How Do You Drive Liquidity in Domain Market? | DomainInvesting.com
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How Do You Drive Liquidity in Domain Market?

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In a public Facebook post this afternoon (embedded below), Mike Mann, founder of DomainMarket.com, posed an interesting question: “There are hundreds of millions of dollars worth of the worlds best .Com domain names for sale at DomainMarket.com but they sell too slowly, any ideas?

In my opinion, one major issue in the domain investment space is liquidity. You and I each might have domain names that are legitimately worth 6 figures to the right buyer, but that buyer may not realize how the domain name can impact his or her business, and that buyer may not have the capital to be able to afford the domain name. Similarly, we might have domain name portfolios with significant value in them, but selling these assets takes quite a bit of time.

By nature, domain investments tend to be illiquid assets. Figuring out a good answer to Mike’s question would bring considerable investment into the space and would help solve a major obstacle to getting more people involved in this dynamic marketplace.

At the moment, I don’t know of a good answer to Mike’s question. Perhaps some people will see this Facebook post and share some of their ideas about how to bring liquidity to domain investing. What are your thoughts on this?


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 (50)

    Anticareer.com

    If you want to drive liquidity you offer pricing that the general public can afford. A quick look at that site shows tons of domains are end user pricing. So when you are pricing for that one specific person/company to wander along one day that has the desire and the means to buy it you aren’t going to be driving liquidity. But I’m sure he already knows that. Not sure if the question was asked as such, or just trying to drive some traffic to the site.

    April 1st, 2014 at 5:05 pm

    Jared

    His question seems to be a small part of the answer. He just created some of the awareness necessary to move these premiums. My initial reaction to his post was that it’s just like bricks and mortar real estate: you’ve got to bring the price down. But the difference for domain space is that the benefits of owning the right one can grow (IMO) more quickly commensurate to the owner’s efforts to add value. That is to say that the right domain marketed well (or at least leveraged well) can grow much faster in value than other investments. That needs to get out there, and that’s some of what we often run into in domain marketing: how in the heck are we going educate people about this? The good news about awareness is twofold: 1. I think that the attention of the new domains is going to bring attention to the value of all domains in general (especially .com) and 2. Mike and DomainMarket are holding onto an investment that, while not moving now, will soon, and when they do perhaps for even more than he expected.

    April 1st, 2014 at 5:05 pm

    Leonard Britt

    It comes down to marketing or pricing as being patient does not provide liquidity. We have all sold the random domain and seen aftermarket sales for far more than any domainer would ever pay. However, as an industry domains are for the most part looked at as $10 items – lots of disdain toward those holding domains for resale but of course it is OK for these businesses to make a profit. I believe some large portfolio holders are educating end users but sometimes I struggle to make a convincing case to those who question why they should pay more than $100 for a domain name.

    April 1st, 2014 at 5:14 pm

    Leon

    Not sure there’s an easy answer to that Elliot. If there was, those of us with domains of sufficient quality would be implementing it and have far higher sales volumes, surely?

    It surprises me that Mike Mann wants to sell domains at greater frequency since domaining is seen by many as a waiting game, many people in the industry employ this “buy and hold” strategy. Also, basic law of averages dictates that MM should be seeing a decent volume of sales at a decent frequency Vs someone with a handful of names simply by virtue of his huge portfolio, that is assuming the portfolio is stellar, which I have no doubt it is.

    But you said it yourself, domains are illiquid assets. Illiquid assets that are usually easiest converted to liquid assets when a party in the market for a domain name realises the inherent value and SEEKS to acquire it, notwithstanding a certain amount of outbound effort.

    Various people have tried various approaches to generating greater liquidity, from Rosener and Clements’ industry newsletters with thousands of subscribers, to Rick’s JV project to high profile domain auctions etc etc etc.
    Fact is if no-one’s buying, for whatever reason, ain’t nobody selling.

    Unless I’m missing the point of the question then I really don’t see any way round that.

