I was reading a post on Lightspeed Ventures (a popular venture capital blog) recently about how being popular has been found to make you more popular.

In one study of over 12,000 volunteers, researches manipulated what they claimed were the top selling songs and worst selling songs — it surprisingly (or perhaps not so surprisingly) had a dramatic effect on what the volunteers claimed they liked. Another study by a Chinese restaurant found that just by calling certain items “popular”, sales on them increased by 13-20%.

There are some well proven real world examples which are related to domain development as well. Take forums for example — one is more inclined to join a forum which appears busy than one that isn’t frequently posted on. This is a well known fact and many people when starting forums will pay people to post to create the illusion that their forum is busy until it becomes busy on it’s own. Similarly, a forum with “exclusivity” or something which makes it “special” will also encourage people to join as they believe (and they might be right) that this forum will provide more value than other less exclusive forums.

I’m not a big fan of tricking visitors, however I’m willing to bet if I created 20 or so fake comments on certain posts all praising the post that those particular posts would get more comments. Just think about those Wordpress plugins which are available such as “Most Popular Posts” — people wouldn’t keep making such plugins unless they produced results.

Look at popular blogs like say, John Chow or Shoemoney — does their popularity not further drive their popularity? Have you ever noticed how easy it is to manipulate social media such as Digg by creating the illusion that something is popular?

Stanley Milgram, a famous psychologist, once demonstrated that by getting a sufficiently large number of people to look at the sky will in turn encourage others to look up — even if there is absolutely nothing worth looking at! Curiosity got the best of them.

I sometimes wonder if that’s part of the reason being green is so popular right now — surely most people didn’t just realize 1 or 2 years ago that many of the things we do are destroying our environment, yet many of these new “green” customers have only been converted to the green side within the past year or two. Does this coincide with corporations and the media promoting green as both a popular and intelligent choice? How might this increase the profits of corporations which are able to create an eco-friendly image or offer products which cater to these green customers?

How might you be able to create or increase your popularity? It’s certainly something worth pondering.

When it comes to buying domains, selling domains, developing your domains, or otherwise monetizing your domains, be careful of whom you seek advice from. As great of a resource as domain forums are, many domain name investors spread terrible advice about what domains are worth, how to go about selling a domain, where and who you should use to broker your domain, and how you should go about monetizing your domain. The 80-20 rule, when applied to the domain name world is the realization that 80% of the domain name investors out there don’t know what they’re talking about, whereas the other 20% are very helpful and well worth listening to most of the time if you’re new to the domain industry.

Let’s start first with domain appraisals — ask yourself if a person may have hidden motives behind giving you an appraisal on your domain or asking you to get an appraisal on your domain. In many cases, domain appraisals are asked for from the owner of a domain appraisal company — he’s not interested in your domain, he’s interested in your money! Worse still, these domain appraisals are rarely accurate, so you’re no closer to understanding what your domain is worth. When asking for domain appraisals, a couple rules to follow are to never pay for the domain appraisal and never take a single domain appraisal as anything more than one domain name investor’s opinion. Seek out multiple domain appraisals by asking for a domain appraisal on a popular forum such as Namepros or DN Forum. A popular way of mine to get a better idea of what my domains are worth is to pretend I’m interested in selling them — put the domains up for sale in the “Make Offer” section of domain forums and observe the offers you get. If you’re still unsure about whether you’re getting the most for your domain that you can on the domain aftermarket, consider placing the domain on auction at a popular domain auction venue such as Sedo, AfternicDLS, Godaddy Auctions, or even eBay. If you decide to use eBay for your domain auctions, be sure to make sure you read the information on my blog about selling domains on eBay and how to make sure you get as much for your domains on eBay as possible.

This is something most domainers already know but for any new domainers reading, please be careful when using sales comps. I was reading Namepros today and came across a post about someone who paid $2500 for an LLLL.com. Now as much as I like LLLL.coms, there really aren’t a whole lot out there that are worth this price.

If you look at DN Journal, you’ll see that each week there are a few LLLL.coms in the list. The thing you have to remember when browsing DN Journal is that they only list sales above $1000, so the LLLL.coms you see listed on DN Journal aren’t necessarily a good representation of what they would normally go for. More often than not, they tend to be what I would lump in the “extreme outlier” / end user category. With keyword domains, there are far more that are worth $1000+ and so it’s much easier to use a resource like DN Journal to get an idea of what a certain keyword domain may be worth — there are still end user sales here that are for more than domainers would be willing to pay, however by looking at several months of DN Journal weekly sales reports, you can get a pretty good idea of what a keyword domain is likely worth when considering the price it went for and applying other metrics. You can read all the DN Journal sales reports you want and not be any closer to understanding what your LLLL.com is actually worth because of that $1000 minimum which is in itself already an extreme outlier for the large majority of LLLL.coms.

Aside from pronounceable LLLL.coms, it’s a fairly safe bet to suggest you’re overpaying if you spend $2500 on an LLLL.com. In this particular case, it looks like the domainer might be somewhat of an end user himself — I’m not really sure what to make of it as he asked other domainers what they thought it was worth but then did go on to mention that the reason he bought it was that it was the closest thing to his forum username that he was able to buy.

Another area new domain investors are misled is with threads on domain forums (or on other domain name websites) promising them returns on their domain investments which are impossible to guarantee. What I’m talking about here are the domain investors who push domain name landrushes and domain name buyouts on other domain investors — while these occasionally work out (I made about $70,000 within about 4 months following the LLLL.com buyout), most domain investors lose money. As I always tell domain investors — do your own research. It’s your money, so don’t let anyone else tell you how to make your domain investments. It’s fine to read and even listen to domain advice, such as that which is provided on this blog, however be sure to then do your own research and make sure that any domain investments that you make are the right domain investments for you. There are many variables which could impact whether you should be investing in a certain domain name segment or another — for example, your need for liquidity. Certain domains are much more easy to liquidate than others. For the most part, it’s generally difficult to quickly liquidate for top dollar both very cheap domains and very expensive domains. The sweet spot is probably domains in the low $XXXX range from what I’ve seen — it’s a price which isn’t too high, so as to be affordable by most domain investors, yet it’s a price high enough that if you need some emergency cash, it’ll make a difference. Suppose in example you had 100 domains worth $10 — you’d now have to sell 100 domains to earn that same $1000 that you could have earned by selling a single $1000 domain. It’s not hard to see which domain investment is more liquid. Liquidity aside, we next need to consider how important these domain investments are to us. If you have a good (guaranteed) job, a nice stock portfolio, and no debt whatsoever, you’ll likely be less concerned about whether you lose a small domain investment than if you’re working a 9-5 deadend job for minimum wage, without benefits, and without any guarantees you’ll have a job tomorrow. While I haven’t surveyed domain investors, I would imagine most fall somewhere between those 2 extremes. I would imagine it’s obvious but I’ll say it anyway for any new domain investors (which are often referred to as “new domainers” in the domain business) reading — the more important your domain investments are to your financial well-being, the more conservative you should be with your domain investments. The converse isn’t necessarily true — many domain investors are well off but still don’t want to lose money on their domain investments, no matter how small.

So, what would we classify as a conservative domain investment and what would fall into the aggressive/high risk domain investment category? I would argue that no domains (and not really any stocks either) should be classed as conservative investments with how much uncertainty at present — if you really need the money to be there tomorrow, put it in your bank in preferably a high yield savings account or something else which is guaranteed. One step up from that would in my opinion be strong keyword which produce revenue. Many top domains have a lot of end user potential and the possibility to form a brand around, however if you need or think you may need money, you’ll want to go with not only a good domain but also a domain which is paying dividends - be it through domain parking, through the domain already having been developed, or through you buying the domain and developing it.

Let me start this post by saying I am not suggesting people go out there and register 1000 domains like this - merely trying to show a few ways you can find a meaningless pronounceable domain for regfee. Why might you want a domain like this? If it’s meaningless, it should be pretty easy to trademark, incorporate as a business, or build into any type of site as you want. As one example I gave in the past, premium .coms are great for many reasons, but a name like Girl.com is never going to fly with male customers, no matter how good your prices are. That meaninglessness also means if your first domain development project is unsuccessful, you can always restart with a completely new development idea on the same domain. Here are a couple sites to help come up with short, brandable domains — think of these as the poor man’s CVCV:

• MakeWords.com
• Domain Name Soup

There are some sites which do a really great job of doing this with keyword domains as well, such as:

• NameCombo.com
• DomainsBot.com
• Bust A Name

If you have a general idea of what you’re looking for, you might find a site like DomainTyper useful, it having instant availability results. You can of course find expired/expiring pronounceable domains using the various drop venues and sites such as Freshdrop.net or Stuck Domains.  Joel over at Domain Superstar has a very impressive set of domain tools worth mentioning as well, with a brandable domain finder coming soon. Lastly, there are sites such as Picky Domains which offer services to help you find the right name at prices still most likely lower than you’re going to find on the aftermarket, aside from wholesale threads on domain forums. This is by no means an exhaustive list, however I think it’s long enough to help get the job of finding a brandable domain done.

Another article for the domain newbies — don’t be like me and only learn that PayPal isn’t safe after someone scams you through it!

Paypal makes it very easy to reverse payments. If someone’s Paypal account is hacked, Paypal will reverse the payment and you’ll be left with nothing should they complain the transaction was unauthorized. If someone pays by credit card through Paypal, they have the option of convincing their credit card issuer they didn’t receive the goods and again, you’ll be left with nothing (and possibly even fees for the credit card chargeback). Credit card issuers almost always side with the buyer. Simply put, don’t accept Paypal (other than Paypal MassPay) for amounts larger than you would be comfortable losing. While a PayPal rep told me that MassPay can’t be reversed, I have my doubts about whether it’ll protect you from more complex fraud involving multiple hacked Paypal accounts and the participation of third parties who may not be aware of what’s going on. Nevertheless, Paypal MassPay is much safer than Regular Paypal granted it must be funded from your bank account and hence offers no credit card chargeback risk.

Delaying delivery of domains a week after receipt of payment can substantially reduce the likelihood of being scammed with Paypal. Paypal doesn’t usually get involved in digital good disputes. You stand a much better chance of winning if you complain the transaction was unauthorized than if you complain about not receiving the domain that you bought. Unfortunately, many scammers are also aware of this fact and will attempt to reverse charges by claiming the transaction was unauthorized.

Keep in mind that other than with escrow service, security for sellers and security for buyers is almost always inversely correlated – that is, the safer a payment method is for buyers, the less safe it is for sellers and vice versa. One one extreme, you have PayPal who is very pro-buyer, on the other extreme, you have Moneybookers and e-gold who are very pro-seller.

