"So Many People Are Going to Lose Their Shirts" | DomainInvesting.com
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“So Many People Are Going to Lose Their Shirts”

26

This afternoon, someone posted the following comment in response to a new gTLD video that was created by 101Domain:

“So sad that so many people are going to lose their shirts over these new tlds. Sob, sob.”

I regularly see comments here, on other industry blogs, and on forums that seem to express pity for people who are, in the opinion of some commenters, going to lose money by buying new gTLD domain names. I don’t really understand why people are so concerned about how others are spending their money.

If someone makes a $100,000 offer to me for a domain name I hand registered a month ago, should I investigate their background to make sure they can afford to spend so much on a domain name and they have a plan to use this domain name in a manner that will earn them a positive ROI? Should I be worried about their financial well being because they are, in my opinion, overpaying for a domain name that has little value?

I can’t imagine someone would turn down a substantial bona fide offer for a domain name simply because they are concerned that the offer is coming from someone who might end up losing money on the investment or business idea. Likewise, I don’t understand why so many people seem concerned that other people are buying new gTLD domain names.

Investing in domain names is a risky business. When I buy domain names for my company, I prefer to stick to excellent .com domain names. I know there is a strong market for them, and I use my experience to evaluate domain names and do my best to pay a fair price for them. Other people are more comfortable buying other types of domain names. Some people stick to the main extensions and others buy domain names that use the new extensions.

If I am wrong and lose money on domain purchase, I don’t expect anyone to feel badly for me. There is a risk with every purchase.

It seems strange that people have this concern about others when it comes to their buying habits, but they almost certainly wouldn’t think twice about selling one of their own domain names for significantly more than they believe it is worth.

As always, I welcome your thoughts and comments.


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 (26)

    JZ

    a very true point but perhaps the difference is people feel the marketing is misleading people into thinking this is the next gold rush or something. regardless, there is a ton of money wasted on horrible .com domains too.

    May 3rd, 2016 at 4:03 pm

    Acro

    If you’re going to lose your shirt, at least buy this one ­čśŤ
    https://www.booster.com/niavardalostshirts

    May 3rd, 2016 at 4:17 pm

    J

    It is possible that many people will lose a fortune with these new gTLDs. There is truth to what this commenter posted. People have a right to look out for the other guy.

    On another domain blog, the owner questioned why someone would buy 1.xyz for 6 figures and not 1xyz.com for $5,000. It is obvious a single digit number of a gTLD will produce more interest than a random 1XYZ dot com string that has little value unless it is paired along with the single word domain as a pointer. That is if the end-user plans to develop this gTLD. The likelihood of this happening is pure speculation.

    End-users are paying 6 figures for single number gTLDs. Good investment? High risk? Unless the market is booming for the single number in gTLD, paying these outrageous prices on something new can be risky (IMO).

    The best investments are what end-users view as familiar. Great dot com domain names will always turn many heads. They hold the most value, most will type-in the name and dot com, and they have survived for many years. Surely, this is the safest bet.

    On the opposing side, new gTLD are marketed as new, refreshing and a great investment. The best way for these domains to increase in value are strong sales, popular brands developing websites using these extensions, top brand using the gTLD name (ABC.XYZ Google) instead of making an offer to acquire the best name in Alphabet.com, and domain auctions pushing the best gTLDs and reporting honest sales.

    Should we worry about what end-users are paying for these gTLD domains? Morally, we should but this ethical action is uncommon among an industry focused on investments and high returns. Worrying is what a domain consultant should do because they get paid to guide investors using their services.

    It is likely many people could lose a ton. If all gTLD domains were deemed obsolete and worthless right today, many people would lose a fortune – this includes some of the best domain investors. As long as domain registrars are featuring these domains for registration, there is little risk they will be a bad investment unless people start dabbling in the aftermarket to pay outrageous prices for overrated names. Paying a mint for premium gTLDs renewals can spark another discussion in how carrying high annual costs could prove to be wasteful.

    If we analyze this statement, it is a one-sided debate on their perception of the gTLDs. However, the cost to acquire the best domain names benefit the owners of these extensions. They put up the money to win the extension, and now are making a fortune selling the best names held back from the land rush.

    The future of these extensions depend on domain sales, development, and renewal cost. For some, the cost to renew premium names may sink them. Investing top dollars in top names may produce and/or deplete domain investors.

    Who will lose in the end is something we can’t predict right now. Maybe .xyz takes off and becomes a great investment. Stock.photo and Stock.photos could make a top domain investor a nice return.

