Understanding Domain Appraisal: How much is your domain worth?

Understanding domain appraisal is important because domain names are a crucial aspect of almost any type of endeavor. A domain name can help define a business; it can be synonym for people looking for a particular niche. Using the right word or phrase to describe a venture is, in many ways, an art form in itself. It requires in-depth knowledge and vision of what it is you’re trying to achieve with it. For this reason, certain domain names can become very valuable.

Domain appraisal basically refers to how much a domain is worth. The value of a domain will ultimately be determined by how much others are willing to pay for it. However, there are a number of traits that will usually help determine if a domain name is valuable. These include its length (shorter names are usually preferred), language, extension (.com tend to be the most sought after), and other factors. 

If you own a domain that you think may be valuable to others, it can be challenging determining its retail price. Certain companies will pay up to six-figure amounts to acquire a domain name that suits their business profile, so how can we determine the appropriate value of a domain?

A common way to do this is through domain appraisal services; a popular site is Domainindex.com. The site allows users to submit domain names, providing an estimate of how much the domain may be worth. Domainindex.com is a free of charge service that uses algorithms to determine a domain’s Alexa rank, keywords, number of searches, and various other characteristics that help evaluate the domain’s financial worth. The site also includes numerous tools for domainers and webmasters, as well as information on the domain market.  Domainindex.com also allows users to search for mass appraisals of domains with over 100 TLDs. 

As mentioned earlier, the .com extensions are often preferred and tend to be the most valuable domains. Regional TLDs such as .uk or .ca may also become sought after, but nevertheless the number of potential buyers will be significantly limited.  Short domains are also considered valuable. Usually, the shorter the domain name, the most valuable it will be. Effective and to-the-point keywords can also be a strong factor in determining the value of a domain name. A domain titled “organicfoods.com” would likely be preferred over “organicproduceandmeats.com”.

Ultimately, you need to understand how your potential buyers think in order to understand your domain’s value. You need to understand their field, their market, their potential buyers and audiences. Finally, knowing how much related domains are priced at will help you determine your domain appraisal value.

The inequality topic is all over the media right now and we wondered how is wealth distributed among domain owners?

by Benjamin Guttmann, author of "the Bitcoin Bible"

Many domainers are big bitcoin fans, looks like even ICANN is now in the Bitcoin fever.

In a draft ICANN Report released late last month, the organization spokeof algorithms like Bitcoin and the future ofan Internet not controlled by the US Government. This could mean that theorganization is exploring the possibility of a global multi-stakeholder accountability process instead of thecurrent situation of the United States Government in the Internet’s uniqueidentifier system, meaning the US Government would relinquish their remainingcontrol of the Internet, and transfer important technical functions of theInternet to the global Internet community.

Presently, the government’s current responsibilities include the role ofadministering changes to the Domain Name System’s (DNS) root zone file, whichis the database of top-level domains (.edu, .gov, .mil). Additionally, the USGovernment also oversees the historic data regarding unique identifierregistries for Domain names, IP addresses and protocol parameters.

The solution might be to use similar protocols as in the encryption of Bitcoin transactionsand the idea of an undependable “blockchain”. 

This would transfer all power to the users.

from the ICANN draft:

“Is there a technical way to think aboutsharing control over the root? Some theories have been advanced. One school ofthought is that data should have N multiple signatures. And thenM/N, signatures are required to authenticate the data. Of course there arearguments about M and N, and whether different crypto is needed/desirable.

It’s not our intention to argue for aspecific system here, but we do feel that a good design could allow thepolitical process of deciding how control should be shared to start. Our visionis the creation of a toolbox for shared zone control, not only for the root,but also for other zone coordination problems.

We note that the DNS Operations (DNSOPS)working group in the IETF has two proposals for coordinating DNSSEC signinginformation, but wonder if it might be better to create a general facilityrather than a solution to this point problem. Coordination of forward andreverse addresses might be another application.

The participants could then each do astandard algorithm to generate consistent state. This might seem like afantasy, but Byzantine algorithms like Bitcoin [Andreesen 2014] and Namecoinshow that such systems are possible today.

(Note that we aren’t proposing the rules,just a distributed system for implementing whatever rules the community wants.)” 

More about this at ICANN

 

On the first day 19.163 new gTLDs got registered while .com had 99.000 new registrations on the same day as it was just mentioned in a post on "the domains"
However this is not really the numbers to compare I think, what we need to look at at is something else:

In the last six month we have been working on a completely new suite of leadgeneration tools for domains and domain related services. We plan a total of 15 tools, 4 are under development, 6 are in beta and 5 will be released within the next days.

