No More Easy Money | DomainInvesting.com

No More Easy Money

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One problem I think many of us have is that we sometimes view our domain investments as a means to make a lot of money quickly. I know a number of people who got started in the industry after reading articles about people like Rick Schwartz making a lot of money with virtual assets, and they want to follow suit because it looks like a great lifestyle filled with “easy money.”

I must admit that the domain investor “lifestyle” I live is great, but it’s not exactly the stereotypical one that people probably think about. I work 12-16 hour days developing, researching, and negotiating, and I work every day. I enjoy what I do, and I set my own hours, so it’s worked out well. If I want to take a day off, I have the ability to do that. There are very few people in the industry who sit back and relax all day while drinking cocktails on the beach at night, although that stereotype does sound relaxing.

All of this said, I want to give a bit of a warning to people who may be new to the industry. Just because you see a specific type of name selling for a lot of money (and growing in value), it doesn’t mean that all similar names are worth the same amount of money. Simply because some people are investing isn’t a good enough reason for you to buy as well unless you know why the name is increasing in value and believe the rationale is correct.

Over the past year, prices in a number of verticals within our industry have dropped considerably, while premium domain names have kept their value. The reason is that many verticals (like 3 and 4 letter domain names) were perceived as being much more valuable than other domain names, and domain investors who were doing most of the buying couldn’t sustain the growth. Eventually, there were many more sellers than buyers, and the prices dropped, tremendously in some cases.

I am not going to preach and tell you what types of names are best to buy and what types of names aren’t. It really isn’t as easy as that. I will say that you should do your due diligence when you buy, and if you are looking to make fast money, you are in the industry at the wrong time. Just about everyone I know is working hard, and there is no such thing as easy money.


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 (10)

    Kellie

    Does the “lifestyle” count if I’m in my backyard each evening with a beer?

    Seriously though, I think the 3 and 4 letter thing, well the 4 letter thing isn’t all that different from regular domains. There’s a lot more realistic pricing in generic and premium domain names today then there was say three years ago.

    There was a run up of prices on those 4 letter domains after they were all registered and now that people realize there’s still a value strata they have to be more realistic about what they renew.

    We saw every one word domain get snatched up no matter what it’s realistic value, then that went on to two word combos. Lots of those have started dropping. It’s a maturation of the industry that people are starting to separate the wheat from the chaff in all corners of the industry.

    May 11th, 2009 at 10:07 pm

    ASN5

    It never was easy for 90% of domainers, or domain investors or whatever you want to call them. Check the age on domain names that sell for big prices; most of them are YEARS old, and the best sales don’t come from somebody just landing on your domain name and seeing it’s for sale. That was cool for a couple of years during the “dot com boom”, but these days there’s usually something else going on and / or there’s some kind of hookup.

    Take Ricks sale of iReport.com – he sold it to CNN, Ron Jackson’s old stomping grounds. Did Ron facilitate this deal? If not, I would be very interested in how Rick was able to connect. “Hello, this is the Domain King, put me through to the decision makers around that place.”

    No way.

    And what about “investors” buying domain names from each other? Aren’t there tax advantages for two people buying a domain name from each other for $100K? At the very least there publicity advantages and no money is actually spent.

    BTW, what happened to CANDY.COM? $3 Million? Maybe so, but that’s a lot of money to pay for a domain name just to set up a pop-up trap.

    And oh yeah, what about WIDGETS.COM?’s Rick is affiliated with a big time auction service, but I saw widgets .com for sale on eBay! Yep, it was on eBay (item number 120235634796) and went to $175,100 – BUT IT DIDN’T MEET HIS RESERVE. What? Well, it sure did generate some buzz though huh?

    Hey, I’m not pointing to Rick for anything other than an example of the TONS of activities that look suspiciously like bullshit. And speaking of BS, what about getting fifteen cents from parking pages for keyword clicks that lead to sites that paid Google three or four dollars for that same click?

    No, nothing about it is quite as easy as it may look through the untrained eye, and people who may be new to the industry would do well to heed your warning.

    May 11th, 2009 at 10:08 pm

    geoffrey gonzales

    Elliott,

    Too many, Welcome to the reality.

    I suggest the domain investment community create new levels of classifications.

    From your previous post… it’s no longer “I do Internet Stuff”

    What is the new classification name for domain developers

    1) Domain Name Developer
    2) Domain Name Portfolio Developer
    3) “.Vertical..” Market Web Developer

    What is the new name of domain name owners who wisely has transitioned into web developers. As opposed to “Easy PPC Money” Geoff

    May 11th, 2009 at 10:33 pm

    Reece Berg

    Pretty much all domain prices are down, including premiums from where they were in 2007 and the DN Journal sales reports will confirm this. Development really is the only way to guarantee a domain will always be of value. We can’t predict where things like parking are going to go or even if they’re going to be around in the future, however we can do things such as development to ensure our domains will always have value.