    These new gTLDs are saturating the market. It is confusing the search engines. Getting ranked at the top could take a long time. End-users will probably make the excuse, even deceiving and/or tricking their investors, that acquiring a gTLD will replace their need for the dot com. In the end, the exact match dot com is the better investment. We can never go wrong with a dot com.

    As for those who will lose their shirts, it is up to them to make this investment. They have plenty of information to make an informed decision. If they lose, that is their decision to do this. If they get a great deal and make an awesome flip, that is their gain. Some lose because they snooze. Other gain because they retain.

    It is better to take a risk than to sit back and watch others making all the profit. These gTLDs give newcomers a chance to enter the industry and possibly make a good ROI. Fair warning: Don’t overspend on an unproven extension with little to no good domain sales. IMO, invest in what is selling weekly and what is making the headlines.

    May 3rd, 2016 at 4:40 pm

    steve brady

    I’ve never visited a wine blog and told the experts if they spend more than $11 on a bottle, they are pouring money down the drain, even though at the $11 mark I can’t tell the difference in quality between that or anything higher. Refraining saves a lot energy as well.

    May 3rd, 2016 at 4:41 pm

    Leonard Britt

    Elliott,
    While you cannot provide specific “domain investing advice” per se your blog is titled DomainInvesting.com. Just like a stock newsletter would have the goal of guiding its readers toward favorable risk/reward investments, I would think that would also be the case with your blog – to provide general guidelines which should be useful for individuals buying and selling domain names. Yes, some experienced investors have invested in new TLDs but even then new TLDs are only a small portion of their overall holdings. It is quite often newbies who are registering new TLDs like lottery tickets and have more than half their portfolios in new TLDs. Time will tell but it is likely they will lose a considerable amount of money doing so. When new TLD registries promote them as the .COMs of the 90s, inflate registration numbers and report sales which are dubious, such actions could be viewed as misleading – the sort of advertising that if these were stocks would have the SEC and FTC jumping in to shut down. New TLD domains are very risky investments and that fact should not be overlooked.

    May 3rd, 2016 at 5:02 pm

      Elliot Silver

      I don’t advise people on what kinds of investments to make or what types of domain names they should buy.

      I occasionally discuss what I recently bought and I also regularly add that I don’t really buy the new gTLD domain names, aside for a handful of names I bought (maybe 5-10 total).

      I do agree that the new domain names are more risky than good .com domain names. That said, I regularly spend 4 and 5 figures on .com domain names, and there are plenty of people who would consider that risky, too.

      In reply to Leonard Britt | May 3rd, 2016 at 5:20 pm

    Brad

    My friend recently asked me about buying domains and one he mentioned was Dallas.club for $3,000

    I told him if he bought it, that it would be the equivalent of paying $3,000 for a bottle of dirt water lol.

    May 3rd, 2016 at 5:15 pm

      John

      As .club’s go, that’s a great one and $3k is a bargain.

      In reply to Brad | May 7th, 2016 at 7:53 pm

    Elliot Silver

    Every week, I look at the DNJournal sales report and see sales of all kinds that are surprising to me.

    On one hand, I am regularly surprised the sellers did so well with their investments, and on the other hand, I am also surprised someone else felt those domain names are worth what they paid.

    This is a dynamic, international market with many factors contributing to value. I am not in a position to judge the value or merit in various domain investments, especially in a public manner.

    May 3rd, 2016 at 5:57 pm

    Ron

    Wasn’t long since the .ws article caused a comment firestorm, you had a domainer being paid to push the extension, they were insulting anyone pretty much who opposed or tried to warn newbies of a incoming implosion.

    There are lots of newbies looking to take a shortcut to those promised land type keywords, gtlds are not the answer. Premium carrying costs, and a undeveloped end user market, I already see many selling their gems trying to keep the dream alive.

    Only a matter of time.

    May 3rd, 2016 at 6:15 pm

      Elliot Silver

      I published my thoughts on (not) buying .WS domain names right after Braden published his article about why he did invest: http://www.domaininvesting.com/why-i-am-not-investing-in-ws-domains/

      “There are lots of newbies looking to take a shortcut to those promised land type keywords, gtlds are not the answer. Premium carrying costs, and a undeveloped end user market, I already see many selling their gems trying to keep the dream alive.”

      People are also wasting money on crappy .com and ccTLD registrations as well.

      In reply to Ron | May 3rd, 2016 at 6:23 pm

    Melodramatic

    On point Elliot Silver.

    May 3rd, 2016 at 6:21 pm

    Melodramatic

    On point Elliot Silver.