    April 1st, 2014 at 5:17 pm

    Peter

    Idea

    Forward all traffic (via 301) to potential customers website with full utm tracking parameters appended (with the hope that they check Google Analytics)

    Set up of the the tracking parameter names as ‘This-Domain-Is-For-Sale’.. along with a phone number, maybe

    See if you get any call backs..

    Just thinking out loud..

    April 1st, 2014 at 5:29 pm

    Mark M

    Here’s the answer your looking for “The laws of supply and demand”

    There are more domain names for sale, then actual buyers.

    On the supply side – The .com arena is overbought from domain investors.
    On the demand side – Not enough buyers, as sellers.

    April 1st, 2014 at 6:03 pm

    Rahul

    There isn’t enough money in the world to buy all the names on DNS. I have never received a quote of less than and $90,000. And all the names are super premium.

    April 1st, 2014 at 6:12 pm

    DNS

    There are no complaints about liquidity at DNS. Things are running very well here :)

    April 1st, 2014 at 6:17 pm

    Raider

    Out of the hundreds of millions of dollars worth of the worlds best .Com domain names for sale, one has to wonder how many of these domain names infringe on trademarks, I guess it doesn’t Mann when trying to profit on other peoples hard work.

    Just do a search on DomainMarket, the site is notoriously full of them.

    April 1st, 2014 at 6:21 pm

    Robin

    Three main reasons
    1- Education, I spent some time selling advertising for a local online business and learned a lot. Everyone should spend a little time with small to medium sized businesses to get a clearer idea of the end user, and how they view domain names. At this point in time most small businesses think that a website and a domain name are just necessary evils and doing more with the online presence is something that they don’t have time for. Small business needs to be educated on the importance of a good domain name and the competitive advantage associated with developing such a name. Education is key to developing a demand for premium names.
    2- Ease of purchase. The end user enters the market with little to no knowledge of the value of domain names. Most sites are looking for the purchaser to make an offer. Think about this, do car lots ask you to make an offer for that new pick up. No, they spend their time convincing you that the truck is worth what they are asking you for it. Pick a price and sell the value.
    3- Financing. This will be the key factor in increasing liquidity of domain name as well as adding to the legitimacy of the domaining industry. Its easier to finance the office furniture than it is the domain name that the business is built on.

    April 1st, 2014 at 6:49 pm

    LouChe

    I’d quickly change the home page domains to others that are are more realistically priced rather than…

    TheFirstRow.com One million dollars!

    Toplisty.com Half a million dollars!

    Creativeofficedesign.com Seven hundred thousand dollars!

    etc, etc.

    It’s hard to reason with the unreasonable.

    April 1st, 2014 at 6:56 pm

      Raider

      You might want to type in Google or Microsoft, or better yet “Twitter”, you’ll find some better bargains there.

      In reply to LouChe | April 1st, 2014 at 10:57 pm

    Patrick Hipskind

    Real property has poor liquidity. Most properties sit six months to a year before selling, unless the owner is willing to sell below market value. It is not surprising that Internet property also has poor liquidity.

    Somehow, Internet property needs to evolve to a market system more like stocks. If domain investors were able to purchase shares in premium domains the money could be used to develop the domain name, and as the domain became profitable it would generate investor interest. New crowd funding laws could allow the selling of shares in a premium domain name, or the domain name could be listed on the OTC market. NASDAQ has higher listing requirements that would make this concept difficult to implement on its exchange.