    May 11th, 2009 at 10:43 pm

    Elliot

    @ASN5

    I think CNN had a marketing plan for iReport, which is now clearly been executed, and they realized they needed the domain name or else they would have lost a significant amount of traffic and ability to differentiate between their content and user content. They didn’t want to put these together I am sure.

    It’s also easier to make $750k on a domain sale if you can afford to turn down everything up to that amount, which Rick has been able to do.

    The biggest thing I credit Rick with is keeping his incredible names for so long. I’ve met a number of people in various places the last few years, and when they hear what I do, they say, “oh, I registered xyz.com or other great name and sold it for a few hundred dollars.” Rick never sold his names cheap. It might be luck that he bought these names originally, but it’s not luck that he kept them until the right buyers came around.

    May 11th, 2009 at 10:53 pm

    Elliot

    @Reece

    According to Ron’s report, had it not been for the $10,000,000 Fund.com sale, Q1 2008 and Q1 2009 sales are about flat.

    I think all domain prices are down just like just about everything (like real estate), but there are verticals that have been hurt MUCH more. I remember when decent 4 letter .com names were selling for $200/each, and now might sell for $20. In fact, I bought 5 of them someone was selling for $200/each with the proceeds going to charity, and I would be happy with $25/each :)

    Many domain names aren’t worth what speculators are paying, because many of the speculators have no clue and assume other speculators will buy them for more. I guess it mirrors the real estate world where a bunch of people thought they could make easy money, and they ended up making a bad judgment call because they paid much more than the actual value.

    Point is that while most values are down, the speculative names that people bought because they saw others buying are in much worse shape, while the great names are still valuable, albeit a bit less than before.

    May 11th, 2009 at 11:00 pm

    Peter Frank

    Elliot:

    Couldn’t agree more. I certainly “traded” the character game for a while: three character .NETs, LLL.us, some LL.net/org but really that kind of selling isn’t sustainable. If you’re relying on selling mainly to other investors (read: resellers) then you’ve made a bad play (IMO). Case in point, the incredible over-speculation of LLLL.com’s.

    Anyways, I feel as if I’ve grown further and further from a “domain reseller.” I’ve somewhat taken the role of quasi-developer and domain holder.

    I reg names every now and then (usually for a project or idea), but I’m rarely buying in the aftermarket. Sure, there are bargains out there, but I’m investing in myself, and my own sites.

    Thanks as always,
    peter

    May 12th, 2009 at 3:00 am

    ASN5

    @Elliot – Sure, maybe. But when Service911.com was about to go public it had not occurred to them that TECH911.COM would be a problem until I used a connection to suggest to them that it was not only a similar name, but superior name. Otherwise, I’m certain they wouldn’t have otherwise called me up with a half million dollar stock offer.

    CNN could have just as easily went with “Citizen CNN” and bought ccnn.com or a dozen similar strategies. So the question remains, did Ron facilitate the sale? There’s nothing wrong if he did, but it would show that there’s a lot more involved than just registering a domain name, which was the point of my post.

    And what about CANDY.COM? You and others reported on the hype, but I haven’t seen anything on it since. The point there was the same as the “exchange sales” where there is no financial net gain, i.e. domain name news often doesn’t jive with reality – thus providing a misleading expectation of new comers.

    May 12th, 2009 at 3:06 am

      Elliot

      @ASN5

      CNN had already been branding iReport before they got the name… they wanted to expand. There was a discussion here about whether a company should pony up for a domain name before they get successful because the cost could be too much for a project that gets fazed out, but if it gets big, the domain gets more expensive.

      May 12th, 2009 at 6:40 am

    Robbie

    Agreed Elliot.

    The market place is tough in domains – There isnt anyone sitting back making the same cash they were making this time last year.

    Most people get into to domains for a fast buck and they normally crash and burn within a year to 18months.

    The true business people that grasp the concept of domains, learn and teach the world about domaining put in 70+ hrs per week into becoming sucessful

    There is no such thing as a FREE lunch, Its the same in domaining you only get what you put in.

    Work, Hard, Learn, Teach, and Play Hard and Im sure you shall be sucessful

    Buy domains and wait for that big offer to come – Just wont happen anymore!

    Well these are my thoughts,

    Regards,

    Robbie

    May 12th, 2009 at 5:19 am

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