Does a Big Sale Raise Domain Values? | DomainInvesting.com
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Does a Big Sale Raise Domain Values?

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I am in the midst of a discussion with one of my blog readers, Bruce Gittleman (who gave me permission to use his name and domain names), and the discussion centers on whether Rick Schwartz’s pending sale of Candy.com will lift the values of four domain names Bruce owns, CandySweets.com (reg’d in 1999), WeLoveCandy.com, SheLovesCandy.com and BuyGreatCandy.com. There is a saying, “a rising tide lifts all boats,” and some people liken it to a big domain sale increasing the value of similar or related domain names, but I don’t think it applies in this situation.

After a large domain sale like Candy.com, world event like the election of President Obama, or tragedy like the tsunami in Thailand, people register thousands of domain names with the hopes of capitalizing on the increased publicity. It is my belief that 99.9% of these types of domain names do not sell. Although Bruce didn’t specifically register his brandable domain names because of Rick’s pending sale, if they are put up for sale now, they will compete with thousands of other similar names on sites like Ebay.

There are several reasons that I outlined why I think Bruce will be hardpressed to sell his domain names for a profit – especially given the current economic conditions:

  1. Since nobody has contacted Bruce since 1999 (assumption), chances are good that nobody will all of a sudden want them… so
  2. Bruce will have to contact candy companies on his own to sell/market them, which is  very time consuming
  3. It will be difficult finding someone who wants these, so Bruce will have to sell them on the concept rather than just on the value of the names alone.
  4. Once Bruce gets someone interested, he will then have to convince them to spend the money.  Bruce has already invested over $75 in renewal fees alone + the time it takes to convince them that they need the domain name
  5. It’s very difficult to convince a company to spend thousands of dollars on a brandable name, when they can just as easily spend $8 to register: TheyLoveCandy.com, SheLovesCandies.com, or another unregistered brandable domain name

There are always people who spend hundreds of dollars on “trendy” domain names that are mostly a waste of money, in my opinion. Instead of spending $800 dollars on 100 new registrations like these, it would be better to buy one $800 domain name that gets some traffic and actually has meaning, rather than creating brandable domain names that nobody cared to register in the past.

Generic domain names like Candy.com and Auction.com sell for 7 figures because everyone around the world knows them.  They haven’t been developed into businesses before, yet their brand value and goodwill is already immense. Additionally, the type-in traffic is and always will be strong, and this traffic can be converted into sales immediately after turning it into a business.

In my opinion, 99.99% of the new registrations that come after big sales are worthless. In general, I do think similar meaningful names like CandyBars.com and Auctions.com become worth more as domain names, but I really don’t think brandable names become more valuable.

What do you think?

BTW, I thank Bruce for being a good sport about this and allowing me to use him and his names as examples.  If the four names he owns are of interest to you or your company, drop me a note and I will put you in touch.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (22)

    Gerry

    The one keypoint that I focus on is this statement;

    “…“trendy” domain names that are mostly a waste of money”

    This is a very risky area to venture into.

    That rising tide does nothing but float rubbish to the top. That is my take on it.

    You mentioned “events” as having been the catalyst for many domain regs.

    The Virginia Tech tragedy brought about more domain regs tied to a single event than any other in history. Previously that honor [sic] went to Hurricane Katrina.

    A event reg is typically short lived, much like adding a date to a domain.

    An event or trendy reg usually has a short shelf life. It is only noticed and on the front of the shelf until the next event.

    All I can think of is the tons of Britney Spears and Paris Hilton names.

    I say we give skank a holiday.

    March 20th, 2009 at 12:30 pm

      Elliot Silver

      @Gerry – President Obama’s election has led to tons of registrations of related domains (108 on Ebay right now). That isn’t a short term deal, but I don’t think most brandable names that were registered are worth anything.

      March 20th, 2009 at 12:32 pm

    Lou Mindar

    My gut feeling is that while the sale of big name domains like Candy.com may raise the interest in/awareness of domain investing, the affect is shortlived and the impact on the value of other related domains is negligible. Unfortuanely for Bruce, I don’t think the sale of Candy.com is going to benefit him much, if at all.

    March 20th, 2009 at 12:30 pm

    Gary

    In short – No.

    Domainers mostly I am afraid to say are sheep.

    There are plenty of examples of this herd mentality, most memorable are:

    Flowers.mobi sale
    The NNNN, NNNNN “buy out” that took place at NamePros

    both created hysteria and mass registrations, and both are experiencing massive drops now and people are getting burnt.

    Even the milliondollar homepage project spurned many copy-cat’s that went nowhere.

    Sometime you have to first 1st, and there is no prize for 2nd place

    Most of the time you have to have the perfect storm to make a sale, unless you have a category killer domain like “Toys” or “Candy”, and there aren’t too many of those around.

    as for the sale of Candy, and will it prompt more sales – no – as the saying goes: “One swallow does not a summer make”

    March 20th, 2009 at 12:59 pm

    Gary - Typo

    * Sometimes you have to BE 1st, and there is no prize for 2nd place

    sometimes you also have to learn to type. sorry for the typo.

    March 20th, 2009 at 1:01 pm

    Johnny

    Flotsam and jetsam is the end result in that rising sea.

    Eventually, these domains get dumped unless the owner keeps being the sucker that renews over and over.

    March 20th, 2009 at 1:18 pm

    David J Castello

    The only time you will see a “trickle down” effect from a huge sale is with long-tail (secondary) Geodomains.

    For example, a $20,000,000 sale of LasVegas.com (it’s worth at least that much) would definitely raise the value of LasVegasGolf.com and LasVegasRealEstate.com.

