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Domainindex Tool Confirms Weakness ofDomain Sales in 2012

Domainindex Tool Confirms Weakness of Domain Sales in 2012
Domainindex.com has just released a new statistical tool to track domain sales. The tool indicates that 2012 has so far has been a very weak year for the sale of domains. This confirms anecdotal evidence regarding the falloff of published deal sizes, and point to 2012 as the worst year in domaining since 2006.
We believe there are three reasons explaining this year’s dismal performance:

1) New top-level domains (TLDs) have hurt demand and therefore prices are weak. The nTLDs are considered risky by potential buyers, who are sitting on millions in investment funds. The resulting price weakness has discouraged large domainers from offering great domains, as they wait for the market to eventually rebound.

2) The current utility of new domains is low compared to other investments. With funding tight, buying domains is not currently considered a requirement for planning a new venture.

3) Privacy issues have gained increased purchase this year. We have not published any of our deals of $10,000 or higher. Furthermore, we have been involved in domain bids of up to $1 million; all domains were sold yet none of the transactions were published. In addition to concerns over taxes, buyers realize that a domain that is sold in a published transaction is harder to resell at a substantial profit. In other words, publicity hurts flipping. This trend also existed last year, so it is valid to draw comparisons between the two years.

It looks like we will have to wait until 2013 or even 2014 to see the market bounce back. In our opinion, big gTLDs and ccTLDs will receive a boost independent of the success or failure of nTLDs:

If nTLDs succeed, the market will be perceived as generally strong and that will help sales of old TLDs.

If nTLDs fail, investors will simply return to old TLDs and ccTLDS.
 

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