Be wary of Paypal eChecks – much like regular checks, don’t consider yourself paid until the eCheck clears. Many people think Moneybookers is 100% safe – it’s not. If your buyer pays through Moneybookers with a credit card, you could find yourself in trouble. Credit card chargebacks are something one always has to worry about when using a medium which allows and doesn’t guarantee to cover any chargebacks which do occur. To reduce your risk of a future chargeback, consider not allowing payments through Paypal via credit card on domains you sell. Credit card chargebacks can still be filed months after the actual purchase – keep accurate and detailed records of all sales in the event a future chargeback presents itself and considering the fact the item is intangible (and hence comes without a shipping address), don’t be surprised if you lose. You should keep accurate and detailed records anyway, even if you opt to not accept credit card payments in the event you get audited.

Large foreign checks may take much longer to clear than normal checks (up to 2 months) if your bank decides to send them to collections. This is entirely up to your bank, being based in part on your history with the bank and in part on the size of the check. Whenever possible, ask about how a large check from a certain country will be handled prior to letting the buyer know payment by check is okay. Writing bad checks, forging checks, altering checks, and counterfeit check and money orders are unfortunately all too common, so it’s best to let the check clear whenever possible before considering yourself paid. Be aware that there is a difference between the money being in your account and the check having been confirmed as being good — your bank might put all the money or a portion of the money in your account immediately or within a few days, however this doesn’t mean that the check is necessarily “good”.

It’s best not to accept money orders or checks as it both complicates the selling process and exposes you to increased risk of a fraudulent transaction — there’s really no reason to accept either when so many people have PayPal accounts and there’s always the option of wire transfers for those who like to do things through their bank. If you live in Canada, one cheap way to do domain name transactions is via Email Money Transfer — ask your bank about that if interested.

US Postal Service money orders employ a number of security measures in addition to a money order verification service. It’s not scam-free, however it’s much more difficult to scam with than an ordinary check or money order, provided the recipient of the USPS Money Order knows what to look for . If people send you a larger check or money order than the domain purchase was for and ask you to send them back the difference, there’s a near-100% chance they’re trying to scam you.

Unauthorized funds of a different kind – unauthorized funds taken from your PayPal or other accounts, is another all too common problem. Get a Paypal security key to substantially reduce the likelihood of anyone ever fraudulently gaining access to your Paypal account and sign up for any additional security measures your credit card issuer and online payment providers offer. Some examples are: Verified by Visa and MasterCard SecureCode (ask your bank about them if you can’t find a way to sign up for them through online banking). Call your credit card issuer (number should be on the back of your credit card) or online payment provider and ask them if there are any additional security measures you can take to better protect yourself. A few more pointers would be to never give out your credit card number on a site which doesn’t use secure encryption such as SSL and to avoid all escrow services other than Escrow.com. If you’re doing a domain name transaction, you may also use EscrowDNS.com or escrow services offered by one of the larger domain name companies (such as Sedo, Afternic, Moniker, Namedrive).

I blogged about this around 6 months ago on a different blog I had at the time, however it’s something I’ve seen too many newcomers asking about lately, so hopefully I can reach a few of them here through this post…

Why do domaining ebooks fail to deliver beyond the basics? In my opinion, it comes down to a few things:

1) Nobody is going to share their “best domaining secrets” for $29, 49.95, $99.97, etc.

2) The domain name industry is still relatively small. A good ebook would take months to write and a likely best case scenario would maybe be selling 1000 copies (and you’d likely have to spend serious money advertising to achieve that even). It doesn’t take a rocket scientist to figure out that no domainer who’s actually “making it” in the business is going to sit down and write one — there’s just no money in it.

3) Domainers are inherently lazy — and yes, this is true of me as well. I for the longest time have had trouble posting 1 (one) post on my blogs per week. Pathetic? Yes. A reality for most domainers? I’m afraid so. I’m getting better thankfully.

Do you really expect a lazy domainer to sit down and compile a 150-200 page ebook? I think not.
Don’t let anyone BS you — anything under 150 pages of Times New Roman size 12 isn’t going to even scratch the surface of what domaining is other than introduce you to the very basics. Matter of fact, a book of infinite size won’t turn you into a domain name expert. Why? Because much in the domaining world is about experience, not about reading. You can read all day about generics and what domains have gone for in the past — how do you apply what’s happened in the past to the rapidly changing recessionary economy of today? You can’t. You need to live it, breathe it, experience it. No ebook is going to do that for you.

It takes most domainers years to accurately grasp even a small segment of the domaining world — and that’s not because they didn’t have ebooks back when they started, it’s because there’s just that much which needs to be learnt.

Self proclaimed domain name experts will throw in some past sales, often a few big sales, pretending all their sales are like that. Look, just a few of the sales I completed this year through Escrow.com:

It means nothing. Without knowing what the domains in question were both bought and sold for, we have no way of even knowing whether the domainer is writing an ebook to “Share his knowledge” or writing an ebook to “Recoup what he’s lost domaining”. These might even be sales a friend of his made or Photoshopped sales with digits added.

If you want a good inspirational book, buy David Kesmodel’s The Domain Game and read about people that actually have made it in the domain world. Read the blogs on Domaining.com — all are 100% free content from real domainers who actually know what they’re talking about. Sign up on domain name forums (Namepros and DN Forum) if you haven’t done so already and ask any questions you have, visiting DNJournal.com, DN Sale Price, and Namebio.com to keep yourself up to date on domain prices.

A real domain name expert shares what secrets he wants to share because he wants to share them, not because there’s $19.95 in it for him if he does — think about that.

According to research conducted by Gartner, over $3 billion in losses resulted from phishing scams which took place during the 12 month period from August 2006 through August 2007. Phishing scams generally involve obtaining access to confidential information which phishers wouldn’t otherwise have access to, such as confidential company files, credit card numbers, usernames, and passwords. I would imagine it’s higher still now, however I couldn’t find more current information on phishing trends.

Like Social Engineering, Phishing is a form of misrepresentation. Phishers generally target financial institutions, online payment processors, and popular websites (eg. eBay, Paypal, Bank of America).

As mentioned in my post on Domain Name Security, avoid clicking links in emails — it’s easy to fall for an IDN or even email spoofing. Other than clicking a link to confirm immediately upon starting a new service, there are very few times when you should need to click on a link to confirm anything and more often than not, it will be a phishing scam — that goes for Paypal, your bank, your domain name registrar’s, the email address listed in the whois of your domains, etc.

Watch out for spelling mistakes, missing personalizations (eg. “Dear User” instead of “Dear Reece Berg”), and time sensitive emails (”you must click this link within 48 hours, or else…”). Misrepresentation techniques used during phishing scams include using Internationalized Domain Names (more commonly known as IDN spoofing or an IDN homograph attack) to make it seem as if the email is coming from someone else, using misspelled “typos” of the targeted website, using subdomains containing the domain name associated with the targeted website in it, and using anchor text which has been carefully crafted to mislead readers into believing the link will send them to the website they’re interested in visiting, rather than the phisher’s website.

To get the desired information, phishers and social engineers may employ a variety of methods including: email spoofing, caller id spoofing, pretexting, baiting, DNS cache poisoning, pharming, etc. Modern internet browsers employ security measures designed to safeguard against phishing attempts, however they’re far from perfect and they can’t prevent incompetence on the part of a user (eg. carelessly visiting sites with expired or incorrect certificates which have been flagged, visiting websites which are supposed to have secure socket layers and not noticing the SSL functionality is missing) and of course every phisher’s favorite — people who recklessly click links in emails.

Social networks have ushered phishing and social engineering to a new level, one which many security experts have dubbed Social Phishing.

Social Phishing, also known as context-aware phishing, exploits technical vulnerabilities and human nature of being too trusting of the intentions of friends and family. Most domainers and many webmasters who make their living online are shocked to discover how easy it is to spoof an email — it’s as easy as forging the header, using an IDN, or using a phony domain such as secure-domain.com, where domain.com is the domain the phishers are misrepresenting themselves as being associated with. Social Phishing takes email spoofing one step further, with the social engineer learning about his victim via information freely available on social networks. Gaining knowledge about the intended phishing victim, the social engineer can create more convincing emails which appear (or do, courtesy of malware or a compromised email account) to come from sources the intended target is more likely to trust, such as his friends or family.

Information gathered by mining social networks and other online sources increases phishing success rates by allowing phishers to send spoofed emails which are both personalized as real ones would be and targeted, such as spoofed emails for the correct financial institutions or other online websites that the intended phishing victim uses. Gaining information about individuals (such as siblings) may allow a phisher who’s compromised an account through successfully guessing a secret answer (eg. Mother’s maiden name or place of birth) to simultaneously gain access to a second account, etc.

Another common social phishing technique involves causing a problem and then offering a solution to that problem. As an example, a phisher could commit a sufficient number of incorrect login attempts on the phishing victim’s account so as to prohibit any further attempts from being tried, thereby locking the victim out of his own account. The phisher can then misrepresent himself as being an employee of the company in question and pretend to be trying to help the victim, but first needing to verify his identity via his password – we all know where that ones going. This is but another reason to be careful when sharing information online — usernames can often be discovered by doing a Google search on a person’s name or email address. Knowing one of their domains and doing a whois search on it can be particularly promising for phishing schemes, giving the phisher everything he needs to then phone or email the victim offering “support”.

Research from Indiana University confirms the powerful role social networks are beginning and will continue to play in the future of phishing. Phishing has both financial and psychological costs, destroying trust and embarrassing it’s victims. Be careful what information you disclose on the Internet and don’t let your guard down merely because an email appears to have come from someone you know and trust.

Even the strongest, most difficult to guess password can easily be compromised by keyloggers, viruses, worms, and other malicious software. It’s important to scan your computer frequently for infections. There’s no reason to not be using spyware and antivirus detection software daily. One common misconception is that OS X is immune to any security threats — there are keyloggers designed exclusively for OS X and the operating system being used has little detrimental effect on social engineering and/or other phishing/pharming scams – you’ve been forewarned!

Public Wifi networks, libraries, and cybercafés should be avoided at all costs when you plan on doing anything more than web browsing. I highly recommend against checking email or logging into any important accounts such as Digg, Facebook, or your domain name registrar from them. If absolutely necessary, change your password as soon as possible and when using a public computer, make sure that in addition to logging out of your email or registrar accounts that you delete browser cache, history, passwords, and close the browser afterwards.

If available, use an email address from your Internet Service Provider for your important domains and websites. If you’re using an ISP-based email and plan on switching ISPs or if you plan on switching to a new webmail address, be sure to update the email contact information on all your domains. Historically, there have been major security flaws in many free web-based email solutions including Gmail, Hotmail, and Yahoo Mail. Should you decide to use a free web-based email, make sure you choose a strong 8+ character uppercase and lowercase alphanumeric password, preferably including symbols.

