September-October 2014      DNJournal.com      The Domain Industry News Magazine

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Median Domain Sales Prices in Latest Quarter Again Leave 2013 Numbers in the Dust - Total $ Volume for First 3 Quarters of 2014 Also Up Big 

The common theme in my last two newsletters covering 1Q-2014 domain sales and 2Q-2014 sales was a powerful aftermarket advance from numbers posted in the same quarters last year. In the recently concluded 3rd quarter of 2014 the median sales prices increased yet again even though the total $ volume figures were mixed. 

Those total $ numbers were also made more complicated by the fact that one of the largest domain sales platforms, Go Daddy/Afternic, did not report any of their sales figures throughout 3Q-2014. They had no choice in the matter because they were (and still are) in the mandatory quiet period surrounding Go Daddy's IPO application. 

 

3rd quarter image from Bigstock

Before they had to go silent, we had five full months of 2014 sales data from the company covering January through May. Over that span, they averaged $2.6 million a month in reported sales. That means, assuming they remained close to their average, they would have reported about $7.8 million in sales for 3Q-2014. Without that number, quarterly sales volume numbers (industry wide) obviously take a big hit, so I will give you the results without Go Daddy numbers as well as a pretty good estimate of what they would have been with them. 

In 3Q-2014 $20.1 million worth of sales were reported to us across all extensions (this without Go Daddy/Afternic sales). On the surface that is a big drop (down 32%) from the same quarter a year ago (3Q-2013) when $30.8 million was reported. That quarter presents a tough comparison because it was by far the best quarter of 2013. But when we looked closer to find out why that may have been the case we found that was also the quarter when the year's biggest sale was reported - a blockbuster $4.7 million deal for IG.com. Had that one sale not happened, the 3Q-2013 total would have been $26.1 million. If you also add in the estimated $7.8 million in 3Q-2014 sales that Go Daddy/Afternic made but did not report, the 3Q-2014 total would be $27.9 million - 7% better than 3Q-2013 (the $27.9 million is also in the same ballpark (off 5.5%) as the previous quarter (2Q-2014) when $29.5 million in sales were logged).  

The IG.com sale illustrates how much a huge sale (or a handful of big ones) can skew total $ volume figures for a quarter - and why we also look at median prices that give a more accurate picture of market trends. As I noted in the headline and opening paragraph, median prices were up substantially over last year - but we will get to that shortly. First let's continue with the total $ volume numbers, breaking them down by category.

.Com image from Bigstock

For .coms only, $15.5 million in sales were reported to us in 3Q-2014. Since about 75% of sales volume typically goes to .com we can also estimate that Go Daddy/Afternic had around $5.9 million in .com sales for the quarter which would have boosted the total to $21.4 million. That would be almost identical to the previous quarter when $21.5 million in .com sales were reported, and 17% below the $25.8 million in the same quarter a year ago. Again, if it weren't for IG.com, the 3Q-2013 total would have been lower that 3Q-2014 at $21.1 million.

The ccTLDs had the biggest year over year and quarter to quarter percentage gains. The $3.3 million in country code sales reported in 3Q-2014 was 14% higher than both the same quarter a year ago and the previous quarter this year (3Q-2013 and 2Q-2014 both came in with total sales of $2.9 million).

The non .com gTLDs (.net, .org, .info, .biz, etc.) suffered the biggest fall in total $ volume. With only $1.4 million in sales reported in 3Q-2014 they were off 33% from the $2.1 million recorded in the same quarter a year ago. However, again the absence of Go Daddy/Afternic data is a big factor here as they have traditionally been one of the strongest platforms for .net and .org sales. Still, if new gTLDs are impacting any part of the domain aftermarket, this category - the one that all new gTLDs are all a part of - is the one that is most vulnerable. Verisign acknowledged that this week in noting that .net is facing a challenging environment with hundreds of new competitors arriving in the same category. 

The non .com gTLDs had an even more unfavorable comparison quarter to quarter, plunging 72% from the $5 million in sales reported in 2Q-2014. But again this is deceiving as that massive change can be attributed to a single domain. Sex.xxx was sold for a whopping $3 million in 2Q-2014. Without that sale the category would have come in at $2 million which is right around the average number we see for it every quarter. 

For this group, the question going forward will be "can aftermarket sales of new gTLDs make up for declining sales of traditional non .com gTLDs?". If they can we will see those total $ volume numbers go up. If they can't this group will fall further behind both the .coms and the ccTLDs whom they already trail by wide margin. With hundreds of new gTLDs on the scene (and many more coming) it's hard to envision the group's aggregate number not growing considerably unless the new gTLDs completely flop in the aftermarket.

Now let's move on to median sales prices in 3Q-2014. As always, you should note that, in order to keep our weekly domain sales reports at a manageable length, we do not track sales below four figures (to be specific, we track .com sales of $2,000 and up and all other TLDs from $1,000 and up). So our median numbers would be lower if we also tracked the bottom end of the market. Conversely, our total $ volume number would be higher). 

In 3Q-2014 the median sales price across all extensions was $3,000 - exactly the same figure as the previous quarter but a very solid 13% jump from the same quarter a year ago when it was $2,660. Since the median represents the figure at which 

Money image from Bigstock

half of all sales were higher and half were lower, it is a difficult needle to move. We normally see changes of no more than 1-5% so a double digit increase is very impressive. 

The median numbers for .com only were even more eye popping. The 3Q-2014 median of $4,410 is a 24% increase from the previous quarter (when it was was $3,546) and an astonishing 43% higher than the same quarter a year ago when it was $3,088. Seeing this kind of upward movement in the median is pretty good evidence that the arrival of new gTLDs is having no effect on .coms (and could even be making them more attractive, though it is so early in the game that is not something anyone can definitely say).

The ccTLDs weren't as fortunate but they did hold their own. Their 3Q-2014 median price of $1,935 was $1 higher than the median in the same quarter a year ago. However, their median was off 8% from the previous quarter (2Q-2014) when it was $2,110

The non .com gTLDs, despite taking a hit in total $ volume, got some good news on the median price front. Their 3Q-2014 figure - $2,200 - represented a very strong 22% jump over the same quarter a year ago when it was $1,800, and it was 10% better than the previous quarter when it was $2,000.

One final interesting stat. With the first three quarters of the year now in the books, we can tell you that the total $ volume reported to us across all TLDs thus far this year has been $81.6 million. That is a solid 9% increase over the $75 million reported in the first 3 quarters of 2013 even with an entire quarter of Go Daddy/Afternic sales missing from 3Q-2014. Again, we know they were averaging $7.8 million in quarterly sales this year before they had to go silent. If you add those average sales that were made but not reported as they normally would have been, the 3Q-2014 total rises to $89.4 million, a hefty 19% jump from the same time frame a year ago. Now if the 4th quarter holds serve we will have a very good 2014 story to tell when the books finally close. 

*****

 

 

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Ron Jackson
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