We had a chance to work on a small study for a client on seasonality in parking revenues. We have been able to use a database of 137,000 parked domains across many different verticals and parking companies. Most of the traffic was type-in traffic we estimate only about 15% is expired traffic. In the 4 full years of data (2009 to 2012)  that we had, this particular portfolio lost on average 7.5% of revenue every year with stable amount of visitors. We normalized this (virtual) portfolio from the overall decrease in revenue and these are the results we found:

The Public Interest Registry (PIR) will release 94 previously restricted domains to the public in a project called Project94. To take part in the auctions it is necessary to qualify or in the words of PIR: "the addresses will be made available through an allocation process to companies and organizations who respect the attributes .ORG has become known for – namely, trust and well-intentioned"

The auctions will be held through a partnership with Go Daddy and eNom.

It is currently unclear how restrictive PIR will be when it comes to accept bidders for the auctions of these 94 domains, therefore it is very difficult to estimate how far the actual price for the domains will reflect the proper market value. 

We have preappraised the end-user prices for the names to provide orientation in the process. Few names are not part of this list because we have provided estimates for our customers earlier.

Domainindex.com, the domainindustry's leading benchmarking, TLD analysis, rating and Domain appraisalservice, has announced today that it has changed its rating for .co.uk from AAto B

 

 

Domainindex.com, the domainindustry's leading internet domain name benchmarking, rating and appraisalservice, has announced today that it has changed its rating for .co.uk from AAto B. The step has been taken after the release on October 1, 2012 of a three-monthconsultation by Nominet, the not-for-profit manager of the .uk infrastructure,into a scheme that would introduce .uk as a top-level domain (TLD). Aftergetting feedback from Nominet meetings held in London on Nov.7and 9 Domainindex.comdecided to change the .uk rating

Currently, over ten million UKdomains are structured as www.anybusiness.co.uk; under the proposal, a competingstructure would be introduced: www.anybusiness.uk. Domainindex has also issued anInvestors Warning for co.uk and .uk TLD, and believes the introduction of the.uk TLD would massively destroy the value of existing .co.uk domains and infact Nominet´s announcement already inflicted harm to the value of .co.ukdomains and the aftermarket as well as the investment climate in the .uk TLD.Our analysis of the proposal, which Nominet defends as a move to increaseInternet Security, would have several adverse effects:

 

·       The auction of .uk sites would preferentially favor trademarkholders instead of existing domain holders, thereby representing anunprecedented expropriation ofdomain registrants and website of whom most do not own the trademark for theirdomain name.

·       The higher costs of the .uk TLD are in effect an Internet tax for businesses in the UKand especially to domainers as it will raise the cost of holding an inventoryby 800% and will lead to drop of many .co.uk names that until recently haverepresented significant value.

·       The move will create more bureaucracyand red-tape.

·       British companies would have massive rebranding costs.

·       The proposal will create months or years of uncertainty as the issue is litigated in the courts.

 

We will closely monitor the progressof the Nominet consultation and may issue further rating changes accordingly.

 

Domainindex also announced thefollowing rating changes in November:

·       .me up from A to AA(because of the good performance of the TLD)

·       .eu down from AA to A(because we expect the TLD to suffer from nTLDs and weak economy in the Eurozone)

·       .info down from AA to A(because we expect the TLD to suffer more from nTLDs)

·       .mobi down from A to B(because we expect the TLD to suffer more from nTLDs)

·       .tel down from AA to A(because we expect the TLD to suffer more from nTLDs)

 

 

Domainindex.com is a domain appraisaland benchmarking service. It provides automated and manual appraisal ofindividual domain names and portfolios. Domainindex also provides indices tothe domain industry, tracking the value of each TLD and benchmarking theholdings of large portfolio owners with respect to the markets. Additionally,Domainindex provides ratings for 60 TLDs, rating them by economic, legal andtechnical criteria. Domain ratings are used by large portfolio owners to judgetheir risk profiles and exposures in the various TLDs as well as by lenders todomain owners.

Many people inthe domain industry are asking which new TLDs will be the best. Although manylists have been compiled and published in response to this question, we thinkit is much more interesting to identify the best domains being registered in all the new TLDs. To do so, we’ve hadto analyze and appraise billions of possibilities. Our efforts yielded a set oflists, each containing 10,000 of the most valuable domains for one of the 1,928proposed new TLDs. We then combined all of our lists into a huge Master List ofthe most valuable new domain names.
We acknowledgefrom the get-go that our lists are not perfect. For one thing, they contain manydomains that cannot be registered because of trademark policies or otherrestrictions. Nonetheless, the lists constitute a very powerful resource forthose who plan to register domain names in the new TLDs.
Complicating ourassessments are the uncertainties surrounding the new TLDs:

·      It is too early to discern thequality of each new TLD.
·      Reliable estimates of marketingbudgets for each new TLD are not available.
·      There are differentregistration restrictions and general policies across the universe of registriescontrolling the new TLDs.
·      We do not as yet have a pricingforecast for the different TLDs.

Given theseinherent uncertainties, we have adopted a strategy to form our appraisals basedon an arbitrary number of 100,000 domains in each of the new TLDs.
To provideaccess our compiled lists, Domainindex.comhas created a new TLD Tool , available below. The first ten TLD lists are open to the public;to access the rest, you’ll have to subscribe– it’ easy and only takes a minute.

