I wrote a week or so ago about the need to change my buying strategy. It seems, however, that sellers are drastically changing theirs. As per usual I submitted about ten offers on Sedo last night for LLLL.com’s and waited until this morning to see the result. In the past I would have had one or two responses with higher offers or if I was lucky a 4 letter domain owner would accept there and then.
Today, however, the story is very different. On checking my buying panel, aside from the silly $22k counter, four of the other domains I submitted offers for have been sent straight to auction. Not a single negotiation, not a single counter, not a single comment, straight to auction. This seems to be the new four letter domain selling strategy.
As I have mentioned before I was finding it more difficult to buy domains at a fixed price in the Namepros forums because sellers where unsure what their names were worth due to the fluidity of the LLLL.com market. This state of mind has affected many other selling venues including TDNAM and Sedo whereby sellers would prefer to send their names straight to auction in the hope they will get top market value. Gone are the days when no one will bid on a four letter dot com. Gone are the days when the initial bid is as far as a sale will go.
Four letter dot com domains have become a sort after commodity and are getting rarer by the day as more and more domain speculators horde their stock in the same way I am. My advise would be to buy up as many reasonably priced 4 letter domains for sale at fixed prices rather than suffer the torture of getting sucked into a drawn out auction process and paying more than the name is worth just because you found the gem in the first place and have developed an emotional attachment for it.
One Response to “Whatever happened to negotiations?”
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January 27th, 2008 at 2:07 pm
To borrow the old term, could it be “irrational exuberance” borne of pure speculation as well as bidders having formed an emotional attachment to the names; or is the market really now just realizing and finally giving due credibility to the trade of domain names themselves as prime real-estate.
When it comes to the Internet, domains and their sites if existing are the real forms of real-estate, as no other component can lay claim to that title. Hosting cannot– though high traffic can be expensive, prices are generally trending downward toward free. Design and development cannot because they’re professional services. Markets cannot because they’re essentially the destination sites themselves.
It’s only with domains that are the true addresses and real-estate of the Internet, bearing similar traits like being in limited quantity being unique, etc. etc. It’s only logical that its inherent scarcity will inexorably bring prices up.
The big question is if this recent fever in low-digit domains will continue or if this is a bubble. So far, the evidence points to the contrary and that this is a good sustainable trend since the domain industry is only now finally getting its fair share of the limelight it deserves, and ever since, domain names have generally been going up.
But like any market, sometimes there is a correction, and the real question here is if we’re near one, or if despite the prices rising, we’re too far off that even if prices went up 500% or more, they’d still be bargains when years from now they’ll have gone for many multiples what their present values are.
In other words, the hypesters will do everything to drive prices up to bear a greater windfall for their portfolio. Buyers also have a vested interest in prices going up because they want their investments to appreciate in value. And the market just starts believing all that positivity creating a cycle that only trends upwards.
Did you notice how, even the ugliest 4-letter .com’s are justified so their ugliness is a form of beauty on its own, and despite an obvious lack of practical use, there is an artful value to them which justifies their hefty prices too, even if only because they’re getting scarce? Where else can you find that? Did the Dutch tulip bubble ever value the tulips for how ugly they looked? Or stocks like Time Warner for the ugliness of their stock ticker (TWX)?
It’s really new and different. And nobody knows. But it appears their scarcity will make the trend go upward. And it’ll be harder and harder to get these LLLL names than they were in what seems like only yesterday.