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Despite Recession Domain Aftermarket Holds Its Own in 3Q-2009

We held release of this end of summer combined August-September newsletter until after September 30 so that we could bring you the latest quarterly update on the domain aftermarket in this issue. 3Q-2009 just ended and after running the numbers, we found that the data confirmed a feeling we have had week in and week over the summer. That being that despite a severe ongoing recession, the domain aftermarket seemed to be holding its own (in stark contrast to PPC revenue streams that have been decimated over the past 12-18 months). 

Better yet, while the market held steady in 3Q-2009 compared to the same quarter a year ago, it experienced a double digit increase it total reported sales over the previous quarter (2Q-2009). In the 2nd quarter of this year a total of $21,108,655 in domain sales were reported to us. In the just concluded 3rd quarter, that number rose to $24,361,644 - a healthy 15.4% increase. 

The current recession has placed a lot 
of obstacles in the domain aftermarket's 
path, but sales held their own in 3Q-2009.

That $24,361,644 for 3Q-2009 is almost identical to the total for 3Q-2008 which came in at $24,542,784, a year over year decline of less than 1%. While we would always like to see growth from one year top the next, one has to remember that most of last year's third quarter played out before news hit in late September 2008 that the world was facing a historic financial crisis. The domain market (as has been the case with just about all markets) has been trying to overcome a reluctance on the part of consumers to spend money ever since. Even though the market is still well below its historic highs the fact that it was been able to climb back to the pre-crash level of a year ago is encouraging.

That is not to say that things are completely back to normal of course. While the total sales volume for 3Q-2009 equaled the same quarter in 2008, we did see a slight slippage in the median price paid for domains (the median is the point at which half of all reported sales were higher and half were lower). In 2Q-2008, the median price is our database was $2,788. In 3Q-2009, the median was down 8% to $2,563. That indicates that overall, buyers are paying a bit less per domain than a year ago. (Editor's note: since we don't track sales below four figures the median prices in our database are higher than they would be if we included sales at the very low end of the market).

The recently revealed sales of Clothes.com and Shopping.de added over $7.7 million to the 2008 total.

 

In comparing the first three quarters of this year against the first three quarters of last year, it is not surprising that the 2009 year-to-date numbers are down considerably. In the opening nine months of last year, consumer confidence was considerably higher that it has been in 2009. In addition, the 1Q-2Q-3Q total for 2008 got a significant boost when two blockbuster sales from that time frame were just recently revealed. Those were Clothes.com at $4.9 million and Shopping.de at 1,960,000 ($2,858,945). When those sales came to light over the past six weeks, we added them to the 2008 numbers in our database. That helped boost the 1Q-2Q-3Q-2008 total to $93,215,174. The total for the same three quarters this year is down 17.7% to $76,710,544.

We should make up some ground in the fourth quarter of this year since it will be compared to the extremely weak fourth quarter of 2008 when fear was running rampant. However, it is highly unlikely that we can make up the current $16.5 million year over year deficit, unless we see several more seven-figure blockbusters like the $5.1 million Toys.com deal from last March. Even so, if the upward trend from the latest quarter can be maintained we will be back on track and headed in the right direction and that alone would warrant a big sigh of relief after what the world has gone through over the past 12 months.

Domain Conference Activity Rekindled After Summer Hiatus

As I write this I am preparing to head down to Key West, Florida for the Sedo Pro Partner Forum that will be held at the Casa Marina Resort Wednesday through Friday (October 7-9). Sedo invited me to speak at the event and I am very much looking forward to seeing some fellow domain investors in person again after spending most of the past three months cooped up in the office. This year's conference schedule was exceptionally unbalanced with six major conferences crammed into the first six months of the year, then no large scale events over the next three months. 

Things have started stirring again with the Euro-centric MeetDomainers conference in Warsaw, Poland at the end of September. Now comes Sedo's always highly anticipated corporate event (the last one in the U.S. at New York state's Mohonk Mountain Resort in 2007 remains one of the most memorable domain meetings I've ever attended). Then we have the next general interest globally oriented mega conference - T.R.A.F.F.I.C. New York - coming up the 26th through the 29th of this month at the Brooklyn Bridge Marriott (you can read our review of last year's event at the same venue here). We plan to publish an extensive preview of that event within the next week and look forward to seeing many of you there.

After T.R.A.F.F.I.C. New York there will be plenty of time to recuperate in November and December before the 2010 schedule begins with a bang with back to back shows in January; T.R.A.F.F.I.C. Las Vegas and DOMAINfest Global in Santa Monica, California. Domainer Mardi Gras will follow in New Orleans February 

11-13. Those 2010 events may still seem like a long way off but they will be here before you know it. If you are thinking about attending one or more of those shows, you can save a lot of money by acting now to take advantage of early bird registration fees and discounted hotel rooms reserved by conference organizers for their registrants.

ICA Legal Counsel Phil Corwin Working Overtime on Behalf of Domain Investors

Phil Corwin
ICA Legal Counsel

In closing I want to extend a thank you to the Internet Commerce Assocation Legal Counsel Phil Corwin who continues to do a great job on behalf of the domain community. Phil has been posting frequent updates on key industry issues on the ICA website that will give you unparalleled insight into key developments impacting your business. Just today (Oct. 5) he posted an analysis of ICANN's third version of its Draft Applicant Guidebook (DAG) for those interested in the possible introduction of new gTLDs. Last Thursday he explained what the new Agreement of Commitments between the U.S. Government and ICANN means for domain owners, then on Friday he detailed an ICANN technical study that indicates the rollout of new gTLDs could be delayed for two to three years

Corwin looks out for domain owner interests on Capitol Hill and before ICANN and having him on the job has helped to keep a lot of anti domain owner policies and laws from being enacted. The ICA can only retain his services if it receives enough support from the domain community through memberships or donations. You can help by becoming an ICA member today. 

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