April 2009         DNJournal.com     The Domain Industry News Magazine

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Domain Aftermarket Stages Strong Rebound in the Opening Quarter of 2009 

It looks like the domain aftermarket is on its way back. I compiled and reviewed the latest quarterly sales data in preparation for an aftermarket update I delivered in a luncheon talk at the T.R.A.F.F.I.C. Silicon Valley conference that just concluded in Santa Clara, California. Before looking at the numbers, my gut feeling was that, after hitting a low point in the fourth quarter of 2008, the figures would show little improvement, especially since the year got off to a slow start in January.

However, things noticeably improved in February and March and that rally wound up producing a surprising 32% jump in dollar volume for sales reported in the first quarter of 2009 vs. the closing quarter of 2008. $28.3 million in sales were logged in 1Q-2009, easily eclipsing the $21.5 million reported in 4Q-2008 which was by far the worst quarter of the past year. In addition, the $28.3 million from the latest quarter was better than the average quarterly figure for all of 2008 which was $27.3 million.

Before we take a closer look at the numbers, as always, we remind you to keep in mind that our data reflects only publicly reported sales. The majority of sales are subject to non disclosure agreements or are kept private as the buyer or seller desires. However, the large data sample that we collect from all the industry's major sales venues, as well as from private sales that are reported to us, does provide a good measuring stick for how the market as a whole is performing (that data is updated every week and is reported on our popular Domain Sales page). 

While the market rebounded solidly from its dismal performance in 4Q-2008 it was still down compared to the same quarter last year (1Q-2008). However 1Q-2008 presented an especially difficult period to compete against because it was the best quarter ever reported to us in the six years we have been tracking aftermarket sales. $38 million in sales were logged in 1Q-2008, so in terms of total dollar volume, 1Q-2009 was down 25% year over year. 

However, there is more to that story. The largest all cash sale ever publicly reported, Fund.com at just under $10 million, was made in 1Q-2008. Had it not been for that single 

landmark sale, the 1Q-2008 total would have been $28 million, no better than 1Q-2009 when the global economy continued to be mired in the worst recession since the Great Depression. That says something about how well domain values have held up at a time when other assets, especially real world real estate, has been decimated. 

There is further evidence of the market holding its own when you compare median sales prices (the figure at which half of all reported sales were higher and half were lower). Median prices provide a truer picture of how overall prices are holding up because they cancel out the effects of massive dollar swings caused by blockbuster sales like Fund.com. In the opening quarter of 2008, the median price of all sales reported to us was $2,750. In the first quarter of this year, that number was down only slightly to $2,600. (Editor's note: We do not track any sales lower than $1,000, so the median figure from our database is considerably higher than what the median would be if sales from the very low end of the market were included).

The small decline in the median price year over year is no surprise as we have witnessed increasing numbers of low to mid range sales while activity at the high end has lagged. We believe many of the new low end buyers are people who are starting up new Internet businesses after being laid off from corporate jobs (in recent articles, mainstream media outlets like Time and USA Today have reached the same conclusion. Time referred to it as "The New Internet Start-Up Boom").

In September of last year, when then President Bush went on national TV and declared the economy was in crisis, consumers went underground to wait things out until they could see just how bad things were going to get. In that environment, domain sales in the six and seven figure range almost vanished in 4Q-2008. But now, eight months after black September, the 

The upper corner of the Time Magazine 
cover dated April 20 highlighted an article 
on "The New Internet Start-Up Boom".

world has not come to an end, and that fact alone has helped restore some degree of confidence among buyers, despite the fact that things are still very dicey in the economy at large.

DivyankTurakhia (right) with Moniker's 
John Mauriello
after Turakhia won Ad.com
with a $1.4 million bid on April 29.

Even the very high end of the market has stirred back to life with three seven-figure sales already posted this year (Toys.com at $5.1 million, Fly.com at $1,760,000 and Auction.com at $1.7 million). A fourth, Ad.com, should close soon - that name was claimed by Directi/Skenzo Co-Founder Divyank Turakhia for $1.4 million in Moniker's live auction at T.R.A.F.F.I.C. Silicon Valley a few days ago.

Certainly we are still a long way from the high point of the market, a time when, for example, Moniker could sell $10 million worth of domains in a single afternoon (as happened in their live auction at T.R.A.F.F.I.C. New York in June 2007). However, the worst may be behind us. Yes, it could turn out to be just a short lived bout of spring fever, but with the world of media and commerce continuing to migrate to the Internet, you have to believe that in the long run, high quality domains will continue to be uniquely valuable assets to businesses that want to make an immediate impact on the web.

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