2008 was a very unique year in the domaining industry. The popularity of domaining continued to rise even as prices dropped. Increasing numbers of end users noticed the value of domains as well and there were quite a few astonishing sales reported throughout the year. At the same time, domain parking came to a virtual stand still and there were some rollercoaster-like price developments in the LLLL and LLL market segments. As the economic crisis picked up steam, end user sales have remained relatively strong, but an unprecedented domainer bubble, which was caused by easy credit and irrational exuberance, came to slow but certain end.

Domain Registration Growth Continues

Despite all economic troubles, the number of registered domains kept growing during 2008. However, growth has slowed down quite a bit. Over the course of 2008, the growth rate of registered domains dropped from a 30% growth rate to a 15% growth rate. gTLD domains (like .com, .net, .org) went from over a 30% growth rate in 2006 to under a 10% growth rate in 2008. ccTLDs (country code domains) noticed a similar decline as their growth rate fell from 37% to a 26% growth rate. The majority of the newly registered ccTLDs can be attributed to specific TLDs like those for Russia and China.

Of course, it's important to emphasize that even a lower growth rate means that the number of registered domains is still on the rise! And much of the drop in gTLDs can probably be attributed to the introduction of new rules affecting the domain tasting industry.

The End of Domain Parking

Domain parking in the traditional sense is dying a slow but certain death. Earnings from parking revenue dropped significantly over the course of 2008; as both search engines and parking companies tried to maintain their profits during the economic downturn, domain owners found themselves at the short end of the stick. Alternative monetization solutions like mini-development or auto-development have sprung up for those who own dozens, hundreds or even thousands of domains and don't want to concern themselves with actual development.

The LLLL Craze Is Over

On November 2nd, 2007 the last available four letter dot com domain was registered. This was the start of what was going to be an unbelievable reseller bubble; many people argued whether this bubble would ever pop or not. In early 2008, some domainers started selling their lower quality LLLL .coms for $15 to 20 each. There were quite a few larger investors as well and they were hanging on to their domains in the hope of further price increases.

In the spring of 2008, things really picked up and at one point, the lowest quality LLLL .coms were fetching $35 to $45 per domain. Higher quality domains were regularly seeing end user sales.

Over the subsequent months, things slowed down. Lower quality LLLL .coms became very difficult to sell for more than $10 and we're almost back where we started. Still, it's only a question of time until things pick up again; it is possible that by 2010 or 2011 we'll see we'll see a second, more mature and sustainable price increase for LLLL domains.

LLL Domains Cool Down

At the start of 2008, low quality LLL .com domains regularly sold at $6,400 per domain. Within a few months, this minimum had increased to around $7,000 per domain. Then everything started to quiet down and the value of most LLL domains slowly decreased. At the end of 2008, low quality LLL .com domains were selling in the range of $4,500. That's still pretty good, but nothing like the predictions we heard from top domain experts in early 2008 that even the worst LLL domains would sell for more than $10,000 by the end of the year.

End User Sales Remain Strong

When the market was at its strongest in 2008, Fund.com sold for about ten million dollars in the most expensive reported domain sale of the year. DataRecovery.com also sold for a fair amount (over $1.6 million) in March, when the industry was at its peak. As if to demonstrate that the domain industry will tough out the hard economy, Kredit.de and Invest.com both sold for over a million dollars later on in the year when the economic crisis in full swing.

More recent transactions like FinancialAid.com selling for $480,000, SC.com for $300,000 and YP.com for a very nice $3,850,000 demonstrate that the domaining game will continue on even through harsh times.

2008 - A Year To Remember

It is likely that 2008 will go down in history as the year that the wholesale sector of the domaining industry hit an all time high and went on to drop very rapidly in the same year. At the same time, retail sales remained strong.

It is unknown what the future holds, but it seems that the worst is over and that the domainer-to-domainer market will slowly start to rebuild itself. The primary lesson for all domainers is that we should depend neither on other domainers, nor on parking companies for our monthly income.