    March 20th, 2009 at 1:58 pm

    wannadevelop.com

    Funny seeing one domain sell for whatever amount while millions of others don’t sell even for $10

    Too much hype…

    As I’ve said many times, for every success with domains there are 1,000s of failures… hell maybe even 10,000s, but you never hear about them.

    Don’t we all love the good news.. It gives everybody a little hope.

    LOL !

    and i’ll LOL again cause this is all really hilarious ! :)

    Mike

    March 20th, 2009 at 2:13 pm

    Steve

    Good point David, I think it will also benefit candy.ca, candy.de, candy.us etc. in a positive way.

    March 20th, 2009 at 2:19 pm

    Leonard Britt

    Yes, only a small percentage of domain registrations actually result in a sale. Parking income for registrations the last few years is generally minimal so domainers are beginning to realize that they must develop or be more aggressive marketers. And of course domainers need to adjust their price expectations.

    March 20th, 2009 at 4:24 pm

    David J Castello

    Steve:
    I would agree that the exact ccTLD versions could see some positive impact.

    March 20th, 2009 at 4:24 pm

    David J Castello

    Mike:
    Don’t laugh too much. We did a six figure sale last week.

    March 20th, 2009 at 4:25 pm

    wannadevelop.com

    David, talking about deals that are structured with NDA’s or ones where they cannot be verified is pointless.

    Deals such as Toys.com or Candy.com give the industry a boost… A little bit of hope. False hope? No… Domains are worth what somebody is willing to pay for em and we all like this type of press as it makes it ok for the simple practice of reselling domains without having to setup websites and jsut sitting on your ass waiting for the offer to come in… It does happen! LOL :)

    Unfortunately there are millions of domains that will never be sold.. Ever… That have been sitting and collecting dust for years by domain speculators/resellers.

    Probably at least a hundred million worth spent on renewals and buying em on the aftermarket.. The cool or sound good ones — brandable.

    Suckers…

    March 20th, 2009 at 6:08 pm

    M. Menius

    I agree with David’s conclusion about the long tail geo’s for one.

    The candy domain examples like ‘BuyGreatCandy.com’ go back to the early years of domaining. These types of domains have been registered by the truckloads and are almost impossible to sell.

    Because when you begin adding so many words to the primary keyword, you end up with a domain that has much competition, and is a mere derivative.

    March 20th, 2009 at 6:28 pm

    David J Castello

    Mike:
    It’s not pointless. NDA or not, we’re well enough known in the industry for people to know that if we said we sold a domain name for six figures we sold a domain name for six figures.

    That being said, I will reveal that it was not a Geodomain and was (surprise) a one word generic dotCom.

    Furthermore, I kindly suggest you knock it off with rubbing salt in people’s wounds. Calling people “Suckers” serves absolutely no purpose than to make them feel terrible about themselves. Anyone who has the nerve to jump into this business has my genuine respect whether they succeed or fail.

    March 20th, 2009 at 7:23 pm

    Mark

    Hi Elliot:

    In my opinion, a three word domain that simply contains the same one word generic (that recently sold for high $) is not even worth the reg fee. There are millions of versions like this, MeLikesCandy.com, UCandyLover.com, etc… Really, millions and millions of alternates. So, while I wish Bruce the best, I don’t think he is going to enjoy Rick’s good fortune.

    By the way, I for one appreciate David C’s compassion regarding suckers. Very happy for you and your bro, David.

    Really people, what’s with all the mean spirit. Get over it. Celebrate another domainers good fortune, let it motivate you to work your but off, and maybe you too will share some riches.

    Mark

    March 20th, 2009 at 7:42 pm

    Shaun Pilfold

    I think these large sales are great for the industry as a whole. It won’t make crappy names good, but it will raise the public and corporate awareness that good domain names sell for high prices.

    Congrats on the sale David.

    Shaun

    PS … might even make my candy.ca worth more 😉

    March 20th, 2009 at 8:00 pm

    robb

    I think candy.ca, candy.de, candy.us etc. had good value even before candy.com sold. But it still doesn’t hurt.

    As for the 4 domains in the original post, welovecandy is probably the best, maybe not as good as ilovecandy would be. The others are more like newbie registrations, but could sell for xxx to xxxx, I’ve seen worse in the weekly reports sell for that. Lots of domains sell for xxxx every week and you have to scratch your head on many of them.

    March 21st, 2009 at 2:30 am

    Ron

    I agree with David, long tail GeoDomains do have alot of potential (I’ve sold quite a few myself…on a regular basis!).

    March 22nd, 2009 at 4:58 pm

    Domain Superstar

    “I think candy.ca, candy.de, candy.us etc. had good value even before candy.com sold. But it still doesn’t hurt.”

    Agreed.

    That being said, domains that are not exact match keyword only domains will likely not see any price appreciation or interest from an end user at all.

    If the domain has any word in it that is not part of a searched keyword phrase then the domain is likely not to benefit from a big sale of a related domain like in the example at all.

    March 23rd, 2009 at 1:53 am

    bob francis

    I think a big sale like candy.com does a lot of good as it raises the perception of the industry as an investment alternative, and reaches out to millions of people who for the first time see the value of an intellectual property, the icon of the URL. These new people could be investment bankers, wealthy individuals hoarding their cash, or tomorrow’s cash generators, but it’s all good publicity, as nothing succeeds like success. What the industry needs among other things is more actual stories of how a firm acquired a great URL and made millions from levering it in their marketing program. Maybe candy.com will be the domain to launch such a pr campaign. Other firms like sheep will follow and maybe buy candy.net will sell for 1.5M?

    May 8th, 2009 at 9:11 pm

    markus

    i am interested the the keyword bieng suffices by 247, do these hane much value
    i here the term 247 everyday, poss in mho these could be brandable .

    June 9th, 2009 at 5:20 am

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