    April 1st, 2014 at 7:14 pm

    Leonard Britt

    Actually I do have an idea which is not new but which could increase liquidity. Oftentimes small business owners or the contacts one might interface with at companies can suffer sticker shock when quoted a price which to them personally is a lot of money (even if modest compared to the business’ revenue). How many individuals finance a car or home? Many businesses also finance asset acquisitions. Godaddy and other registrars have not pushed this but if a domain is registered with Godaddy, why couldn’t Godaddy convert a Premium Listing sales price of $5000 into a monthly lease of $100? I have had businesses argue to me that $1500 is an excessive price but when I convert it to a $25 monthly lease I know they are full of ___. Any business can afford $25/month. Under this lease scenario, the registrar – Godaddy takes their commission, the end user gets the domain they want with no long-term commitment, and the seller still gets an ongoing revenue stream – not just the random sale. The domain stays with the existing registrar and the seller would have to remove the domain from other marketplaces if a lease arrangement is agreed to. Part of lease proceeds might be needed to ensure the domain is renewed. Perhaps a few other details need to be settled but why could this not be done by registrars which have domain marketplaces?

    April 1st, 2014 at 8:11 pm

    R Shaw

    The domain market is pretty liquid i sell a couple domains to end users. my percent margins are 800-3000% per domain name.if the end user sees the value in the domains trust me they will buy, you just have to set your price to where the buyer can afford it.I think most domainers are shooting for the high dollar figure the gate, but most end users will walk away if you quote them a price in that range.the economy is still sluggish but businesses are still looking for ways to attract new customers and keep old ones but at a more cost effective standpoint. you have to look at your end users as bargain shoppers in a supermarket setting. As domainers we have to diligently seek the right domains that will peak end user interest, but at the same time keep our acquisition costs low enough so that we can afford to sell at a price that will please the customer and turn a profit at the same. buy domains that are extremely relevant to the the end users business, or if not extremely relevant is close enough to generate a response for them. i think this strategy solves the whole issue of liquidity

    April 1st, 2014 at 10:44 pm

    Josh

    You can easily increase liquidity, decrease prices.

    Now you have an issue, small liquidity lol

    This industry is not always about a fast buck, patience is a vital key long term, some of us get lucky or hard work pays off with quick flips for huge margins but generally speaking at this present time, it is a waiting game.

    April 1st, 2014 at 11:10 pm

    AbdulBasit Makrani

    I completely agree with LouChe. The pricing at MM site is really poor. Those examples given by LouChe are not enduser prices. Those are simply crazy dreams which will never be fulfilled let alone slow selling of such names at those absurd prices!

    April 1st, 2014 at 11:43 pm

    John

    So after checking out the comments here, for yuks I decided to see if the following domain exists:

    themostexpensivedomainintheworld.com

    Anyone? LOL, indeed it is, complete with error page. So of course you’d follow that up by checking this one:

    themostinterestingdomainintheworld.com

    Oops.

    April 2nd, 2014 at 12:24 am

      John

      P.S. I don’t always check domains, but when I do I prefer EMD’s in .com’s. B-)

      In reply to John | April 2nd, 2014 at 12:41 am

    todd

    One thing he needs to do is tweak his site. When you use the Advanced Search feature it will only return a total of 7 pages worth of domains. You can search it every which way and it only gives back 7 pages which for some of the keyword searches is a very small percentage of what he actually has in his inventory. The majority of the searches don’t even give results past the letter A so you can imagine how many domains are missing from B-Z. So probably the majority of the ones that sell are those seen when someone finds it through direct navigation to the sales page.

    April 2nd, 2014 at 1:15 am

    Picas

    if we had an idea or a solution for Mike question,would you share with him ? or to public ?

    April 2nd, 2014 at 3:28 am

    Jonathan

    I’m sure an estate agent will give you the answer.

    April 2nd, 2014 at 4:04 am

    Ivan

    More than 1 year ago DNS created a beta version of a script to calculate fees and installment prices, but they never released that feature to all.
    Now you could ask yourself: why they didn’t released that feature?

    Anyway, go on your landing pages and place the following links on them:
    https://escrow.com/services/domain-name-holding-escrow.aspx
    https://escrow.com/support/fee-calculator.aspx

    Unfortunately It seems to me that the others escrow services don’t have clear pages written specifically for the financing option, which is of utmost importance of course.

    April 2nd, 2014 at 4:48 am

    Luke

    As already mentioned: adopt more realistic pricing.

