I know what you’re thinking. You didn’t get the newsletter release of the Domain Shane domain value guide this month. That’s probably because we’ve never sent it out and actually doesn’t exist. It’s just something Aaron and I talk about when trying to figure out the basic value of domains based on the comparables in dot com. One of the reasons Aaron and I get along so well is our investment approach to domain names is almost identical. We like short, dot com, and numerics. We also like value. And the potential of value has drawn my attention to the dot net market over the last year.
What’s drawn that attention is that they are getting slammed. Anyone who pays attention to domain auctions is seeing that dot nets are generally not getting the bids. They have plain and simply, gone down in value. We’ll get to how I feel about them as an investment later, but the old tool of valuing a dot net at 10% of the dot com doesn’t work any longer in my opinion. I can throw up some dot com sales and their dot net exact match but in reality, finding two that have sold in the same period, especially since this change in market prices, is next to impossible. All I can really do is imagine what the dot com version of that dot net would sell for and compare. The easiest place to start is LLL.com and nets. LLL.coms have taken off lately and the dot nets certainly have not. I’m not even sure the dot net is worth 5% in this case because of the momentum in opposite directions in this category. But I am still using the 5% rule and coming much closer than the old 10% number.
So does this “crash” in dot nets present value or has dot net become unwanted by new companies and domain investors. I think the answer is yes. Dot com has become the safe haven to set up shop. Even if it’s longer, dot com doesn’t play second fiddle to anyone. Dot nets have to brand around the dot com. But it absolutely can be done and the new gTLDs are going to guide the way. If dot nets are worth 5% then the new Gs are worth nothing. If internet builders and investors don’t want to work to build dot net then they are certainly not up for the task of building out some obscure word at the tail end. The world knows dot net. They may not prefer it, but they know it. In time and in my opinion, this second tier tld is going to become much more valuable. I feel the dot nets will be where people turn when dot coms are either too expensive or flat out unavailable. As people pay attention to the right of the dot and notice the difference, then dot net will be easier to differentiate. I think it will still be “old school cool”. More affordable than dot com, less confusing that the other 1000 endings.
Of course these are all my opinions. Opinions that I must say have been spot on over time. And that’s the beauty of domain opinions in that you can buy up your opinions. And yes, I am buying category killer dot nets. Most at less than what I feel is 5% off the dot com. What I see as bargains are “finally got out of that one” names to others. Time will tell who is right. In the last 5 years I’ve gone through a series of “thoughts” on strategy. I was into buying up all cheap 5L.coms (serving me well), as many NNNN.coms as I can afford (made great money, sold too soon, could have 10 times as much if waited a year), adding some dot cc (the Chinese are starting to take a liking), and now adding a percentage of portfolio in dot nets. I have never purchased a dot us or dot biz. I didn’t see value or potential so I stayed away. Like everyone else I make a living with dot coms but like all good investors I keep a percentage of my investment in high risk, high reward investments. I mean higher risk, higher reward because all domains are high risk, high reward when you get down to it.
Whether or not you agree with my new valuation at least now you’re going to pay attention. Feel free to fill me in on the data. I love to learn. Just don’t bid against me