Sick of these new dot-words? Join the .club – it's the only one challenging .com
What the NamesCon auction tells us about the state of the domain market
Round-up Las Vegas loves a show. And so it was earlier this week when domain-name conference NamesCon held an auction for more than 100 high-value names.
The auction has been hailed as a success, especially given two headline sales: homecare.com for $350,000 and wine.club for $140,000. But we thought we'd dig into the results to see what it says about the state of the new dot-word domains that have gone live in recent months.
By forcing people to put up their money, auctions are a terrific clarifier when considering the full value of something. They are designed to extract maximum value by introducing competition and urgency. The atmosphere (and alcohol) is also a big factor in the final price, but nonetheless, auction results, especially when compared to previous sales, are a pretty good bellwether.
Although the biggest sale – and hence people's focus – was the $350k for homecare.com (bundled with homecare.net), the sale was actually made before the auction. It's also worth noting that 26 of the 47 dot-coms put up for auction did not reach their reserve price.
That's 55 percent: a high figure, and could well point to the fact that the value of dot-coms is falling. The clearest example was perhaps the sale of Sexeducation.com for $23,000; it was bought in 2006 for $120,000.
As for the other dot-coms at the auction, the average sales price (without including homecare.com) was $16,800. According to DNpric.es, which has logged more than 300,000 dot-com sales, the overall dot-com average price is just under $4,000. Dot-coms accounted for 35 percent of all the 134 domains on sale in Vegas, and nine of the ten top sales were dot-coms. So there is no doubt that dot-com remains the queen of the domain name world, but judging from these results, there has been a very slight slip in her crown.
Meet the challenger
The success story of the auction was dot-club. There is little doubt that dot-club has become the king of the new generic top-level domains – of which more than 400 have gone live in the past six months.
Thanks to focused and extensive marketing aided by the fact that "club" is a good and instantly understandable word, the registry has the third highest number of registrations among new gTLDs, with just over 165,000 at the time of writing, according to nTLDStats (the two above it have given away most of their domains for free).
Dot-club has also had some recent and very public successes in selling "premium names". It received a lot of attention for selling Coffee.club for $100,000. And it announced at the conference, again with some fanfare, that Vegas.club has also been sold for $100,000.
So with a market baseline established for premium dot-club domains, it was a positive sign that the best dot-club domain up for auction - wine.club - sold for a healthy $140,000.
Four of the 10 dot-clubs available did not meet their reserve – which is a slightly high rate of non-sales, but lower than dot-com's 55 percent. Aside from the big premium names, the value of .club domains came out at between $10,000 and $15,000 apiece - which puts dot-club on the same value plane as the long-established dot-net registry. The average dot-club sale price, again according to DNpric.es, is $6,000.
The upshot of all that is that dot-club is on the way up and demonstrates that there is value to be had in some new gTLDs.
Not all good news
But what of the other new gTLDs? Well, for them the picture was less rosy.
There are a small number of new gTLDs that have been using auctions as a way to boost their profile and value, and those registries unsurprisingly dominated the auction offerings at NamesCon.
Dot-nyc, dot-global and, of course, dot-vegas since we were in Las Vegas, had 16, 10 and 10 domains on the slate respectively.
All of them underperformed compared with previous auctions. Dot-nyc, which has been averaging $10,000 in premium sales, came out lowest with its domain going for $275-600. Likewise, dot-vegas domains sold in the range $300-1,000 but had been averaging $5,000.
Perhaps the biggest drop, though, came with dot-global domains, which have performed extremely well in previous auctions, averaging $3,400 apiece. Seven of the 10 dot-global domains up for sale at NamesCon did not meet their reserves, possibly pointing to over-valuation. Those that did sell averaged $1,300.
What does all that mean? It means that after the initial hype and excitement built around new domain launches (which have accounted for most of the past auctions) that valuations are starting to fall.
This should not come as a huge surprise, but it does demonstrate there is a short half-life in the buzz generated around new domains. With the current exception of dot-club – which has been determinedly pushing and marketing its domains – new gTLDs are falling in price, and far below country code top-level domains fetch.
Overall, the picture painted reflects what many in the industry already know: that new dot-things are not taking off in the wider world. Yet, anyway. Everyone remains confident that 2015 will be the year of new internet domains. And auction prices will be one good way to see if that ends up being true. ®