In a fashion reminiscent of investment pump and dump scams, domain sellers list domain names for sale and pump cheap traffic to the names to make them look appealing and then dump the names on unsuspecting buyers.  These scammers list domains for sale on domain aftermarkets that advertise the inflated traffic information and dump the domains off on a buyer who is likely unaware that the traffic is temporary. This is not a new scam, but it appears that we have some damning evidence of scammers in action on TDNAM.com.

To be clear though, we are not pointing to TDNAM as a perpetrator with any involvement, rather they are merely the venue where  scammers are preying on unsuspecting victims. The sellers in a pump and dump are the scammers not the venues.  We are sure this happens at more than just TDNAM and don’t mean this article to suggest otherwise.  The links we were given show what is easily perceived as sellers engaged in “pumping and dumping” domain names being sold on TDNAM.  Anyone buying any domain names in the aftermarket on the basis of traffic numbers should be aware of this scam.

This activity can also occur outside of an aftermarket venue.  When selling a domain name in public, say on a forum, it’s common for sellers to receive requests from savvy domain investors to “test the traffic”.  The request is made in order to validate any claimed traffic.  It’s the domainer equivalent to due diligence.  Most sellers in this arena are also familiar with the practice.  Sellers know that they won’t be able to sell a domain that they pump with bogus traffic and not be caught.  The risk of being exposed on a public forum as a fraud are likely strong enough that this doesn’t occur very often.   Since whois records can be changed and new identities created easily, it is still possible to run this scam outside of the confines of an aftermarket platform.

An aftermarket platform, however, often provides even more unsuspecting buyers for the scammers to prey on and their terms give the sellers a shield to hide behind. TDNAM, like Sedo.com and other domain aftermarket venues, display domain traffic numbers in the auction details.  The problem with this information is that it is a fairly vague number and only the venues themselves know the details.  The source and  quality of this traffic is not reported and typically not guaranteed.  The TDNAM legal terms only mention this about traffic :

Some Expired Domain listings may include traffic data labeled as “Unique Visitors” (the “Traffic Data”). The Traffic Data is provided AS IS and for informational purposes only. The Traffic Data reflects internally calculated data and does not represent a guarantee of continued traffic in any way.

I was unable to find a terms of service disclaimer on Sedo, but I’m sure that the numbers they post are also not guaranteed.  Obviously, not guaranteeing traffic provides an “out” or protection that sellers can hide behind as they pump in as much traffic to a domain name.  When the domain is sold and the unsuspecting buyer realizes that there is no traffic coming to the domain, the venue and seller can simply reply “We don’t guarantee the traffic”.  This lack of any guarantees enables the pump and dump domain scam.

This is one of the reasons most savvy domainers who buy on aftermarket auctions follow the rule of caveat emptor (buyer beware), knowing full well that the numbers can’t  be relied upon.  What happens to the novice unsuspecting domain buyer ?  TDNAM, being  run by the largest domain registrar, likely has a customer base that is not primarily made up of savvy domainers and likely is unaware of these sorts of scams. To an unsuspecting buyer or novice, a domain with a reported high amount of traffic may seem very appealing.  There are likely far more unsuspecting buyers on these aftermarket sites which enables the scammer even more.

Need Some Evidence ?

So how do we know this is happening ?   Here’s two example domain names that are for sale on TDNAM as of this writing (Friday at 3 am cst) that seem to be “pumping and dumping” (see screen shot below).   Both names have sold in the process of writing this story. The  TDNAM numbers shows 1723 for the domain VideoGameSupermart.com and the domain Dvdroms.net reports 39097.

It’s interesting to note that the domains mentioned above are not expired domain names. The only mention of traffic in the terms of service on TDNAM that I could find (see above) talks about expired domain traffic not being guaranteed. Does that mean that they are guaranteeing the traffic numbers non-expired names listed on TDNAM?   I doubt these are guaranteed numbers and I’m guessing this omission in the TOS disclaimer will be fixed very soon. There’s a note on the auction page next to the traffic numbers that says “The traffic data is provided AS IS and for informational purposes only. The traffic data reflects internally calculated data and does not represent a guarantee of continued traffic in any way.”

