, and those are generally considered the best-performing on the Internet.
So, what is a domain broker to do in this case?
Investing in Dropped Domain Names
Dropped domain names are commonly overlooked by domain brokers and businesses looking to build a successful online presence.
Dropped domain names are those domain names whose registration hasn’t been renewed. When a person fails to renew their domain name registration, the registrar will put the domain name on sale for the highest bidder to snatch. After all, a company that registered their domain name back in the 90s may have gone out of business since, leaving a perfectly good — and possibly valuable — domain name ready to be grabbed.
That’s domain drop catching in action — and when the conditions are right, it can turn out to be extremely lucrative.
However, domain brokers should pay close attention to any domain name, premium or dropped, that includes trending keywords. While trends may change from quarter to quarter and from year to year, we can always expect premium .com domain names to account for a significant percentage of domain name registrations and sales.