    If they want to sell fast, they should drop their pricing substantially – liquidity issue sorted! 😉

    I’ve bought one domain from Mike’s company, other than being a pretty slow transaction I was otherwise happy. I would probably buy from them again if the prices were brought back down to earth.

    April 2nd, 2014 at 5:03 am

    Andrea Paladini

    I think Mike Mann should adjust his asking prices, which often are too aggressive.
    Maybe he thinks he can always replicate sales like ThrillofTheGrill.com for 30k, but it does not work that way.
    When you see names like, for ex., AsianYellowPages.com with a price tag of 100k, well, that’s a wishful thinking, not a fair pricing, even at end users level.

    April 2nd, 2014 at 8:47 am

    Elliot Silver

    Price changes is the easy answer, but I think Mike is looking for something else that will drive sales but not harm pricing.

    April 2nd, 2014 at 8:49 am

      todd

      Elliot you wrote

      “I think Mike is looking for something else that will drive sales but not harm pricing.”

      Since the majority of his sales are already low than how by lowering prices across the board harm pricing? Below is his sales from Feb 28-Mar 31.

      feb 28
      Domains sold Friday: 25
      Total: $44,739
      Avg: $1,789.56

      mar 3
      Domains sold Mon: 22
      Total: $13,100
      Avg: $595.45

      mar 5
      So far average day:
      Domains sold: 11
      Total: $16,250
      Avg: $1,477.27

      Mar 11
      Domains sold Tue: 20
      Total: $27,050
      Avg: $1,352.50

      mar 17
      Average Monday:
      Domains sold: 19
      Total: $20,400
      Avg: $1,073.68

      mar 21
      New Friday total:
      Domains sold: 19
      Total: $34,150
      Avg: $1,797.37

      mar 28
      Friday domains sold: 11
      Total: $69,601
      Avg: $6,327.36

      mar 31
      Domains sold Mon: 17
      Total: $17,645
      Avg: $1,038

      Most average priced domains get very few hits to their sales page so when a name that may only get 3 or 4 hits to the sales page per month and on that sales page is a ridiculous price of 50 grand that buyer is going to walk because chances are he thinks there is no way that he can possibly bridge the gap and buy that name for 1500 bucks but in reality he probably could buy that name for 1500 bucks.

      By lowering the prices across the board to a more realistic non offensive number chances are he will increase sales by not scaring off potential customers. It’s obvious that the majority of his sales are very low in average price anyway so I think there is only an upside to him lowering the pricing.

      In reply to Elliot Silver | April 2nd, 2014 at 12:03 pm

      Elliot Silver

      My thought was that is the easy answer, and if Mike wanted the easy answer, he wouldn’t have asked.

      It does make a lot of sense because I would have bought some names if they were priced lower, but again, I don’t think that is the answer Mike is seeking.

      April 2nd, 2014 at 12:36 pm

      todd

      As a side note the only reason the Mar 28th average is much higher than the rest is because of the sale of Arwin.com for $60,000 which obviously skewed the average.

      mar 28
      Friday domains sold: 11
      Total: $69,601
      Avg: $6,327.36

      I think also one thing that does not help the domain market toward the end user is tweeting how much he paid compared to how much he sold it for in the examples below. That’s a surefire way to make the domain industry hated even more.

      sold Arwin.com for $60,000. Purchased 10-22-2011 $331.

      sold LiveSexAdvice.com for $1000. Purchased 4/17/12 $8.00.

      sold EverydayMoments.com for $10,000. Purchased   2012-09-04 $103

      sold PlayWall.com for $15,000. Purchased 10/1/09 $70.

      sold EssentialsForLiving.com $4,000, purchased 5/6/10 $7.50

      sold BaixoPreco.com $6000, purchased 1/20/11 $7.50

      In reply to Elliot Silver | April 2nd, 2014 at 1:46 pm

      Luke

      Elliot, it may not be the answer he’s looking for, but it’s clearly the overwhelming response. If it looks like a duck and quacks like a duck…

      In reply to Elliot Silver | April 2nd, 2014 at 4:18 pm

    Pat

    Here’s a thought. Advertise.