Let’s look closer at Dvdroms.net though. The traffic numbers claim it is getting over 1000 uniques per day. That seems to be a stretch, but maybe it’s not. Where could this traffic be coming from ?   A former website with incoming links ?  Not likely based on a Google link check. Type-ins ?  I highly doubt it.  How about just buying up traffic before you put the domain on auction ?  Enter the company UGGIcorp.com, a company that sells traffic on the cheap.

Setting up and getting Traffic is fast and simple. We charge $2.000 per 3000 Unique Visit. We will review your website and will have it active within 1-12 hours. Make Sure Your site follows our terms. These Traffic Packages are not adsense safe unless it says so on the package.

UGGIcorp has a page on their website that displays how much traffic they’ve sent to various clients during the month (screen shot below in case it goes away).  It turns out that both Dvdroms.net and VideoGameSupermart.com appear on the list of domains that received this “pumping” of traffic in December.

SOLD !

Dvdroms.net ended up selling for $265 on TDNAM (sorry link not available).  If the seller bought 50k uniques worth of traffic, as the UggiCorp site seems to be saying, he likely paid around $30.  Add in the $10 paid for the domain, and you’ve got a nice profit of $225.  Videogamesupermarket.com was sent around $2 worth of traffic and sold for $69 .

Ok, so big deal. It’s only 2 domain names, right.  Wrong.
First, these aren’t the only names selling on TDNAM that appear on the UGGIcorp list. The same seller appears to be doing this with multiple domain names listed on TDNAM.  Secondly, these are only the ones we found that had some sort of evidence linking the bought traffic to domain names offered for sale.  Like cockroaches, once you’ve seen one scammer, rest assured there’s more hiding out somewhere.  I’m sure there are other sellers doing this same thing, but with a little more stealth. If not now, I’m sure after this post, the practice of pumping traffic to domains will be done with more discretion in the future.

To top off the story, the whois for the domain names that we mentioned seem to contain bogus information.  Another thing someone pointed out when we discussed this issue is that these domains all go to a Godaddy parking page.  Most PPC companies and search engines frown on traffic that is bought and pumped in to a landing page.  Do you think that the advertisers on that landing page want to pay for this sort of traffic ?  It’s a violation of terms to have bogus whois info and it’s a pretty safe bet that pumping in traffic to a lander is also a terms of service violation somewhere.

Buying domains on the aftermarket comes with risks.  Most savvy domainers know about this scam (possibly having been burnt by it before), but others might not.  Buyers need to be aware of these type of scams.  This example seems to be a clear case of “pump and dump” domain selling.   Hopefully, in the future something can be done on these aftermarket platforms to combat these scams.

Thanks to our friends at DomainAuctionCleaner.com for alerting us to this.

(c) 2009 DomainNameNews.com

Buy Category Killer Domain Names for the best price possible.

• ICANN advertises new TLDs in The Economist (Stephan van Gelder)
• Bido.com to restart auctions on February 2nd, 2009 (Conceptualist)
• ICANN releases 2008 report

(c) 2008 DomainNameNews.com

DomainFest Global: January 28th to 30th in Hollywood California. Register by December 31st and save $100.

John Motson, the domainer behind DnXpert.com and the ebook Domaining Manifesto has concocted a new domain auction site with a twist that should get people talking. The recipe?  Take 1 high value domain, mix in a little Bido.com-type buzz, a dash of Million Dollar Home Page ingenuity and a dash of  entrepreneurial spirit and you get MysteryDomainAuction.com .

Motson’s Mystery Domain Auction is auctioning off one mystery domain name valued at $10,000 over the course of 100 days.  The mystery domain will be revealed on day 50.  Bidding starts at .01 and Motson has a goal to reach a total take of $1,00,000.

