Why Companies Are Selling Domain Names
I have seen various blog posts and forum commentary discussing the recent listing of large quantities of domain names by various domain companies and individuals. I can’t speak on behalf of anyone else, but it looks like many domain owners are in the midst of evaluating their portfolios. Companies and individuals have been sifting through their portfolios, choosing names for development, names that are earning their keep in PPC revenue, and trying to sell the other names that aren’t performing well and have little intrinsic value to them.
In the past several months and years, many companies and individuals made large portfolio acquisitions. When a portfolio of thousands of domain names is purchased, there is relatively little control over what is included in addition to the gems of the portfolio. Oftentimes a domain owner will include swaths of unprofitable names in a domain sale, as it will help increase the overall sales price of the portfolio. As these domain names come up for renewal, the buyer has to make a business decision about whether to keep the underperforming names, let them expire, or try to sell them.
A domain owner needs to decide if an underperforming name is worth keeping, as it could be worth quite a bit if developed. There are many fantastic generic domain names that are parked, but they don’t generate a ton of revenue because traffic is light. When there is tremendous competition for certain keywords, parked pages might not yield significant traffic if there aren’t links or type in traffic, but the name might be strong nonetheless. For some companies, a valuable domain name on paper isn’t as valuable as cash in the bank. Therefore, selling these domain names is the best option – especially for second tier names that might be great for a smaller portfolio.
With the cost of full-scale development being expensive, it makes sense to be picky about which names get developed. Some names (like typos) get great traffic and generate revenue, but would be silly to develop. In this case, it’s better to keep them parked and possibly list them for sale at a generous revenue multiple. The worse case scenario is that a link is created on a respected website (like Afternic), which could be of passive value to the name.
With tremendous uncertainty in the domain market as well as world economic markets, many domain owners have been using this time to evaluate their holdings. If a domain name wouldn’t be good for development, doesn’t generate PPC revenue, costs $7.00 per year to renew and may possibly be a legal liability, there really isn’t a reason to list names for sale. One person’s junk could be another’s treasure. I think it is a great move to sell names that aren’t worth the expense.
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