Make sure your email settings are set to “text only” and don’t open email attachments before scanning them for malware, regardless of the source. Without getting too technical, attachments, much like HTML emails, could be infected with keyloggers or other malware which could easily compromise the security of your email account. This must also be done before accepting files when using an instant messaging program such as AIM, Windows Live Messenger, and Yahoo! Messenger. Always remember – just because the email or attachment came from a trusted friend doesn’t mean it is malware-free. While likely not being done intentionally by your friend, your friend’s computer may have been compromised by someone else who is now using it to spread malware and has spoofed emails to make it appear as if they’re coming from your friend. While I strongly recommend against it whenever possible, should you decide to send or receive confidential information by email, make sure your emails are encrypted, providing digital signatures.

Should you require an email spam filter, opt to individually block out problem email addresses rather than using a more complete filtering solution – end user inquiries might otherwise end up in your junk folder. Whitelist (put on your safe list) the email addresses of your domain name registrars to avoid missing renewal notices and other important information.

DomainTools offers a Registrant Search service which allows anyone to purchase a list of domains associated with a certain name, address, or email address. After purchasing a list of domains associated with the compromised email address, it’s time to head to the registrars and click “Request Password”, which will unfortunately send the passwords to the compromised email account.

Using multiple email addresses with a different email address for each registrar will limit the damage a hacker can cause under most circumstances if he manages to compromise the password on one of your domain accounts. Don’t use the same password for your web-based email accounts that you use at domain name registrars. Use strong alphanumeric upper and lowercase passwords at each domain name registrar, each domain name forum, and each website you’re registered at. Buy an agenda to record your passwords in and save you from the temptation to significantly compromise your own domain name security by using the same password for multiple accounts for the sake of convenience.

Make it a habit of changing any important passwords at least monthly. To add an additional blanket of security, when given the option, opt for a different username than your email address at domain name registrars – this gives any would-be hackers an additional element they’ll need to determine prior to gaining access to your account. To make hacking your account considerably more difficult, consider listing a different email address in the whois than is associated with your registrar’s password recovery function (the email you used when signing up with the domain name registrar) and open up multiple accounts using different usernames and different passwords at the same registrar – this will significantly limit the damage which could be done in the event one of your passwords was compromised. If you use your own domains as nameservers, make sure they’re not about to expire. If the domains you’re using as nameservers expires, an opportunistic hacker could register them and use it to compromise the security of your other domain names.

By using email forwarding, you can forward all mail from the email listed in the domain’s whois to the email addresses you used while creating an account with your domain name registrars. Don’t let anyone know about this email addresses. The person hacking an account is often someone who knows the person he hacked — be careful what information you share with others. Don’t keep any personally identifying information saved in your email accounts. Information such as credit card numbers, passwords, secret answers to security questions, and contact information for domainers or reps should never be found in your email account or on your computer. Make it a habit of backing up your emails and storing them offline on removable storage media (such as a DVD-RW, CF/SD cards, USB drives, etc).

If your secret question is “What’s my dog’s name”, it’s really not a very good secret answer to give your dog’s actual name – many people probably know the answer and someone who doesn’t know you could easily run a search on the most common dog names and try to brute force his way into your account. A better solution is to use the secret question as a second password – how many hackers are going to guess your dog’s name is “6Fw8a42N9fsG38”? I’m guessing none, no matter how long they try. Keep all your domains “locked” and inquire with your registrars about any additional security measures (eg. additional verification measures, passwords, or security questions) which can be implemented on your most valuable domains. If your domains aren’t locked, they can be transferred away without your permission should you not deny transfer requests. If your registrar doesn’t offer additional security measures, transfer your valuable domains to a registrar which does (eg. Moniker Max Lock, Fabulous.com Executive Lock, Godaddy Protected Registration).

Keep on top of the news (especially the bad news) about your registrar. If things are heading south, you’ll want to get out of there asap. You should always have a contingency plan and money set aside in the event something does go wrong. Place all domains you intend to keep on auto-renew, however consider renewing them earlier if you can afford to. Renewing your best domains for an additional year is always a good idea and can protect you from possibly losing them in the event someone fraudulently obtains control of your domains, your auto-renew payment source doesn’t go through (eg. expired/stolen credit card, empty Paypal account), Acts of God resulting in your registrar being unable to process your payments, etc.

While looking up the whois, observe if it’s been updated recently (this could indicate a recent fraudulent transfer of ownership). Enter the information listed in the whois (such as name and email address) into Google and look for anything suspicious. Ask about the domain discretely with domainers who are “in the know”. Always remember that nothing is certain on the Internet and it’s always best to take more precautions than not enough. Google the domain name with and without extension. Enter additional keywords such as: namepros, dnforum, digital point, etc to get relevant search engine results for a particular domain name forum. Add in additional words such as: stolen, fraud, hijacked, hijacker, thief, missing, chargeback, paypal . Pretend one of your domains just got stolen – what would you do? Put yourself in that person’s shoes and try to outsmart any domain name thief by uncovering the truth. Example search engine queries include:

a) domain.com stolen namepros

b) domain.com missing dnforum

c) domain.com paypal chargeback

Make sure you don’t enter the search terms in quotations – this will produce only exact matches and in the case of a stolen domain, will result in you likely missing any information about it’s theft.

If a domain’s price seems “too good to be true”, proceed with caution. The biggest indicator of a domain name scam is often the price the domain is being sold for – the scammer wants to offload the domain as quickly as possible before the rightful owner reclaims it. Keep a watchful eye on newer domain name forum members selling expensive domains. View their profile and read some of their recent posts. A good way to avoid most domain scams is to only deal with domainers who have a good reputation. On domain name forums, this is easily determined by looking at their iTrader rating and observing comments from other domainers about previous transactions. Are the people who’ve been leaving comments new domainers (possibly fake duplicate accounts by the scammer) or experienced veterans? Phone the number listed in the whois for the domain and verify that the person answering the phone is currently in possession of the domain. If more than one person is listed in the domain’s whois, contact the other people listed – the person attempting to sell the domain could be an angry employee or part owner who isn’t authorized to sell the domain, something which brings me to another notable point worth discussing – Make sure you completely trust anyone listed in the whois as administrative, billing, or technical contact. Imagine a few worst case scenarios – the billing contact (who is in charge of paying renewal fees) forgets to renew your domain, the technical contact accidentally or maliciously changes all the nameservers on your domains bringing parking and website revenue crashing down to zero, and the administrative contact doesn’t feel he’s being properly compensated for his time and decides to sell a few of your valuable domains! For these and many more reasons, it’s best to have all contacts listed as you whenever possible.

Make it a habit of logging into your domain name accounts at least every 2-3 days and making sure nothing is missing. Use domain name monitoring software (eg. http://www.domaintools.com/monitor/ ) as an added security measure, however this is not a replacement for logging into your accounts regularly. If you discover any domains missing or with changes you didn’t authorize, phone your registrar immediately and provide them with any information they ask you to provide about the missing domain, such as when you were last aware of the domain being in your account and if you have any proof that you’re the legitimate owner. Your registrar will likely ask you to sign some forms including a liability waiver – truth be told, in most instances I’m aware of, blame falls 100% on the domain owner for not taking necessary security precautions discussed in this article. If you want your registrar’s help, you’ll need to sign the forms they ask you to sign. Many hackers will leave your whois info intact (especially if they’ve compromised the email address listed in the whois) – this makes it harder for a registrar to determine whether your domains have been compromised or not. Check domain name forums to make sure your stolen domain isn’t being put up for sale. If it is, alert moderators to the thread immediately.

If you can prove to your registrar that you’ve filed an ownership dispute, they may be willing to “freeze” your domains, preventing transfer or further modification of whois information pending the outcome of their investigation. If your domains get transferred to another registrar, it will be much more difficult to recover them. See my article on Sandboxing

for more tips on how to keep your domains safe.

Both keyword domain names and short domain names have value. Of course all domain names have intrinsic value because each and every domain name is unique. However, many domainers like to concentrate on their particular money making “niche”. Keyword domains and short domains are 2 of those niches. Let’s take a look at some of the pros and cons of each:

Keyword Domain Names

PRO

• Strong SEO benefit if the domain owner decides to develop the site. Exact match .com domains enjoy the most SEO benefit.
• Potential for type in traffic (this is especially true if a domain is both a keyword domain name and is a short domain name).
• High likelihood of being seen as a trusted “authority” on the targeted keyword (i.e. “loans.com” would enjoy a higher degree of perceived authority for the keyword “loans” than would a non exact match keyword domain like “123-online-loan-finder.net”.

CON

• Potentially hard to brand when developing because a keyword domain is by default a generic term.

Short Domain Names

PRO

• Potentially very easy to remember.
• Potentially great for branding.
• Great for offline marketing (fits easily on business cards, marketing material, etc.)

CON

• An unnatural short domain can be hard to remember as opposed to even a long keyword domain that has easy to remember keywords.

Additional Considerations

What did I miss? Are there any other things that you would like to add to the mix for comparing keyword domain names and short domain names?

About the Author: This post was written by Joel Ohman. Joel runs the domain name tools site DomainSuperstar.com and has a goal of helping everyone consistently find awesome money making domain names!

Perhaps the biggest scam of them all is the scam new domainers pull on themselves when they decide to go out into the domaining world and start buying domains without the requisite knowledge and experience. We’re going to look at niche domaining and trendwatching in this article, two important concepts in modern domaining for those on a limited budget and those aspiring for enormous returns on their domain investments.

Successful trend watching or niche domaining requires skill, discipline, patience, and persistence. Ideally, choose a topic which interests you so all the work involved doesn’t feel like such a burden. That said, it’s important to make sure your niche has both a reasonably large audience (or the potential for a reasonably large audience) and is reasonably wealthy — this applies not only to niche domaining and trendwatching, but domaining in general, really. The wealthier potential end users and applications of products in this niche are, the more likely you are to turn a profit should it pan out.

For most trend watching domainers, it’s a good idea to find like-minded individuals whom you’ll be able to consult with and ensure you don’t register a bunch of silly domains. It’s great to envision a future full of interstellar spacecraft powered by antimatter and deuterium-tritium fusion if you’re working on a sci-fi movie — if you’re planning on turning a profit on your domains in this century, you’ll have to unfortunately look at technologies which are a bit closer to being realized today, such as wind power and hydrogen in the alternative energy segment.

Trend watching isn’t about looking into a crystal ball and trying to predict the future, rather, trend watching is about using what information is readily available in the present and observing how this readily available information could and is shaping the near future.

Many new domainers make the mistake of entering the trend watching field unprepared. Trend watching requires excellent information sources. Bookmark websites and subscribe to blogs, forums, magazines (preferably online magazines), scientific publications, organizations, and books pertinent to your niches. Make a habit of staying up to date on current events and keep a pen and paper handy wherever you go. Trends come and go like fashion — it’s important to keep up to date on what’s hot and what’s not, realizing when it’s a good time to accept an offer and when it’s a good idea to hold out for more.