$1 million for a $10,000 domain ?  You heard me right.  The trick here is that the domain will sell to 1 person for $10,000 but everyone else having paid in their bids prior in an all-pay auction format means that the total sum will be $1 million before Motson even reaches a bid of $150.  Pretty smart.

The accumulating auction process is explained on the sites FAQ page:

. . .the auction bid amount is incremented by $0.01 every time a new bid is placed (*). Because this is an all pay auction, the bids accumulate into a bulk total which by the time bidding reaches $147 will have passed $1,000,000.

Below is a projection of the minimum value accumulated as a result of bids reaching various amounts.
High bid Minimum accumulated value
$0.10 -> $0.55
$1 -> $50.50
$10 -> $5005
$20 -> $20,010
$30 -> $45,015
$40 -> $80,020
$50 -> $125,025
$147 -> $1,080,523

Each bidder also receives a link on the site in the “past bids” section .  We tossed in .64 and by the time we got this written up the auction was at  .  By the looks of it the links can be used for any sort of promotion and current links appear to be targeted to just about anything except adult sites.  This is a great idea and John’s creativity will likely be greatly rewarded.  I predict a slew of copy-cats coming on the heels of this as well. Hopefully for John 100 days is a long enough lead on any potential competitors.

Good luck bidders !  Check it out at MysteryDomainAuciton.com

(c) 2008 DomainNameNews.com

NameDrive is introducing 6 new innovative templates.

Chris Dannen of FastCompany blogged his thoughts on the pending release of new TLDs . Dannen feels that the release of the new domain extension will spur a rebirth of cybersquatting.  Too bad Dannen, like many others, has bought in to the idea that cybersquatting equals buying and selling domain names or merely owning more than one domain.  He cites an example of an Iraq War veteran and friend of his who bought up and sold domain names to supplement his income. I’m not sure what this friend of his owns but the act of buying domain names and selling them is not really cybersquatting.  Cybersquatting is illegal. Speculating on domains is not. Owning thousands of domains is not. Selling domains is not.

Dannen also buys in to the message that seems to be one propelling the introduction of new TLDs forward “the Web is running out of memorable domain names.”  Highly unlikely given the number of TLDs we currently have, language variations and made up words and names that are created every day.  Even the name ipod, a name he uses in his piece, meant nothing a mere 7 years prior.

Cyber squatters will suddenly have billions of new domain names to purchase for only a few dollars — no longer will they have to rely on buying domains more expensively secondhand. Trademark infringement suits will balloon from tens or hundreds of domains to thousands and tens of thousands.

Jason Kincaid of TechCrunch follows up to the FastCompany piece, essentially stating that nobody really cares about all these new extensions.  Sure there will be squatters and speculators grabbing up a bunch of domains and it may keep the lawyers busy. We can however look at the history of the latest and greatest new TLD and see that this game is pretty much played out.  A new TLD needs an audience and type-ins and a reason for people to gravitate to it.

As Kincaid points out, people generally don’t navigate to these new TLDs through typeins contrary to what Dannen seems to be saying. The new TLDs are not recession proof in our opinion either.  How well are those .mobi aftermarket sales going right about now?  The Fortune article by Paul Sloan talking about domains as recession proof is clearly dated, given the downward trend that all in the domain space have been feeling.

(c) 2008 DomainNameNews.com

Buy Category Killer Domain Names for the best price possible.

According to the Miami Herald, bodybuilder Steven Thiele, has been found liable of cyber-piracy and trademark dilution.  He was ordered to pay $3000 plus legal fees.  Thiele had previously demanded the Indian tribe pay $500,000 each for the domain names miccosukeetribeofindiansofflorida.com, miccosukeetribeofindians.com and billycypress.com. The tribe recently had won a default judgment when Thiele did not respond.

Thiele may wish to count his blessings in this case, considering Verizon was just recently awarded $50,000 each for the OnlineNic domain name squatting violations that were also default judgments.

(c) 2008 DomainNameNews.com

DomainFest Global: January 28th to 30th in Hollywood California. Register by December 31st and save $100.