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