Google Insights is a free tool that tracks search query data, giving you an upper hand on the competition and helping you better estimate trend popularity. Google Alerts allows you to receive email updates whenever there are new results for your chosen search terms. Technorati and Google Blog Search should help you rapidly discover blogs relevant to your niche and keep you informed on the latest news making waves through the blogosphere.

Look at the big picture, study trends occurring across industries and relate them to your chosen niches. When studying trends, try your best to remain impartial and realistic about future potential. Don’t underestimate any technical or technological barriers which need to be overcome prior to mass consumer adoption. I often find it beneficial to keep asking why something is important until a final answer is reached. Called “5 Whys”, it’s a popular problem solving technique developed by Sakichi Toyoda.  Another technique is to think of ways to cause the problem (eg. Pollution) you’re trying to solve (eg. What are good ways to pollute?). If you know the cause, you should have a good idea of how to solve the problem.

In competitive niches, it’s important to remember that time is never on your side. The best domains related to new technologies, discoveries, or buzz words are often registered within minutes of hitting the airwaves — it’s not uncommon at all for the domain to have been taken long before then in certain niches like technology and medicine. There simply is no time to procrastinate. Effective time management starts with prioritizing what’s most important. There’s likely no better way to keep yourself motivated than to assign yourself an hourly wage and observe how expensive procrastination is. Keep an up to date To-Do list of tasks which need to be completed with each task ordered by priority. Proper organization is a must.

Don’t put all your eggs in one basket — not every trend will materialize. Others will take far longer to come about than you initially anticipated. By diversifying your holdings, you reduce your overall risk. While it’s important to have a broad perspective and observe trends occurring across industries, it’s also important to remain focused on your chosen niches. Choose niches small enough that you can invest the necessary time to become an expert in them.

“Focus on quality, not quantity”
While cornering a niche puts you in a much better position when it comes time to sell, having 20 domains in the same niche also multiplies your risk 20-fold should it not pan out. Consider that carefully before going on a buying binge. Newer domainers and trend watchers alike often get carried away registering far more domains than they should when they think they’ve found “the next big thing”. Resist the temptation and stick to strong .com, .net, and .org keywords only. As a general rule, I recommend staying away from registering multi-keyword terms in anything but .com. Ask yourself, “Would I buy this domain if I was a business in this niche?” If the answer is no, then you have no reason to register this domain.

Buying niche domains with the goal of reselling to other domainers is a very risky, albeit potentially profitable activity. Finding end users takes time, there are renewal fees associated with waiting for a trend to mature to the point where an end user might be interested, and there’s always the possibility a potential end user won’t be interested or a trend won’t pan out.

Purchasing niche domains which were previously registered but which haven’t been renewed is another option. Expired niche domains will often be backordered and this will drive up the cost of acquisition significantly. Should you choose to purchase niche domains at secondary domain name marketplaces or via backorder, it’s imperative that you stay up to date on domain name prices to avoid overpaying. If you’re putting in hours each day studying your chosen niches, you’ll likely attain expert status in those niches in no time. Share that information with others through a website or blog – place some advertising on your site and begin profiting from your knowledge months or even years before the end users come calling. Building websites out of your domains and getting them ranked in the SERPs is never a bad thing and will only add to their value when it comes time to sell. Authority sites in most niches were among the first to cover their niche (first-mover advantage).

Final Note: Niche domaining isn’t Fad Domaining (we’ll cover that another day). There’s lots of money to be made registering current event domains and what’s temporarily popular in “the now”, however niche domaining and trend watching are more about focusing on new industries and products which have the potential to achieve critical mass adoption. In certain fields (eg. health), existing products may have functional benefits which aren’t discovered until a later date – here, there exists the opportunity to purchase  these domains on the aftermarket before they really catch on. Aftermarket purchases increase the risks involved in niche domaining considerably – tread carefully should you go down this route.

All of us invested in the short domain world spend a lot of time talking about letter quality. What is letter quality anyway? Does a short domain having an ‘X’ in it automatically make it less valuable than a short domain having an ‘F’ ? Of course not — that’s just silly. Letter quality is nothing more than something people writing short domain price guides use to suggest which letters are better on average.

If you’re completely new to the short domain world, you can rest assured (so long as the short domain price guide is accurate) that buying at the minimum wholesale a certain letter pattern goes for won’t result in an immediate loss on your investment. That’s all it means and that’s all it’s ever meant. Rather than buying short domains based on how many premium letters a short domain has, domain name investors should be looking at what end user potential the domain has. Traffic, revenue, and a lot of the other metrics one would use with longer domains can pretty much be thrown out the window here, as very few short domains are valued for their performance in these metrics..

So what gives a short domain a better chance of fiding an end user? On average, it would be having stronger letters, however, we’re not talking about averages here, we’re talking about how you should determine whether a single short domain is worth buying or not worth buying. One easy thing you can do right from the start is a google sarch on the letters in the domain. Do several companies use the same acronym as you short domain’s letters? How about company products? Using AcronymFinder.com or another acronym listing website of your choice, what can you say abou the probability that a future end user might be out there for your domain? If the domain’s letter pattern isn’t English-friendly, would it be desirable in another country? Is there anything special about this short domain which might make other domainers more interested in it for themselves (such as having a rare letter pattern)? Even though most short domains make receive little traffic and make little revenue, you might as well ask the question — I had a single premium LLLL.com which made me $25 parked last year (more than I paid for the domain), so while unusual, some short domains do receive traffic and make money.

And when I write this post, I’m not simply referring to avoiding short domains with bad letters because they might actually be good — I’m implying the converse as well that some ‘premium’ short domains really aren’t so premium when you start thinking of who could be a potential end user for your short domain. It’s not all that uncommon to see a double premium or triple premium with more end user potential than a weak quad — why would you want to pay 10 times more for an inferior domain, all because you just took the domain at leter value? Every quad premium LLLLcom is most certainly not a better domain than every triple premium, double premium, etc LLLL.com — same goes for LLL.coms. Just like the minimum wholesale, letter quality should be nothing more than a guide — something useful to use when considering which short domain to buy, but absolutely not a deal maker or breaker.

They say you can’t judge a book by it’s cover - you most certainly can’t judge a short domain by it’s letters.

A look in this post about why eBay may not be the best place to list your LLLL.coms (or other short domains for that matter) unless you place a reserve to ensure you get what you’re after. We’ll look at some of the past eBay prices versus the median LLLL.com sale over the months.

November 2007 had a median LLLL.com price of $35, yet LLLL.coms sold on eBay had a median selling price of just $22.50. December 2007 saw the median LLLL.com sell for $41.00, yet on eBay the median LLLL.com price was only $31.00. What about November 2008? We have a median LLLL.com price here of $21.00, however the median LLLL.com price on eBay was but $14.20.

Enough months looked at to be statistically significant? Probably not — it’s too bad I hadn’t compared eBay LLLL.com performance to that of the overall LLLL.com market more often than in the past. Nevertheless, I’m reasonably confident from my experience in the LLLL.com market that we’d see similar differences between LLLL.com sales outside eBay and LLLL.coms sales on eBay in the other months as well. I’ve discussed reasons for this many times in the past — type “eBay” in the search bar for more information.

Domain name forums have also historically been a weak market for LLLL.coms, except right at buyout when they were selling like hotcakes on NamePros and were even of reasonable popularity on DNF. Today, most DNFers aren’t interested in a whole lot of LLLL.coms other than the very high quality ones and most NPers are looking for good deals rather than to pay full market value because, unlike ahortly post-buyout, they’re reasonably confident prices are going to rise dramatically in a very short period of time.

Looking at some real numbers now, let’s look at LLLL.com sales since March 1st, 2009 — I think prices have been reasonably stable since then, however do feel free to suggest a different date if you think I’m not being fair here. There have been 3087 reported LLLL.com sales since March 1st, 2009. Of these, 138 occurred on Sedo, 364 occurred on NameJet, and 137 occurred on SnapNames. Subtracting the LLLL.com sales that occurred on these 3 venues from the 3087 reported LLLL.com sales leaves us with 2448 LLLL.com sales. Roughly 21% of domains were sold at NameJet, SnapNames, or Sedo.

Let’s remember that many of the LLLL.coms sold on SnapNames, NameJet, and Sedo, would have sold for significant premiums regardless of where they were sold, so I don’t see it being fair to exclude them as being outliers on the high end any moreso than doing the same to eBay on the low end. I’ve sold about 300 LLLL.coms now from a lot I’m brokering and I haven’t yet sold anything under $5 per, with the average around $12 per so far. All of the LLL.coms have been anti-premium through triple premium in quality, with most of the LLLL.coms between anti-premium and double premium. I haven’t been pushing the sales particularly hard either — just been letting them naturally come about, along with a bit of promotion which anyone would do if they were trying to sell such a large number of LLLL.coms.

So far on eBay, I’ve sold between 20-25% of the LLLL.coms I’ve listed, all of which have had starting bids of $6.99 and ending prices between $6.99 and $7.51. Many of the LLLL.coms which did sell for $6.99+ were not of noticeably higher quality than the ones which didn’t.

Ray (equity78 on Namepros) made a great post just a few minutes ago in the .tv forum, part of which I thought I’d talk here on LLLL.com. As I’m sure many of you know, the premium .tv market is in many ways quite comparable to the low end LLLL.com market, with premium .tv domain name renewal fees often being 50%  and sometimes over 100% of the domain’s reseller value. So the question was asked whether a $1000 per year premium .tv domain was worth it. If you think about it the way a lot of .com domainers would, you’d probably say “Hell no” and make some reference to how much that .tv has cost you over 10 years.

Ray goes on to suggest that one ask themselves 3 questions before investing in a premium .tv:

1) Why do I want to own the domain?

2) What will I do with the domain?

3) Will I be able to continue to renew the domain at $1000 per year?

If you notice #3, it’s something I’ve brought up many times with cheaper LLLL.coms — invest in them if you want but make sure you have money set aside come renewal time to renew them. As for numbers 1 and 2, notice the difference between what one wants to do with a domain and what one will do with a domain. Raise of hands, how many people haven’t at least planned on developing a few domains they never got around to.. I know I certainly have — new projects come along, you get too busy to find time, etc. Is that going to happen this time around (this last comment is of course more applicable to a $1000 per year premium .tv than a $8 per year LLLL.com)?

This is the final part of a 3 post series looking at the LLLL.com market since January, 2008. If you missed the other 2 posts, they can be found here:

Short Domain Name History: LLLL.coms I
Short Domain Name History: LLLL.coms II

So where did we leave off in part two of our short domain series on LLLL.coms? We left off talking about what essentially was the short domain name world’s equivalent of the Prisoner Dilemma, where the actions taken that were rational for the individual short domain name investor proved to not be so rational when we considered their actions on a group level encompassing all short domain name investors.