    And I don’t mean advertise to other wholesalers, which, as far as I can see, is just about the only place where advertising dollars are spent by large domain wholesalers now.

    Come up with well-thought-out B2B campaigns targeted at the marketing departments at medium- to large-sized businesses. Demonstrate the inherent value of excellent domains to the folks who have the resources to buy them at end-user prices.

    April 2nd, 2014 at 9:03 am

      John

      Congratulations, Pat – you won!

      In reply to Pat | April 2nd, 2014 at 7:27 pm

    Donna Mahony

    Great topic. I don’t have anything to add but I’m especially appreciating the more general replies.

    April 2nd, 2014 at 9:18 am

    Ivan

    Sorry, I forgot the question comes from Mike Mann. To be honest, it seems to me too that they have ridiculous high prices, so, since he could have the ability to do that, I would suggest to Mr.Mann, instead of those prices having nothing to do with the reality, to work on an advertising platform to distribute photos and videos of high quality on a circuit of best domains and not those crap text links from google….

    April 2nd, 2014 at 9:48 am

    JW

    There are companies that develop portfolios of premium domains and make millions in revenues with 30% profit margins.

    I don’t think end-users have a full appreciate for the impact a domain can have on their business. Whoever mentioned the crowdfunding idea I think is spot on. If you pooled some premium domains, developed them and then paid dividends, I think you could spawn investment in the asset class broadly speaking.

    I’m convinced the domain market is 60% wholesalers trading amongst themselves (hand reg guy sells to wholesaler 1, who sales to wholesaler 2), and the rest are end users. Not scientific by any means, but just my suspicion.

    I think adjust pricing would help as well. The trend is now to make up names and buy radical misspellings to avoid paying the domainer holding the ideal name a pound of flesh. Brandables have come about as a result, but end-users will continue to adapt (or pay if they really want the name).

    April 2nd, 2014 at 10:09 am

    steve cheatham

    Work, work, work. The end users need educating. They don’t read domainer media. Find out where they get their information that they trust and get some education going.
    Some of the well funded domainers could get this going and all boats will rise.

    April 2nd, 2014 at 10:21 am

      John

      Nice work, in second after Pat up above.

      In reply to steve cheatham | April 2nd, 2014 at 7:29 pm

    Matt W

    Does anyone strongly apply a ‘time value of money’ principle to pricing?
    Are there any papers or research you guys know of on this?
    Seems to me that Andrew from Huge has sharp pricing, asked him about this at Traffic & he said it does hurt seeing the sales price reports. They they seem to keep that big portfolio rolling though.

    April 2nd, 2014 at 10:43 am

    Michael Wayne

    Marketing & sales 101, its the only way to increase liquidity. We have a few effective tricks up our sleeves, but it is VERY time consuming and technical. Let’s be friends and maybe I’ll share. It’s rare for big money end users to come to you; you have to go to them. Our liquidity is low an slow. Most people have this ‘anti-squatter’ mentality or don’t know how to price a EMD. We have a few that the floor price is justifiable at $20k, but most businesses still don’t ‘get’ why. We are trying out some new marketing strategies to enhance liquidity. I think in the near future this will change dramatically and even the most tepid of portfolios will command a strong price. Most people don’t even understand the internet, as awareness increases so will the prices.

    April 2nd, 2014 at 2:09 pm

      John

      Congratulations, Michael – you took bronze!

      In reply to Michael Wayne | April 2nd, 2014 at 7:45 pm

    Travis

    I say we all take a joint effort on not getting suckered into the new gTLD’s lol. Let’s keep the real value in the existing extensions, the bulk of your existing domain portfolio (I would imagine). Calling all blog owners, let’s bring em down 😉 hahhaha

    April 2nd, 2014 at 2:42 pm

    Patrick Hipskind

    Another possibility is that the domain name community start a “Domain Coin” to use for transactions. The owner might accept a lower payment in Domain Coins on the prospect that the value of Domain Coins will increase over time.

