Thoughts On The IDNX Domain Price Index
Elliot did a posting today (click here to read it) about how the IDNX domain index, run by Thies Lindenthal and using data from Sedo.com, announced that domain prices have doubled since 2006.
I looked at idnx.com and read Lindenthal’s academic paper and it all seems very well researched, but I wish he published an actual list of the domain prices that he used to come up with this doubling in value. As a long time domainer (since 1995), one thing I have learned is that it is very hard to estimate the value of a domain or compare one domain sale with another. On the other hand, that does not mean a site like IDNX can’t track the domain market as a whole. Some of the IDNX price estimate is based on repeat sales of the same domains over time, and that is great way to do it, but some of the estimate is based on hedonic regression analysis which I think is kind of like what estibot.com does (I love estibot).
The point is that there is some element of human input into those values, even if it was just to come up with the initial valuation formula, so that means for example that I might come up with a different value for IDNX if I were the one doing it. If I trust that Thies Lindenthal knows what he is doing with domains, that is fine, but until earlier today I had never heard of him or looked at his site, so that is why I wanted to check it all out. I was actually very impressed after reading everything.
Another issue I want to bring up is that depending on what type of domainer you are (either .com domains or alternate extensions), this “doubling” info can be a little misleading (I am not blaming IDNX, I think what they are doing is great). If you look more closely at the IDNX data, it looks like .com domains only went up around the same rate as inflation since 2006 (inflation went up 18% in the USA). Most of the IDNX price increase was due to the rise of non-.com extensions such as .info and .biz. It is hard to get the exact breakdown by domain extension from their site for the past 12 months, so I am just estimating some of this.
In no way am I trying to be negative about what IDNX is doing. They are a pioneer in this area, and seem to have thought everything out in great detail. They have spent years working on this, while I only spent around 15 minutes looking at their site, so I may be misreading some of their methods and data. I just wanted to put my thoughts out there for people to consider and also to elicit further comments.
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