LLLL.coms sure have been an interesting market to follow. In the 2+ years I’ve now been actively following and investing in this market, I’ve seen it compared to everything from tulips to tech stocks in the late 90s from those who didn’t believe in the LLLL.com market’s fundamentals, and domainers investing in the LLLL.com market saw it as anything from a good place to invest money to the biggest domain name opportunity in years. I never was extremely “hyped” about LLLL.coms myself and it was a medium to long term focus I first came into the market with. Pre-buyout, I certainly didn’t think we’d see prices rise as quickly as they did and I was actually hoping to maybe turn a 100% ROI after a couple years of holding my LLLL.com investments — something quite a bit lower than what actually ended up happening. For some of us, our initial expectations were far exceeded, others had much greater visions for the near future of the  LLLL.com market and others still have had expectations which have changed along with the market (eg. me).

The only short term method I’ve ever recommended of investing in this market for the short term has been to look for deals which you can quickly resell at a profit. One LLLL.com for example recently sold on eBay for I believe it was $0.52 — it was reasonably pronounceable as well and could quite likely have been sold for $10 or so had it not been sold on a day where there were 200 other LLLL.coms on eBay instead of the usual 20 or so. Similarly, some people in the past have had luck getting CVCVs cheap by contacting owners via WhoIs that weren’t domainers — you can of course do that with any type of domain, however it works with LLLL.coms just like other domain name markets. Alternatively, you could of course choose to seek out end users, however make sure you properly factor in the value of your time in determining whether this is worthwhile for you or not.

I’ve been criticized a few times in the past for changing my position on short domain name markets, however my belief is that one has to adapt to change and new information which presents itself. I still maintain the optimistic long term view that I initially had when first entering this market — I never thought we’d see $7 LLLL.coms turn into $60 ones inside of 4 months, and I never thought we’d see those $60 LLLL.coms with under $7 by the time that year ended. That’s what I find pointless about long term “predictions” — they really are nothing more than a guess. We can predict with reasonable certainty what will happen tomorrow based on what happened today, but any data we have today is completely useless for trying to predict what will happen 1 year, 2 years, 10 years, etc years from now. There really isn’t a right or wrong answer to where the LLLL.com market is going — perhaps the only right answer would be that we just don’t know. One Namepros member said it best a couple years ago when he suggested that the LLLL.com market would be full of ups, downs, and uncertainty until it establishes itself. Whether it establishes itself as a worthy investment remains to be seen — I’ve never been particularly high on short term speculation in the LLLL market, mainly because I’ve seen many people lose their shirt doing it. The LLLL market (be it LLLL.com, LLLL.net, or otherwise) just isn’t the kind of market you can pick a day in the future and decide that you’re going to sell out on that day and expect to come out ahead or with a small loss. I showed some data a few days ago about how CVCV sales for the exact same CVCV had varied by sometimes over $1000 from one month to the next — sometimes up $1000, sometimes down $1000. If you’re going to get into that market and try to cash in when the market is up, my suggestion would be that you use your money to play roulette — bet on red or bet on black, because you’re either going to be right or wrong, and I don’t see this depending on skill to near the extent I see it depending on luck.

What will future end users be interested in? Some of these potential end users see a good domain very differently than the large majority of current end users. The big issue as I see it right now is the cost of renewal fees versus the value of the cheapest LLLL.coms. If the renewal fee wasn’t there, there’d be very few people arguing that cheaper LLLL.coms wouldn’t increase in value long term, however it is there and so long as prices stay low, it continues to play an important role in the value of the cheaper LLLL.coms. The more LLLL.coms get above regfee, the less they’ll be affected by renewal costs — that’s just common sense right there. So, what’s going to get those LLLL.coms above regfee? What’s going to get those LLLL.coms so much over regfee that they’re no longer or negligibly impacted by renewal fees?

I try to remain relatively neutral on this short domain blog — I’ll praise a good sale but I will at the same time acknowledge a bad one or when the market is performing poorly. There’s no denying that much of the LLLL.com market has been performing poorly lately — poorly for quite some time, matter of fact. Will that change? What will make it change? Why would or could it change? When will it change? Those are some good questions to ask yourself before investing a sizable amount of money in this market. Speculation is fine, but if you’re going to put a lot of money into a speculative domain name market, do yourself a favor and understand both the risks and opportunities as best you can. Risk is a reality of any investment — there is no such thing as a completely safe investment and don’t let anyone convince you otherwise. We live in a world of imperfect information, one where we don’t and never will know the complete picture. All we can try to do is assemble as much of the puzzle as possible so we can make an investment that we’re comfortable with, understanding to the best of our abilities what the risks and potential benefits are with the  domain name investment we’ve chosen to make.

Andrew Miller, a long time investor in short domains and author of 3Character.com said it best in my opinion in response to a Namepros post in May 2008 asking about whether every LLLL.com may someday reach $5000+ as LLL.coms had at the time. His response was that it’s of course possible but then questioned  how likely it would be — there really is a chance anything could happen probabilistically speaking, and so we need to determine what presents the right risk/reward profile for us. What’s your need for liquidity? How much uncertainty and fluctuation in the value of your investments can you comfortably live with? Do you have money set aside or know you’ll have money around to pay for LLLL.com renewals now and in the future? If short domains become more popular, who’s to say that popularity will create additional investments in short LLLL.coms and not short domains in other extensions (such as ever increasing in popularity ccTLDs) or market segments (such as brandable LLLLL.coms)? What will make for a better investment long term — cheap LLLL.coms or expensive ones? Questions, Questions, Questions… I’m sorry, but I don’t have any more definitive answers. One more thing I’m reasonably certain about is that the performance of the LLLL.com and short domain name markets as a whole will largely depend on the economy. LLLL.coms are an interesting market when it comes to the economy because the market has some very different investors — from the little guy who has a few LLLL.coms and is worried about losing his job, to rich domainers and domain name companies, some of which own 10,000+ LLLL.coms. What about everyone between those 2 extremes?

To quote a post made by accentnepal in June of 2008, “Times like these the long-term investors sleep right through while the flippers think the world is ending. Wake me if they get down to $10.” The prices for the weakest ones are of course below that today, however that was clearly not the point of the statement. The bottom line is that there are 2 very different types of LLLL.com investors — the flipper and the long term investor. Most people fall somewhere in between and the ones who need be worried most about what the near future holds are those investing today hoping to resell tomorrow, something which has never been a great strategy for most domainers to adopt in any domain name market and has only worked well for short domains in the past because their values were going up so quickly. So are prices today a bargain — a chance for domainers who missed the boat the first time around to hop on and go for a ride or do prices today serve as a warning to domainers interested in investing in this market that we may not yet have seen the end of the LLLL.com bust? This is a question I’m sure a lot of Americans are asking themselves at the moment with respect to housing prices down there. Houses really do make for a pretty good comparison because there are plenty of costs associated with owning a house. Are U.S. housing prices a good deal at present or were they so overly inflated that they’ve now merely been brought back down to earth? Your answer might depend on whether you’re interested in buying your first house or are considering the possibility of buying a second house as an investment. Anyone actually using what they’re buying will be happy with the current prices — now is a better time to buy than it’s been in a long time. Similarly, now is a great time to buy LLLL.coms if you’ve been planning on developing them or seeking out end users — the prices have never been better.

LLL.coms have over the years slowly gotten out of the budget of many (if not most) end users. Prices are better now that they’ve dropped around 55% on the low end, however they remain expensive. Most domainers think LLL.coms will eventually begin rising in price yet again once the economy improves — trophy domains aren’t a luxury many can afford in a recession after all. Will companies adopt LLLL.coms that end in corporation-friendly letters such as C, I, and L? I’ve always been a fan of those kind of LLLL.coms myself, mainly because from what limited research on the matter I’ve done, they do seem to have higher usage with end users.

If you’re unsure what to do with your LLLL.coms — you’re in one of those hold  positions where you’re not sure if now is a good time to buy but at the same time aren’t sure if now is a  good time to sell, why not develop a few of your LLLL.coms? This domain (www.LLLL.com) was getting about 60 uniques per day before the previous owner developed it into a blog. By the time I acquired it, it was averaging around 100 uniques per day and now with a bit of work, it averages around 300-400 uniques per day. How many domains out there get 400 uniques per day of targeted traffic? Not a whole lot of undeveloped ones, that’s for sure… If I had to sum this market up in one sentence, it would be that anything is possible and that nothing is impossible. You can put a positive or negative spin on that line however you see fit

I’ve talked about the past performance of short domains and the LLLL.com market many times before — mainly based on what I remember. But if we want to have a real good look at what it was like at the time — the raw emotion, the future expectations, popular opinion at the time and more,  there’s no alternative to going back and reading the thousands of posts written on LLLL.coms and other short domains at the time. This will be the first in a series of posts I hope to cover over the next few weeks on the history of different short domain name markets.

What better place to start than January 2008 — right before prices rapidly built up. I’m looking at an LLLL.com thread as I write this about what people predicted the minimum LLLL.com price was going to be in  January 2009.  Estimates varied wildly from Snoop who predicted $15 (and was closest to actual LLLL.com performance) to

As I’ve mentioned before, popular opinion at the time was that LLLL.coms should be worth 1/26th what LLL.coms went for due to having one more letter and yes, that’d imply a minimum wholesale well into the $1XX had that proven true. Ironically enough, most short domain name investors discouraged investments in CVCVs at the time because CVCVs were in their view already valued at or near what they should have been valued at whereas the argument with weaker LLLL.coms was that the availability of LLLL.coms for registration fee was holding back LLLL.com prices until the LLLL.com buyout took place.  Hindsight is of course always 20/20, however how many people who invested in cheaper LLLL.coms back at peak wish they could have gone back and invested in CVCVs instead?  Enough said on that — no reason to dwell on the past; something we cannot change.

Let’s examine now a few of the other comments that were made regarding both LLLL.coms and other short domain name markets back in early 2008… Who remembers the argument that the more domains you have, the more chances you have to possibly land an end user? That is of course true, however the more domains you have, the more renewal fees you also will need to pay. Is the probability of landing an end user sale and the expected value of that end user sale (after factoring in the opportunity cost of your time in making that end user sale) worth more than the sum of all the domain name renewals you’ll need to pay? That’s a tough one to answer because it’s difficult to assign a probability to the outcome of finding an end user for an LLLL.com or of predicting what you’ll be able to sell that LLLL.com for. If you sell an LLLL.com to an end user for say $X and you spent say, 10 hours between trying to find an end user for your LLLL.coms and finalizing the end user sale, we now need to know both how many domains it took you to accomplish that and how much you value your time at. If you value your time at $20/hour, that $Xsale is essential a ($X - $200) sale and at approximately $8 per domain (handregged), you’d need ($X - $200 + D) > $8Y, where $X represents the value of the end user sale, $200 represent the cost of your time at $20/hour should it take 10 hours to sell, “D” represents what you could recoup of your investment reselling the domains to other domainers before the LLLL.coms expire and “Y” represents the number of handregs/renewals we paid for to achieve what was on the left side of the equation. Not hard to read that off in plain English that if you paid more for for the domains than you’re able to resell them for between domainer and end user sales, then you’re in the red and if you’re able to sell them for more than you paid to acquire the domains, then you’re in the black. Low end LLLL.coms aren’t generally valued according to their end user potential, however that certainly is a nice bonus when buying a short domain. Yes, some domainers have been able to find end users, even many end users for low end LLLL.coms and I’m certainly not saying it can’t be done — it’ll just require more than waiting for the end users to come to you (unless you’re perfectly happy holding the domains until they do so).

