JohnChow.com: "Domain investing party is officially over"

The post was guest blogged by Andrew Knibbe from Flippa.com.

Interesting read especially from someone from Flippa.

Taken from the article :

It’s not difficult to see the parallels between this and the current state of the domain investment industry – where owners are discovering their portfolios can’t generate real cashflow and have little prospect of delivering capital growth.

Domain industry advocates will no doubt disagree with all this by citing a handful of premium domain sales.

A few events over the last few months, however, provide solid evidence that the domain investment party is officially over.

Firstly, Sedo – arguably the largest domain marketplace – acknowledged in their 2011 9-Month report that both their Domain Trading and Domain Parking businesses are in decline. We saw further evidence of this earlier this year with the exodus of key sales staff from their domain business. And, despite all the fuss and publicity, they’re still trying to find a buyer for teaparty.com.

Secondly, we’ve seen some of the industry’s most prolific commentators abandon the cause – or at least shift directions. Examples include Rick Latona doing this a few months ago citing that the domain bubble had burst as far back as late 2008, and Rick Schwartz just last week announcing that he was leaving the domaining pond to “jump into Rivers and Oceans”.

Thirdly, any remaining revenue being generated by a domain’s parked page is under constant threat from updates to Google’s algorithm. Even last week’s search update specifically called out that detected parked pages will no longer appear in search results (see point three at Google’s InsideSearch blog).

Read the whole article here

Comments

[.xxx]

I agree with the underlying premise that domain investing probably has less potential now than in the past decade, on average. However, the blogger's argument is weak. He claims that proponents of domain investing would point to a few isolated sales as evidence of a strong market. But he attacks domain investing by pointing to a few isolated bearish indicators.

And Schwartz is not leaving domain investing, which he clearly specified himself. Sedo is probably seeing fewer sales because there are more sales channels now and people are making more deals without the use of an intermediary like Sedo.

[Jason Thompson]

Thanks for pointing this blog entry out. I went ahead and made a comment over there.

[Acro]

The majority of "developed" domains sold on Flippa are nothing but basic installations of WordPress.

[Domain Report]

If he is saying domain parking is dead, then that is 2010 news.

Has he seen the DNJournal weekly sales reports?

I have had more offers and interest on my domains in the last month than in all of this year. If anything, I feel like things are picking up.

He has a bit of biase being with Flippa, who sell websites but which also include the domain I imagine. The push for domainers in the last couple of years has been to develop out their domains into sites, but it is hard when you have hundreds or thousands of names. There will always be a demand for good domain names, so many businesses yet to come online and the best names keep getting put into use.

[Rick Schwartz]

It appears the comment I left over at JohnChow.com was removed after it was up so I will just post it here:

"Just to set the record straight.....I have not abandon the cause at all. I am just shifting my focus from domainers and the industry of domains to the movers and shakers in the business world looking to make their mark and needing one of my domains to help do it. The industry of domaining is thriving like never before. Beyond my wildest dreams. Just NOW taking center stage. Will that shake out a lot of folks that invented a bag of smoke? You bet! Good riddance.

As for Google's change, it may not be popular but this change is long overdue because paying for domain traffic that is not PURE type in traffic is crazy and I have stated so many times over the years. So I am happy that Google will eliminate that traffic because that makes REAL type in traffic from domain names more valuable and those that really do have that pure traffic will do quite well now that the crap is being removed. You can shut off the search, you can't shut off the pure type ins."

Rick Schwartz

I guess the BULLSHIT he is spreading does not match the reality so he has to make it up and then cover it up.

[Edgar]

I agree with Jason Thompson that the majority of sites in Flippa seems to be WordPress based. But this could be the reason why domaining is in the decline - heavyweight domainers are into developing their domain names, sell it as a business and get some shares in the business too.

And with more high tech features being built in WordPress (http://htmlpress.net/wordpress-2012-comes-with-high-tech-features/) it's no wonder other domainers are following.

[Samit Madan]

While there has been an exodus of senior staff at Sedo, sales are still at the $1mm+ per week levels, which isn't too shabby at all.

And they're not the only ones, Afternic also hits the $1mm+ week number pretty regularly.

Add to that sales on GoDaddy, Name.com, Snapnames, Namejet, Dynadot, Bido, Aftermarket, Forums & more sales platforms, not to mention end user sales and I'd be willing to guess that the aftermarket has never been this good.