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.
 

Recently the IDNX, a index for  domain names, promoted and sponsored by Sedo has been listed on Reuters and Bloomberg.  Domainindex is publishing indices for the domain world since 2009 and I would like to share some of our concerns connected to this development.
Its great to see the domain industry to grow into the financial sector, something we are working on for many years now and we honestly congratulate IDNX to be included in Reuters and Bloomberg this is a big achievement.

However I want to share some of my concerns connected with this step I must say that from an investors perspective I am afraid the promotion of the IDNX might cause more harm then good.

There is in fact nothing wrong with the methodology of the IDNX itself, the problem is created by the set of data used for the calculation: Sedo´s sales data from 2006 to today. So the first and obvious argument against this is that the IDNX only looks at a very specific marketplace, it would be a little like creating an index for antiques by only looking at antiques sold on eBay.

Sedo has created a great marketplace, the best and biggest in the world for domains, however there are certain domains that are simply rarely or never traded via sedo, with a commission between 15 and 20%, an escrow fee 3x higher than escrow.com it attracts a very particular crowd that will purchase domains. It fits the names in the range of 100 to 10.000 usd and usually again to domainers or webmasters and rarely to "high end" endusers in this price range.

I have talked to many domainers last week and almost nobody has bought or sold any domain in a range over 20K ever on Sedo, but traded many below 10K on Sedo´s marketplace. So what happens is that domains are simply growing out of the Sedo market once they reach a certain value. Yes from time to time Sedo will broker a huge domain like sex.com, but most big deals are made without any of the marketplaces or brokers, most endusers will simply contact owners via the whois and so will most domainers and webmaster and lawyers acting on behalf of big buyers.

So Why does it matter ?

1) Over the longterm, the IDNX would suggest only a very little growth in value for domain names, for .com´s 20%, .net 20%,.mobi 15%, es 20%, so from an investors perspective domains would therefore represent a horrible Investment because this means only about 2% revenue/year but in fact what we look at is that Sedo has managed to keep their average sales price increase at inflation level.

2) What do we see in the IDNX ? We see what we see all over, if the economy is doing well and the consensus is bullish, people buy more, when the sentiment is bearish people buy less (in this case domains) and pay less for them on this particular market. This is the worst case for domains as an investment, because the main thing every professional investor will look at if it comes to alternative investments is the correlation to the market. If an alternative investment is correlated there is usually no point to invest in it because you are inheriting additional risk and reduced liquidity and if you can achieve the same goal by buying an established financial instrument you will simply buy an index.

These 2 issues will make it harder to promote domains as investment in the future because it will be benchmarked against the IDNX within the Reuters and Bloomberg systems (and all other systems using the data) from now on.

Domainindex.com, the domain industry's leading benchmarking, DNS analysis, rating and appraisal service, has announced today that it has changed its rating for the .com and the .net TLD from AAA to AA

SEATTLE, Mar 13, 2012 (BUSINESS WIRE) --Domainindex.com, the domain industry's leading internet domain name benchmarking, rating and appraisal service, has announced today that it has changed it rating for the .com and the .net TLD from AAA to AA. The step has been taken after the release of an official statement by U.S. authorities of its intent to continue seizing .com, .net, .cc, .tv and .name domains and forcibly redirecting .org (and probably .us) domains. Officially, over 750 domains have been seized in the last few months by the U.S. government, most of them from overseas registrars. The U.S. government claims that illegal activities take place on these domains. However, many of the domains seem to have been seized simply for linking to gambling sites or sites streaming sporting events on the web.

Domainindex.com considers these seizures a threat to any .com domain and the internet DNS in general, given the fact that seized domains can be resold for the benefit of the U.S. government even more. This increases the threat to any valuable domains within these TLDs. Therefore, we've had to rerate the TLD today and to lower its rating by two steps, from AAA to AA. While the technical infrastructure, business and economic environment still deserve the AAA level, the legal situation no longer supports this rating.

About 50 large portfolio owners consult Domainindex.com ratings for domain names portfolio risk management and investor reporting. Because .com is still the "king" of TLDs, we do not expect any changes in customer asset allocations. Nonetheless, the step has been taken to make clear that other ccTLDs are not affected and will keep their AAA levels. Note that no generic TLD currently has an AAA rating anymore.

We will watch closely how, in the future, the U.S. and other governments handle this issue. Hopefully, we will be able to upgrade .com again. However, we are pessimistic, as a change in this policy will require a substantial change in US politics and in the governance of TLDs.

Domainindex.com is a domain appraisal and benchmarking service. It provides automated and manual appraisal of individual domain names and portfolios. Domainindex also provides indices to the domain industry, tracking the value of each TLD and benchmarking the holdings of large portfolio owners with respect to the markets. Additionally, Domainindex provides ratings for 60 TLDs, rating them by economic, legal and technical criteria. Domain ratings are used by large portfolio owners to judge their risk profiles and exposures in the various TLDs.