So why invest in low end LLLL.coms? Well, as we all know, there are other things that give short domains value than merely their end user potential, one powerful factor being the “prestige” associated with owning a  certain domain (eg. LL.com, CC.com, LLL.com, NNN.com, CVCV, generic .com, premium descriptive keyword .com) and another being the collectible nature  and easy liquidity of LLLL.coms. Despite LLLL.com prices having fallen as much as they have, they’ve remained a very liquid market — if you’re willing to price your domains 20% or so under the going rate, you will find buyers for them rather quickly, whereas in many other domain name markets, that just isn’t the case.

We have the suggestion that the world will continue to be ever more connected and that Internet penetration will create further demand for short domains — but that would create more demand for all domains, would it not? Maybe some additional demand above and beyond that for numeric domains granted Internet penetration is occurring faster is some Asian markets than elsewhere and they’ve always liked numeric domains.  One thing I’ve always liked short domains for is that I see them as the best alternative for the mobile web. People can have qwerty keyboards and all the works, but the bottom line is that it isn’t an enjoyable experience for many (most?) people typing on a smartphone or PDA unless they’ve purchased a full size wireless keyboard for it. But let’s face it, the mobile web is a long term play — it’s not what’s going to influence the value of your short domain within the period of time most domainers expect to resell their short domain name investments within.

It quite incredible looking back to see how optimistic some people were. With 253 people polled, 23 people thought prices were going to be above $500 within a year. There were 41 more people who thought prices would be at least $250 per by January of 2009. Collectively, 64 people (25%) thought LLLL.com prices would be at least $250 per for the very worst LLLL.com by January 1st . It should be noted that the particular poll I’m quoting here was taken on February 11th, 2008 — pretty much exactly at peak. Is it not surprising to see that many domainers merely extrapolated past returns to predict future ones? Seeing as the LLLL.com market had gone pretty much straight up over the past 4 months, what else did they have to go on?

Of the 253 votes, 163 (64%) thought the minimum wholesale on LLLL.coms would be at least $100. It’s important to note here that many of the votes that came in for sub-$100 prices weren’t made at the time people were first asked to participate in the poll and were actually made roughly a month later when it had become very obvious that prices were falling. Now $100 is a much more realistic number than $250 or $500 and is understandable taking into account how things had been going up to that point, realizing that things are certainly going to slow down as prices get higher, yet believing that prices will continue to slowly increase granted up to that point there was no evidence to suggest otherwise. Wise words were spread in this post. I was way off myself in guessing what prices would be in 2009 back in February, guessing on the low end of replies at $100 exact. I correctly guessed that the gap between the lowest quality LLLL.coms and the higher quality ones would widen, however I never thought we’d see quad premium prices fall the way they did…

One of those “what if” paragraphs this one here, but one thing I have wondered about a few times in the past is what if the LLLL.com hype had lasted just a bit longer — long enough to make it so that big venues such as Sedo and Afternic would open up to even the lower priced sales… This certainly would have greatly helped with liquidity in the market. What would have been the end result had that been the case? No right answer obviously but something I do think about and that was one of the things that was bothering me when I decided to sell out of the LLLL.com market myself — I was just wondering what might happen if prices were to get to that point where people would be making offers on Sedo and Afternic. When you consider for a second the fact that Namepros has roughly 150,000 members today, yet Sedo has almost one million, it really does beg the question of whether we would have ever run into a liquidity crisis had LLLL.com prices just been able to rise another $20-$30 above what they did at peak. Being the speculative investments that they were, it’s not surprising that LLLL.com prices fell as quickly as they did.

Another reason LLLL.com prices were believed to be heavily undervalued were because of how high CCC.com prices are. To be completely honest, I still don’t understand today why many CCC.coms go for the prices they do and they certainly report less end user sales than higher quality quad premium LLLL.coms that fall into the same price range. Domainers back in early ‘08 were frequently comparing the LLLL.com market to the CCC.com market and suggesting that most LLLL.coms (even those with bad letters) were as good or at least close to as good as a bad CCC.com and to tell the truth, I have to agree with that. But just because one short domain name segment (CCC.coms) is in my opinion grossly overvalued does not mean domainers should go out and grossly overvalue other short domain name markets without a valid reason. The same can be said about bad LLL.coms — just because a bad LLL.com realistically has little more chance (if not less of a chance) of finding an enduser than a quad premium LLLL.com does not mean we should all start paying $7000 for quad premiums!

We have the “He’s just jealous he missed the boat” comment thrown at those expressing their belief that the LLLL.com market is overpriced at the time.. Everyone is so absorbed in LLLL.coms that people are talking about what an LLLL.com bubble will be like, with 99% of people not even realizing they’re already part of one! What’s particularly interesting is that many people were still predicting $250+ in 2009 even into March, by which time it was obvious the market was correcting itself.

What’s a bit ironic is that it was no one other than these same domainers predicting $100+ prices who managed to crash prices from the $55+ levels rapidly down to $20 inside of a few short months. People started panicking, questioning their originally strong faith in the LLLL.com market and decided to cash out while they were still ahead. Domainers are now selling out believing it’s in their best interest, however when they all decide to do that simultaneously, the end result is that the market gets flooded several times over what it could ever possibly support at $50+ levels and hence prices begin to fall as sellers get impatient with their domains not selling. Once prices started falling, it was pretty much the reverse of what we saw on the way up — instead of predicting that week after week LLLL.com prices would rise, people started believing that week after week LLLL.com prices would fall. All it has to do is happen for a few weeks in a row and all of the sudden people think it’s a pattern that’s going to continue on forever. Little do they know that by panicking and selling for whatever they can get, they’re only further contributing to the problem. While this was clearly the correct choice to make on an individual level when looking at LLLL.com prices today, flooding the market certainly wasn’t the optimal choice on a group level.

A great thread was just started by Gene over at Namepros. The thread asks domainers to offer the one domain name tip they see as being the most important for the success of a domain name newcomer who planning on buying or registering domains.  If you could give but one domain name tip, what would it be?

Answers so far are exactly what I’d tell anyone starting out in the domain name world — .com is god and do your own research before investing. I happened to arrive at the thread after these 2 suggestions had been made and hence offered the tip that any domain name newcomer read and follow to a tee the above 2 tips (does that count?). Those really are the most important things in my opinion — most domain newbies get burned if they invest in any extension other than .com, as do most domain newbies investing in .com without first doing their own research. Now, just imagine how badly burned a domain newbie will get if they don’t do their own research and invest in a different extension! Ouch. I don’t even want to think about that… “Burned” is too gentle a word to describe what’s resulted from their domain name investments… Does financially destroyed get the point across? What’s really sad is exactly what one person left as a comment a few days ago — that most of the people that need to read this most aren’t ever going to see it. Isn’t it ironic that many of the people that need to do their research most (new domainers) are the ones who do the least of it! How many of us won’t at the very least run some metrics and/or ask about revenue and traffic before buying a domain? Some of these domain newbies are so excited to get into the domain name market, it’s as if common sense just went out the window. I’ve seen a few new domainers now needlessly waste $5000+ on new domains. If they would have run these domains by anyone who had been in the biz longer than a week, they most likely wouldn’t have received the green light to go ahead and register these domains… But did they do that? I wouldn’t be writing a post about them if they had done their research! I could blog about this everyday..

I tease the newbies sometimes but the truth is, I don’t like seeing anyone losing a pile of money they didn’t need to lose. Those domain name registrars and registries have enough money already — don’t give them more unless it’s for good reason! New domainers today are lucky there are so many resources out there to help them. New domainers can complain all they want about there being slim pickings today as compared to the past, but I think any domainers who’s been around a few years knows how easy these newcomers have it today — the domain forums literally serve all the domain name information a domain newbie could possibly want on a silver platter. And let’s not forget about the tens of thousands of members on these domain name forums offering advice, many of whom are happy to answer questions. So don’t feel sorry for yourself for coming late to the domain name game — as many domainers would say, you’re still early, and as I’d like to say, you’ve got it easier than anyone ever has. The market today is proven, the resources out there are practically endless, the amount of networking going on has never been higher, nor has been the ability to stay in contact using services like Twitter.

If you’re a new domainer, that link I posted at the start of this post is probably something you should come back to in a couple days — heck, I’m going to come back to it myself, just out of curiosity of what other domainers see as being most important.

No, not me! Just time for a rant about how many people I’ve seen desperately looking for domain name brokers lately… The sad fact is that if you’ve approached all the big players and none of them are interested in brokering your domains, it’s probably not because they don’t like you — they just don’t like your domains. Don’t take it personally, I know it’s hard to consider the fact that all those domains you painstakingly bought or registered just aren’t worth a domain name broker’s time — those domains which you thought were screaming end user were actually screaming “delete me or whatever you do, sure as hell don’t renew me!”

Okay, I’m sorry if I offended anyone with that but seriously, if nobody wants to broker your domains, have you ever thought of asking yourself why that may be? If you went to any broker (and probably even most domainers) with a domain that could quite literally sell itself, whose going to turn down free money? So you have a domain that can sell itself but you want to get someone who can get top dollar for it — okay, that makes sense now.

Some of the people looking for brokers on the domain forums are looking for domain name brokers to find end users for their new domain name registrations… There’s plenty of stories of domainers buying a domain for $10 and reselling it for $250 or $500 — do you have any idea what kind of chump change that leaves a domain name broker working on a 10% commission? Let’s do some math… Ten percent of $250 is $25. Someone explain to me why anyone would broker a $10 brand new domain name registration, work their ass off in the process of finding an end user for it, and then settle for $25 on that $250 sale. You better be giving that guy $240 of that $250 sale, seeing as you’d be lucky to even see your domain’s registration fee back were it not for him brokering that sale.

</rant>

If you’re an eBayer, you probably know that one pretty easy way to get more traffic to your website is to include your web address in all your eBay listings — of course you can do that for your domain name listings on eBay as well. And what about when using domain name forums? I tend to get anywhere from 5 to 10 uniques to this blog from the link in my sales thread signature — more when there are more than 1 domain listed in the sales threads. I put 88 LLLL.coms on eBay recently and have received 30 uniques so far from them (all are still 1-3 days from being over). If you were to start the eBay listings at $0.99 or less, it’s only costing you $0.15 per listing, so you could put 100 cheap domains on eBay for all of $15 — pretty easy to make a profit off the domains even if they don’t sell.

