mapping

This page looks at domain name auctions and sales, supplementing the discussion in the broader Domain Names & DNS profile.

It covers -

• mapping prices - what's the 'standard' price
• structure
• Australia and New Zealand - no names bubble down under?

     mapping prices

During the bubble there was surprisingly little questioning of those figures, with little analysis of

whether prices sought/achieved were justified (eg reflected an inherent value or were likely to offset 'investor' acquisition and holding costs)

whether prices featured in the media and on some sites were actually achieved

whether prices are stable (eg what are lewinsky.com, clintonscandal.com or kennethstarr.com worth as memories of the Clinton presidency fade to black)

Overall it's clear that 'million dollar names' were exceptional. Most dot-coms transferred in the secondary market changed hands for under US$1,500. The indifference of potential buyers meant that several hundred thousand domain names were not renewed. (Some observers suggest non-renewal figures as high as three million; there is an indication on the DeletedDomains site) That's good news for some people seeking a domain name, as the name of choice is now available from a registrar at the standard fee or on the secondary market at a 'discount' price.

There is considerable uncertainty about some of the peak prices. Some of the 'million dollar sales' celebrated in the media, for example, occurred in private. There's no publicly available information to confirm that a transfer took place between unrelated parties (some WHOIS searches suggest that a transfer occurred only on paper from the right hand to the left hand) or took place at the claimed price.

WHOIS searches and conflicting information between claimed transfers and continued appearance on GreatDomains and similar sites suggests that some 'sales' simply didn't occur. At least one observer has accordingly argued that particular entities were deliberately ramping the market, although the absence of a detailed investigation by trade practices regulators means that argument hasn't been substantiated.

In discussing valuation methodologies we noted that there are no authoritative global figures on

• the number of companies that have simply bought out speculators or blatant squatters
• the aggregate value of such transactions
• the aggregate expenditure in the secondary market
• the number of domains that have left the secondary market through non-renewal
• the extent of the slump in secondary market prices for 'non-premium' names, ie those at the US$1,000 rather than US$1 million end
• changes in secondary markets for ccTLDs such as dot-tv, dot-nu and dot-md
• the extent of the secondary market in problematical alternative domain names

As with other financial bubbles, it is probable that many speculators made no money by punting on the intangibles and that the expectations of some corporate investors weren't met.

Procter & Gamble for example is reported to have come out marginally ahead after selling much its portfolio of 2,000 generic names such as flu.com or cleaner.com, deciding that the importance of generics in marketing was greatly overrated and that its brands (which embodied years of promotion and billions in good will) were more effective domain names. P&G's renewal costs are estimated at around US$350,000 over five years.

Some speculators are likely to have acquired their names on the secondary market and have incurred holding costs (in particular registration renewal fees) which mean that any profits will be small.

Media attention has centred on claims of multimillion dollar sales. The absence of comprehensive public databases inhibits a definitive assessment but it appears that most sales - through domain name auction services and direct from registrant to registrant - involve only a few hundred dollars.

Many offers, as noted in our discussion of domain name valuation, simply haven't met with a buyer and the name has returned to the registry.

     price structure

Following the dot-com crash and a wave of action by trademark owners under the UDRP and ACPA it appears that the following price structure is likely -

high (US$50,000 plus) - names common to two or more trademark owners (eg Ajax petroleum and Ajax dogfood). Speculative registration/resale by non-trademark owners has diminished because anti-squatting regimes have introduced liability (in particular fines of up to US$100,000 in addition to legal fees and forfeiture of the name) for Great Domains claims that act.com sold for US $500,000 to the owner of Act contact management software.

Generic names (US$10-49,000) - functional names such as holidays.com or pharmacy.com. Declines since the market peak (eg the famous sale of business.com for US$7.5 million) reflect competition from similar names - was it holiday.com or holidays.com - and failure of some generic names to suck in traffic from the right demographics, which instead use search engines, other navigation methods or wickedly stay offline.

More specific names (US$500-9,000) - such as bestcars.com or pinelogs.com

Niche names (US$200-500) - ranging from thejohnsons.com, brewarrinapizza.com to XXX horrors such as animalsexbestialityzoophiliabeastiality.com and boysodomy.com

Junk names (US$25-200) - weird confections, such as carbonatedmooncowcheese.com and iamabraindeadmoron.com (perfect for some blogs), that attract the 'impulse purchase' consumer.

     Australia and New Zealand 

What are the peak prices of Australian and New Zealand domain names?

The answer is unclear. Australia as yet has not seen the emergence of a real secondary market, primarily because of the 'close & substantial association' provisions in auDA's rules covering domain name registrars and registrants. Holders of dot-au names were discouraged from trading in the names as such, with attempts to publicly trade names in overt defiance of the dot-au rules (breaching contract law) resulting in action (including cancellation of registrations). There is no formal online secondary market site.

The extent to which registrants have worked around the restrictions, eg by selling the company that holds the name in order to monetise a dot-au registration or exploiting erosion of the rules, is unknown but as of 2003 was likely to be exceptional.







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