So we at QLQ were waiting to see what happened with the domain market after February 15th to get an understanding of the landscape and what to expect for 2016. Well, we are already seeing some early trends and can make some reasonable predictions about what the domain landscape will look like for the upcoming year.
The impact of the downturn in the Chinese economy has had two major effects on the domain market. First, because there has been a loss in confidence in the Chinese markets, the domain market has seen an influx in the amount of people entering the market as new investors. Most of these new investors are still in the stage of testing the market and as such aren’t necessarily looking to purchase high-end, expensive domain names.
We are seeing much more activity in the more volatile, less expensive end of the investment market. For example, 4L.com, 4L.net CHIPs, 6N.coms, 3L.orgs, etc have shown a nice jump in value. People are looking for cheap names that have a good chance to show a high percentage return. In terms of the domain investor market, these are the penny stocks. We believe that the upward trend in value of these types of domain names will continue based on the fact that more investors (both Eastern and Western) are entering the marketplace and we haven’t even seen the massive influx of investors from places like India and Brazil that are sure to come.
Simply put, more investors will enter the market but scarcity will remain roughly the same. This will allow for new TLDs to emerge as valuable assets.
There is less confidence in expensive names rising in value as a percentage such as 2L.com, 3L.com, 2N.com, 3N.com. The prices are so high that many investors cannot participate in those market segments. That being said, they are the least volatile investments that an investor can make as they are the most scarce and most valued types of domains. In terms of investment, these types of domains are like blue chip stocks (similar to investing in IBM, Alibaba, Amazon, etc). You may not see a massive value increase but investors are confident that you won’t see the value of these names plummet as may happen with domain assets in the less desired TLD’s or .com’s with higher characters.
As has happened in the past, we are seeing tiers of domain investments emerge and depending on your comfortability with risk you will want to structure your domain portfolio taking these factors into account. To make it easy for you we have broken down high, medium and low risk domain names and high, medium and low reward domain names. Always keep in mind that scarcity is the key to ultimately determining a domain assets value. The more characters, the less scarce. The lower the popularity of the TLD, the less desirable. When you find a balance, of these two factors you will find value.
Single word – One word in English
N – Number
L – Letter
C – Character (number or letter)
CHIPs – Chinese Premium (any letter that is not AEIOUV)
w/04 – Numeric Domain name containing 0 or 4
anyTLD – Any TLD that is not .com
CVCV – Consonant, Vowel, Consonant, Vowel letter pattern
IDN – International Domain Name or a domain name containing a letter with a diacritic mark (eg – à,ü,ñ,etc)
2N – 100
3N – 1,000
4N – 10,000
5N – 100,000
6N – 1,000,000
7N – 10,000,000
2L – 676
3L – 17,576
4L – 456,976
5L – 11,881,376
2C – 520
3C – 28,080
4C – 1,212,640
2L(IDN) – 9,125
Each domain name is judged on its own merit and there is a lot of variability within each category.
The above information is to be used as a general guide for prospecting in various categories
As new regions in the world join the domain investor market, new TLDs will emerge as valuable