When you start to think about it, if I buy a cheap domain for a few bucks and I can get 5-10 targeted uniques from it, the domain may actually be cheaper than free. At least for me anyway — the alternative of buying targeted domain name visitors through Google at anywhere from $1-$10+  per isn’t all that desirable. I’m also pretty sure the visitors I’m pulling in using these methods are of much higher quality than I’d get on average via Google.

One thing you do have to remember is that the cheap domains while not necessarily having to be great domains need to be domains that people might be interested in — interested enough to at least come to the sale page and ideally end up clicking the link to your domain name blog or website.

When it comes to short domains, I’d say that as a general rule the more letters you add, the more you’ll have to know what you’re doing if you want to turn a profit. At the same time however, there’s potentially more money to be made if a ballpark figure of a domain’s worth is difficult for the average short domain name investor to obtain in that market.

If we look at LL.coms, pretty much all of them (obvious some exceptions such as AD.com)  are going to fall somewhere between $50,000 and $150,000 — essentially, the very worst LL.com is worth about 1/3rd of what the best LL.com would sell for. Basically, you could be utterly clueless about LL.coms, decide to pay $100,000 for one because it seems to be right in the middle of what people are paying for LL.coms and you’d lose at most 50% of your investment.

Looking at LLL.coms now, the lowest priced ones sell for about $3500 and the upper limit (again, excluding outliers) seems to be around $25000 — the worst LLL.coms here being worth about 1/7th the best ones. If we take a number right in the middle — roughly $14,000 when dealing with LLL.coms, it doesn’t take a genius domainer to figure out we stand a good chance of losing money on this purchase, granted that at present far more LLL.coms sell for under $14,000 than over it. If you were to pay $14,000 for an LLL.com that turns out to only be worth $3500, you’ve lost 75% of your investment.

Going one letter further to LLLL.coms now, we see that the very worst ones may sell for as little as $2 while the best ones (excluding outliers) go for around $10,000 — the worst LLLL.coms here are selling for around 1/5000th of what the best LLLL.coms are going for. If you decide to pay $5000 in this market for a completely random LLLL.com, you stand to potentially lose as much as 99.9996% of your original investment. Now I don’t think anyone would be stupid enough to pay $5000 for one of the weakest LLLL.coms unless they’re an end user, however I think this example did a rather good job of getting the point across that you can lose a whole lot more money with LLLL.coms than with LLL.coms or LL.coms, and what we’ll show at the end of this post is that more still can be lost with LLLLL.coms.

Pronounceable LLLL.coms are hands-down the most difficult LLLL.coms to appraise. Everyone has a pretty good idea of what an unpronounceable LLLL.com with at least one bad or semi-premium letter is worth.. We have enough sales comps to know it’s highly unlikely an ordinary LLLL.com will see $50 today. But with pronounceable LLLL.coms, there really is no simple benchmark to value pronounceables by. Some of the weakest pronounceable LLLL.coms (the ones domainers are “trying to make pronounceable”) won’t even sell at a premium to unpronounceable LLLL.coms.

Your average short domain name investor has a reasonable idea of what a CVCV is worth, but what about a pronounceable LLLL.com that doesn’t fit the CVCV or VCVC pattern like ZEEL.com in example? ZEEL.com sold earlier this month for $3201 — I’m willing to bet a lot of domainers would’ve thought this domain was more in the $1500-range and I also wouldn’t be surprised if other domainers felt it was a $5000 domain. With such disparity between how 2 different domainers size the domain up, it’s unsurprising that domains like this may sell for very different prices even if sold twice within a very short period of time.

Let’s head one step further to LLLLL.coms. The worst LLLLL.coms are essentially worthless — maybe you could get 10-25 cents for the domain, however I’d be surprised to see the worst LLLLL.coms sell for much more than that. With 11,881,376 LLLLL.coms out there (registered or waiting to be registered), these domains aren’t rare in any sense of the word. The acronym potential many LLLL.coms have is diminished to near-zero in this segment — very few companies have 5 word acronyms.

So if you were to invest in LLLLL.coms, how would you go about doing it? I would say, focus on pronounceability and don’t go reg-crazy. Just remember that there are about 10,000,000 currently available LLLLL.coms out there, so if you expect to sell yours for more than regfee, it’s going to have to be a whole lot better than average. With so many available LLLLL.coms, this is not a market you’ll likely be able to invest in successfully without first getting a very good grasp on what makes one pronounceable LLLLL.com better than another.

Have the past few years ever been full of ups and downs, hype, unpredictability, profit, and losses for your average short domain name investor! If you were into short domain name investing back in 2007, you remember how month after month demand increased for LLLL.coms — I mean, Namepros made a forum for short domains (and DN Forum not so long after) pretty much specifically because all the talk about LLLL.coms was clogging up the domain name discussion forum which was intended to be about discussions on all types of domains but was starting to turn more and more into what seemed like an LLLL.com discussion forum, with people asking questions such as where LLLL.com prices would be in the future, how much their LLLL.com was worth, when people thought the LLLL.com buyout would happen, etc. Those sure were exciting times to be involved in short domains!

People were so full of optimism in 2007 — not just for LLLL.coms but for pretty much all domains, especially short ones. People used to talk about LLL.coms almost as if it were impossible for them to fall in value and people questioned whether there was any connection between the stock market and offline economy and that of cyberspace and domain land… Those seem like pretty silly things to think in hindsight now don’t they? If someone loses their job, how exactly are they going to be able to pay what 3Character.com suggest they should pay for a bottom of the barrel LLL.com and conversely, what makes you think that now having lost their job they won’t be content to take less than the minimum because they need  the money and want a quick sale?

We saw 3 buyouts which were at the time rather significant for the short domain name world in 2007:

1) The LLLL.com buyout
2) The L-L-L.com buyout
3) The LLL.ca buyout

I could probably come up with more, however these 3 strike me as being the most important. With short domain name buyout after short domain name buyout resulting in massive profits for the owners and hype building up to epic proportions, short domain name investors were determined to find what would be that next big thing, something which short domain name investors had been conditioned to believe would be the buyout of another short domain name market segment. So we saw domainers start registering L-LL.coms and LL-L.coms, others went after C–C.coms (2 hyphens in between the characters), and others went after LLLL.nets, and NNNNN.coms…

The L-LL.com, LL-L.com, and C–C.coms never got off the ground. We saw both the NNNNN.com buyout and the quad premium LLLL.net buyout take place in February 2008 – right around the time when LLLL.coms were at their peak and with optimism about what the future held running high. Things quickly started to go downhill from there.

LLLL.coms began to decline in value month after month. With LLLL.coms falling in value now, still more speculative investments such as L-LL.coms, LL-L.coms, and C–C.coms started looking a whole lot less attractive. The NNNNN.com market was undeniably one of the quickest booms to busts the domain industry has ever seen — talk of an NNNNN.net buyout had started within days of the NNNNN.com buyout, yet interest in both were almost completely gone less than 4 months after NNNNN.coms were first bought out.

The idea around NNNNN.coms was that five numbers are used many places around the world for zip codes and that as new zip codes were added, more NNNNN.coms would have meaning. I’m not sure if they still do, however at least at the time, Marchex had significant holdings in both NNNNN.coms and NNNNN.nets, and this seemed to fuel the logic that these types of domains had real value. The NNNNN.coms Marchex had however were for existing zip codes, not speculative future ones. I never understood the whole zip code thing to be honest — I can understand that something such as 90210.com has value, however are we to believe that people everywhere will be typing their zip code into Google? I can see some possible development uses, however I really can’t see the reason there ever was speculative interest in this segment.

Another one of the arguments that probably convinced many was the fact that NNNNN.coms are about 4.5 times rare than LLLL.coms.. The thing is, and as any experienced domainer knows, there’s more to a domain’s value than rarity. We can have something one of a kind and if nobody wants it, then it has no value. If we look at NNNNN.coms in example, sure they’re 4.5 times rarer than LLLL.coms, however what do you think the difference in demand is? As much as many people like to talk about there not being a whole lot of endusers out there for LLLL.coms, can you honestly name a single possible end user for the large majority of NNNNN.coms (no naming Marchex!)?

It was rationalized that an NNNNN.com should be worth one tenth of an NNNN.com since it was ten times less rare — we had the same argument presented from LLLL.com investors that the worst LLLL.com should be worth at least 1/26th the value of the worst LLL.com (eg. present value of about $3500/26 = $135 for the worst LLLL.com). It’s not too hard to see today that these predictions didn’t pan out. Why? Because like I said earlier, there’s more to a market than rarity. If we look at NNNN.coms, we can see many numbers which would have historical importance — say 1792.com in example or 1492.com. When you consider all the countries out there, it’s unsurprising that a lot of numbers in the 1500-2009 range mean something to someone. Many other numbers still might be used for government to signify something — as an example, the number 1031 would mean something to an American, yet it means nothing to me here in Canada. An NNNN.com is the limit of what I can comfortably remember when it comes to numbers. Something similar can be said about LLLL.coms in that far more companies have 3 letter acronyms than 4 letters ones — so it’s not just about the supply, but also about the demand, and the demand in both cases doesn’t justify a value determine solely based on the rarity.

As for LLLL.nets, interests in quad premiums remained relatively strong for quite some time. Prices fell from the approximately $15 they were getting shortly after the buyout to $10 per and stayed there for I believe a couple months. Prices then slowly drifted downwards until where we are today with quad premium LLLL.nets near their expiration date being worth about $2.

As for L-L-L.coms, they went from at one point being a stronger market than LLLL.coms, to a market which now sees bad L-L-L.coms fetch around $3 (I just picked one up for that today). The only two short domain buyouts which have performed reasonably (in comparison to the performance of these other/past short domain name buyouts) were the LLLL.com and LLL.ca buyouts. LLL.ca have performed quite well since their buyout but are unfortunately restricted to Canadians. LLLL.coms on the other hand have been a rather mixed bag — one I’ve talked about many times which has seen percentage declines in value pretty much inversely proportional to the value of the domain in February 2008. It might almost seem counter-intuitive that the more expensive LLLL.coms would hold their value better in a recession than the cheaper ones, however that’s exactly what has happened — renewal fees are most certainly to blame for this.

And then we have today — talk about L-L-L.coms has really slowed down, most of the people investing in LLLL.nets and NNNNN.coms are doing so very cautiously, and pretty much everyone is completely avoiding L-LL.coms, LL-L.coms, and C–C.coms. And then we have the LLLL.com market which though it has seen some pretty steep declines since peak, has managed to keep a very loyal following. Many said the LLLL.com buyout wouldn’t hold — well it has for about 18 months now. Since LLL.coms bottomed out at $3000, they have started to recover a bit and now the minimum is somewhere around $3500.

And so short domain name investors ask themselves if now is the time to buy back in or if they should wait a little longer to see what happens next. Some people have already jumped in with both feet, others are getting their feet a little wet, and others still are watching from the sidelines.