    The coding could be done at GitHub.com. It requires knowing some basic C++. And if the coding sticks to the same parameters as LiteCoin and BitCoin then it should be simple for someone who knows C++ to do the coding, but if they try to deviate the coding they may run into all sorts of problems.

    There could even be backing for the coin, in the form of premium domain names that would be liquidated during any time of financial crisis.

    It would require the best brains in the industry coming together to pull it off, but it could be done. It could make it easier to pay for premium domain names, buyers and sellers could come to terms easier, and it would bring liquidity to the market.

    April 2nd, 2014 at 4:06 pm

      Travis

      I wonder how many people raced to see if DomainCoins.com was taken lol

      In reply to Patrick Hipskind | April 4th, 2014 at 4:06 pm

    Tom

    PopularProfiles.com $5,000,000
    AOneMetal.com $700,000
    DomainMarket.co $500,000
    PirateProxy.com $900,000

    ^^^ right on the frontpage..

    Damn, I wonder what the problem might be..

    April 2nd, 2014 at 5:13 pm

      LouChe

      But you’re already forgetting Tom, we don’t think that is the answer Mike is seeking.

      In reply to Tom | April 2nd, 2014 at 5:30 pm

    Joseph Peterson

    I’ve been working on solutions to the domain liquidity problem part-time during the past year.

    If Mike Mann likes, he can cut me a check. Then I can work on it full time and bring it to market sooner.

    That won’t happen.

    April 2nd, 2014 at 6:30 pm

    John

    The biggest and most basic secret was already discovered by the biggest fish in the domain name sea of them all some years ago now, you know who and what company that is.

    This biggest and most fundamental secret was also revealed on what may have been the first industry blog of them all, or if not the first then the one which I would think almost certainly must have had the biggest school of fish around it of them all at the time. Hint: this famous blog site associated with this greatest whale of them all did not end in .com.

    And what was this vast and fundamental secret that was revealed to all the other fish around in the sea, disclosed and disseminated on this blog? That despite how big this biggest fish and biggest whale of them all was as it roamed about the sea, even marveled at by the other fish who knew it – multitudes upon multitudes of all the other fish in the sea simply DID NOT KNOW THAT IT EVEN EXISTS.

    So the greatest fish of them all went about changing that, and its prosperity, success and happiness only multiplied and grew beyond what virtually anyone would have guessed, even though at first it had seemed the fish was already great and successful enough before all of this. And the rest is history. And that’s the main answer, as Pat and Steve and Michael here have so well touched upon (scroll up).

    April 2nd, 2014 at 7:44 pm

    anon

    Understand what drives value and how domain names relate to that in the year 2014.

    Here’s a hint: It’s not 2004 anymore.
    All those great domains that are sitting around without a home?
    That’s what’s called “holding the bag”.

    April 2nd, 2014 at 10:22 pm

    Ivan

    I forgot to specify the following points, they are obvious but, sorry, it seems that few domainers understand things that are obvious:

    1) DO NOT PUT the following links

    https://escrow.com/services/domain-name-holding-escrow.aspx
    https://escrow.com/support/fee-calculator.aspx

    on the landing pages of all your domains! If you do that, prospects will think that even for the almost-pigeon domains in your portfolio you want great money. Put the financing option ONLY on your best domains.

    2) Maybe it would be fine if you create a couple of portfolios: premium and low price domains. The landing page of domains in premium portfolio will report those links maybe without other particular explanations, while on the landing pages of domaains in the second portfolio you could write something like: financing plans start from $ 1000 only (or even less…).

    Go to work please: on the financing side there are only 15 years to recover.

    April 3rd, 2014 at 3:13 am

    MaryPT

    Well, I see unrealistic price here…

    Mary
    http://portfolio.e07.net

    December 11th, 2014 at 3:46 am

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