Domaining Trends in 2020
As 2020 kicks into gear, domain investors are looking for what’s next. Many trends in domaining have developed over several years, while others will be new this year.
Here are some of the trends to take note of in domain investing.
Fractional Ownership
The best domain names sell for hundreds of thousands — if not millions — of dollars. There are two main issues that prevent most people from investing in these domains.
- You need to have a lot of money. Many great domains cost as much as a (nice) house.
- It can take a while to sell a premium domain for top dollar.
Enter the idea of fractional domain ownership. Think of this as buying shares in a domain name.
If a domain name is worth $100,000, people could buy 1% shares in that domain for $1,000 each. If the domain name later sells for $200,000, each share would be exchanged for $2,000.
This gives people a way to invest in domain names they otherwise couldn’t afford. It also gives people holding illiquid assets (premium domains) a way to cash out quickly.
There are many challenges to fractional domain ownership, but 2020 might be the year they are solved. By putting in place the technology, legal and tax structures required, domain investing could become a lot more liquid this year.
Higher Prices
The cost you pay to register domains is likely on the way up.
In 2018, the U.S. Department of Commerce amended its agreement with Verisign, the company that runs .COM, to allow it to increase the price it charges for each year someone owns a .COM domain.
Verisign charges a fee to domain name registrars like Namecheap. If the company increases its fee, then Namecheap has to pass that increase on to customers.
It’s likely that Verisign will be able to increase its price for .COM by 7% this year and each of the next three years. That adds up, and it increases the costs of holding onto domain names year after year.
It’s also likely that .org domain prices will increase soon. Last year, a for-profit private equity company bought the rights to run .ORG. The domain has been run by a non-profit for nearly two decades. ICANN, the organization that regulates the domain name industry, also removed price restrictions on .org last year.
Namecheap has been fighting back against these increases, but ICANN seems to be ignoring the people who actually register domain names.
All signs point to higher prices ahead.
A Focus on Landing Pages
Domain name parking is on the decline and domainers are choosing to sell their domains instead.
With domain parking, domainers earn money every time someone lands on one of their domains and clicks an ad. Changes both in how web browsers work and with domain name advertising platforms have reduced the money domainers make from this.
These changes have led many to focus on selling their domains rather than holding them and collecting ad revenue. They’ve removed the ads from their domains and now park their domains with messages that the domains are for sale.
Companies have sprung up to make it easier to create these ‘for sale’ pages, including Efty and Dan.com. Expect to see even more focus on this in 2020.
More Competition
Domain investing is fun and can be lucrative. But it’s not as easy as it seems and it can take a long time to make money buying and selling domains. And as more and more people start investing in domains, there’s more competition in getting good domains at reasonable prices.
Ask anyone who has invested for over a decade and they’ll tell you that the market to buy domains is more difficult than ever. This is especially true with expired domain name marketplaces, where auctions are driving prices to all-time highs.
Domain investors need to get creative and put in more elbow grease to get the best deals. This might mean cold calling or sending emails to owners of domains to see if they will sell them. It might also mean that it takes longer to close each deal.
Combine this with the higher cost of renewing domains thanks to price increases, and some domain investors will need to rethink their strategy in 2020 and beyond.
It’s a One-word World
One-word .com domains continue to be the holy grail of domains. Companies love them. Domain investors covet them.
Some of the companies that bought one-word domains last year include:
- Block.one, a blockchain company, bought Voice.com for $30 million
- A real estate lead generation company bought Carrot.com
- A car rental company bought Joyride.com
Many companies start with a longer domain, or one that’s not .COM, and then upgrade to a one-word .COM domain when they raise venture capital or their business takes off.
As the price of these .com domains has skyrocketed, it has lifted the value of other extensions. The TLDS .CO and .IO have become a good starting point for companies, and this has led domain investors to add them to their portfolios as well.
Stay the Course
It’s wise to stay abreast of the latest trends in domain name investing, but don’t jump to the latest shiny thing. Consider what has worked for you in the past and if it will be impacted in the future.
Here’s to an exciting year in domain investing!
Andrew, thank you very much for this post. I think fractional ownership will be on the rise and the competition is going to hit at a high. Keep up the good work with more post.