    May 3rd, 2016 at 6:21 pm

    Eric Borgos

    I am not a big fan of gTLDs, but I don’t think there is anything wrong with people paying high prices for them. It is impossible for us to predict what they will be worth in a few years, just like some sellers back in the 1990s may have thought I was crazy for paying a premium for good .com domains. More importantly, if they are actually going to use the gTLD domain for their business, the future price action for it should not matter that much; what should matter is if they are happy using the domain they bought. Selling a gTLDs is not like selling somebody a lemon used car, where you know it is no good. It is not even like the recent run up for prices of Chinese type short/number domains, where it could be considered a speculative bubble. We have no idea how well a gTLDs will do for their business or how much the price will increase/decrease in the future, so unless somebody asks me I would not tell them what to do.

    May 3rd, 2016 at 6:48 pm

      Ron

      Eric, the problem with GTLD’s is the framework with which they are created, the owner is not protected from price increases, and premium renewal pricing changes.

      With .com if you own sex.com or sdhidhdsiohdsi.com you are going to pay generally $10 to renew it, and you know the freamework of that contract is air tight.

      Now take something like Car.Loans it has a $90 annual renewal, if someone builds a million dollar business, the registry might go, hey we messed up on this, and we want to change it to a $5,000 renewal, which they have every right to do. They inform say Enom, Enom has no legal obligation to inform the registrant, Donuts simply has an obligation to inform the registrar.

      So people are not looking into the fine print, just shooting off about this, and that, and counting the dollars before they hatch.

      Take The.Coach this domain has had 3 different owners in a single year, I think it last sold on ebay for like $20, it comes with an annual renewal of $1000. The current owner tried to unload while trying to hide the renewal, nobody is stupid, it all comes out.

      The structure of GTLD’s may work for the end user, but the domainer is totally F’ED!

      In reply to Eric Borgos | May 3rd, 2016 at 8:59 pm

      eric

      Yes, that is a good point.

      In reply to Ron | May 3rd, 2016 at 9:04 pm

    Mark

    The only gTLD people should buy is .Web when it becomes available IMO.

    May 3rd, 2016 at 9:48 pm

    Domain Guy

    It has nothing to do with loosing your shirt. The poster, has no interest in feeling bad for anyone really. People just have the tendency to say random stuff just so that they can later have the opportunity to say “i was right” and “told you so”. Its a feeling of self empowerment.
    But he who does not take risks does not drink champaigne

    May 3rd, 2016 at 10:24 pm

      Ron

      A pat on the back does not pay the bills.

      I read about guys bragging they sold $25,000 in gtld’s, but paid $50,000 in acquiring them, and taking on 5 figure annual renewals, you have to be honest with yourself.

      Generally pioneers get slaughtered, 20 years into it we still get $10 offers on premium .com’s, with self created extensions which are still rolling out, where do you think they will be in 20 years?

      In reply to Domain Guy | May 3rd, 2016 at 10:57 pm

    Amanda

    Many of the new gTLDs seem worthless to me until you begin to invest time in them and make them brandable. I have helped a few friends see the possibilities in a domain for their business with that point of view.

    May 4th, 2016 at 12:08 am

    Kevin Murphy

    I always thought people who leave comments trashing anything that isn’t .com are just like the folk who spend their days pumping penny stocks on investor forums. They just want to see the value of their own investments increase.

    May 4th, 2016 at 5:23 am

    George in Miami

    After selling a domain through Escrow, just one thing comes to my mind
    like in the Post Office: Next !

    May 4th, 2016 at 9:51 am

    karl

    Buying / regging the better gtlds and try selling to the dot com owners is one way to go but the dot com will always rule of course.

    too much inventory too little buyers = major drops and opportunity for those grabbing drops but do u really care?
    I don’t buy away and if u profit all the better if not move on…

    May 4th, 2016 at 5:01 pm

    Snoopy

    People hate seeing registries and registrars sucking money out of newbies.

    May 4th, 2016 at 7:44 pm

      Elliot Silver

      Why are they so concerned about a “newby,” when they almost certainly wouldn’t have the same level of concern if that newby was overpaying for a domain name they own?

      May 4th, 2016 at 7:50 pm

      Snoopy

      I’d say there is a couple of factors

      -People usually don’t believe their own domains are overpriced
      -People can identify with the newbie being targeted by registries/registrar because they have been in that position before themselves

      I think what elevates things is comments by registrars and registries that aren’t true and are only said to try and sell something.

      In reply to Elliot Silver | May 4th, 2016 at 9:17 pm

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