You’ll rarely hear me call a purchase at an auction a good deal — they generally represent the current state of the market rather well, however I’m a bit surprised to see what a few CVCVs have sold for on NameJet lately.

I don’t like Network Solutions and I’ve largely stayed away from using NameJet myself because of the fact I don’t want to financially support  what Network Solutions stands for, however it sure is tempting to start using them when I see CVCVs selling for what I’ve seen them sell for lately…

TAXO.com sold on NameJet yesterday for $1650 — even if you’re not a fan of LLLL.coms or short domains, you can surely appreciate the development possibilities of this name, and to be frank, I’m a bit shocked to see this one sold for so much less than many of the other recent CVCV sales — 16 of the past 25 CVCV sales (without a Y or Q) since March have sold for more than TAXO. I wonder if this one had been put on auction around say, March-April if we would have seen different results. NameJet is by no means normally a cheap venue for CVCVs, with only 2 of the past 9 (going all the way back to February 17th) CVCVs of triple or quad premium quality selling for less than TAXO.

NameJet had one CVCV sale in April that would certainly qualify as being a “steal” — DIFE.com selling for $901 on April 15th. You have to go all the way back to 2006 to see a reported CVCV sale having sold for less. Since May of 2008, no other reported sales of quad premium CVCVs have been for under $1800, nevermind under $1000.

1. Leapfish/SwiftAppraisal.com/Estibot/Sedo/Afternic appraisals - Is anyone honestly stupid enough to believe an appraisal from anyone other than a fellow domainer? Scratch that.. Someone must be falling for it or those appraisal scammers and noobs quoting appraisals they’ve purchased would’ve gotten bored and stopped a long, long time ago. You can put noobs who ask for an appraisal and then curse you out when you tell them their domain is junk in this category as well. Thank God Leapfish is no more!

2. Premium - If you need to tell potential buyers that your domain is premium, it’s probably because it isn’t. Same can be said about noobs overusing the term ‘generic’. The only person you’re kidding here is yourself, and maybe some other noobs. There’s a sucker born every minute, right?

3. Rare - Cut the “every domain is unique” bull for a sec will ya? The only market segment where the use of the word has any acceptance is with short domains. A longer domain is more appropriately labeled ‘Premium’, but as I said in #2, it’s probably not premium if you need to tell other domainers that.

4. What a Steal! - If it was such a good deal, why didn’t you buy it? Couldn’t afford it or missed the auction? Okay, I’ll give you that. But how many times does a domainer call something a steal when he didn’t have the balls to put up his own money to buy it? Try growing a pair before calling it a steal.

5. Limited time offer - We all know you’re going to make up some BS excuse about why you’re still offering the domain for sale after this period of time has passed, so why even bother? Do you think I’m going to somehow be more interested in your domain if you make it a time-limited sale? If anything, I’m going to lowball you because you’re making it sound like you need the money.

6. End Users - Why don’t you stop talking about finding end users and actually start trying to find one? And if you’re selling a domain that has, and I quote, “so many potential end users,” I can only ask the question of why you’re selling the domain to another domainer rather than an end user.

7. Domain Development - The same can be said about domain name development as was said about end users.. Stop talking about it and start doing it. Actions speak louder than words.

8. He said / She said - Don’t you just love domainers who can’t think for themselves and repeat like a parrot everything a well-known domainer says? Kissing top domainer ass belongs here as well.

9. Anything about landrushes - I have nothing against new domain name extensions and you’re free to invest you’re money wherever you want to invest it… But do you really need to spam the domain forums to death about how this new extension you’ve invested in is going to overtake .com? Sheesh.. Pump and Dump at it’s finest right here folks! What’s really sad is that when you try to drive some reality into the equation, many of them just think you’re looking to poop and scoop or that you’re jealous for having “missed the boat”.  Pure speculation about “The Next Big Thing” belongs here as well.

Ian from Scotia Domains was kind enough to let me republish an analysis of eBay LLLL.com sales trends over the past 6 months which he’s done. Sales above $100 were removed from analysis — considered outlier sales according to Ian — that sounds like a good number to consider an outlier to me as well. When looking at this data, please keep in mind that this is eBay sales data, not an LLLL.com price guide. Prices on eBay are lower for a variety of factors I’ve covered in many recent posts. So without babbling on anymore, here’s what Ian’s comprehensive analysis of the eBay LLLL.com market revealed:

“All figures quoted below are based on trend lines calculated from weekly figures, thereby smoothing out irregularities.

Mean prices have fallen over the last 6 months at an average rate of about $1.31 per month - that’s a total of $7.86 over the period. The trend was a drop from $23.24 to $15.38, which is a fall of 41% based on the midpoint.

The corresponding figure for the last 3 months is even less encouraging. The average fall was about $1.94 per month.

Highs and lows were -

The best week - November week 2 - mean price $28.47

The worst week - March week 2 - mean price $13.24

Possible explanations -

1. Have average remaining registrations fallen? Yes, they have. This was particularly evident during April, when average remaining registration was about 4.3 months, compared to an overall November-March average of about 7.7 months. Overall the drop accounts for about 23 cents of the $1.31 monthly fall.

2. Has the quality of domains fallen over the period? I’ve seen no evidence to suggest that this is the case. Average quality has been pretty static.

3. Has the market been flooded lately? There were certainly a lot more domains on sale during April than previous months. Overall, the number of monthly sales has increased by an average 25 per month over the period, which is a whopping rise of 150 domains per month over the period. (The average monthly sales figure for the period was 466.) It’s impossible to calculate what effect this has had on prices. I feel it must have had some effect, but doubt whether it completely explains the fall.

Taking the above into account, that still leaves an average monthly fall of $1.08 at least partly unexplained.

Here are the percentile trends -

The 5th percentile fell from $10.02 to $4.54, a fall of 75% based on the midpoint.

The 25th percentile fell from $13.18 to $7.76, a fall of 52% based on the midpoint.

The 50th percentile fell from $19.16 to $11.22, a fall of 52% based on the midpoint.

The 75th percentile fell from $28.13 to $18.79, a fall of 40% based on the midpoint.

The 95th percentile fell from $54.27 to $40.89, a fall of 28% based on the midpoint.

It’s worth noting that the actual 5th percentile figure for the last week of April was just $1.18. However, the trend line smooths out such abnormalities.

In conclusion, it looks as though there has been a real price drop not completely explained by the recent flooding of the market. The fact that April week 4, when most of the flooding happened, wasn’t the worst week over the period bears this out.

Finally an acknowledgement. My previous posts in this thread were based on data I collected myself. However, the above analyses were mostly based on data posted by Nem0 both here and (I assume) at llllsales.com. Thanks for doing that Daniel. I’ve repped Nem0 for his considerable efforts gathering and posting all this information. If you find this post useful I ask that you do the same.”

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Addition from Reece: Daniel, who goes by the username Nem0 on Namepros, has to be thanked for all the eBay sales he’s tracked and reported over the months — without him, none of this would be possible and all price guides and suggested prices would be incomplete. Like Ian, Daniel also sells LLLL.coms on eBay.

Be sure to check out Zenergize Auctions and Scotia Domains the next time you’re looking for LLLL.coms on eBay!

The one .tel I would have liked to have gotten was LLLL.tel but it was taken before I could get around to registering it unfortunately.. Namepros has a fairly active .tel domain name discussion thread in which a lot of new domainers are optimistic about it’s future. I must admit, I’ve been too busy to really follow the extension and still can’t really understand how exactly it works and how one would go about monetizing a .tel domain. Apparently some of the better .tel domains are receiving traffic (from other domainers, no doubt) — I wonder if anyone’s been having success converting visitors to sales. According to a .tel thread on Namepros, it seems like LLL.tel domains are selling out pretty quickly (note: I am NOT saying they make for a good investment, merely making an observation), especially premium LLL.tels.

Over on the .mobi front, interest in LLL.mobi domains seems to have picked up since they became available for regfee — there’s even talk of another LLL.mobi buyout. I’ve always thought that if someone were a believer in .mobi, they should be a believer in short .mobi domains — who the heck wants to type a long URL on a cell without a qwerty keyboard? Dotmobi is still fighting an uphill battle against the great and ever-powerful m-dot which seems to be growing in popularity among corporations. I think .mobi will do okay for itself — at least with the people who decide to develop them, however I doubt we’ll see the high valuations we saw once upon a time some 32 months ago. According to some, .mobi is getting overtaken by .tel — I don’t really understand that argument as neither of the two extensions have anything in common, however it’s seems there’s a lot I don’t understand, or so say the people who I tell that their domains are worth regfee

The mobile web is still chugging along and the one thing that will certainly be a winner is short domains in established extensions. Short domains in CNO have all taken a pretty big blow over the past year, along with most of the domain name market, however there are still endusers out there for them and I don’t see the demand for short domains going anywhere but up as the world becomes increasingly mobile. The popularity of Twitter pretty much tells the story of where our world is heading… People are busy, they don’t have a lot of free time, and when they want information, they want it in a quick and concise package.

I can’t speak for other people, however I actually switched over from using Webcrawler to using Yahoo in the 90s because Yahoo seemed to deliver just as accurate of results and took less time to type-in. If you go out shopping and two stores have the exact same good for different prices, which do you choose? Time has value, I value my time, and if I can get just as good of information with less effort to get to it, I’m going to do just that and I don’t think I’m alone in that regard.

I mentioned yesterday that I’ve started a little experiment to get a better idea of how the eBay LLLL.com market differs from the rest of the LLLL.com market. With domains ending at completely random times, it’s not surprising we sometimes see low sales and with the millions of people on eBay, it’s unsurprising that we sometimes see sales well above what a short domain name investor would likely pay. Below you’ll see my experience using eBay over the past few days. It’s quite obvious I’ve been losing far more auctions than I’ve won — I place my bids based on both what I think I could get in the current market for the domain and how much work would be involved in selling it. Granted I am looking to resell these domains at a profit in the near future, I probably shouldn’t be winning many auctions (and indeed I’m not), as if I were winning most of them, that would probably mean I’m paying near or possibly even above fair market value. About half of my bids are quite close to the ending price, the other half are for the most part well below it. I have edited the pages a bit to make them fit below, however all numbers are the exact sale prices and bids I placed on those domains. There are 4 images below (hover over starting from the top down and observe the 4 different URLs) which you can click on to enlarge so the details will be a bit easier to read. The final image (the one which has green prices) are the domains I managed to win. Is it worth all that effort to get a few good deals on eBay? I guess that’s something you’ll need to decide, but it sure makes for something fun to do when you have a bit of downtime. Looking at the sales numbers, you’ll notice that I tend to be closer to the actual sales price on the bulk lots than on individual lots — as the number of LLLL.coms in a lot become larger and larger, the closer we’ll get to the expected outcomes we know based on past sales history. With a single sale, it’s hard to account for factors such as a particular domain being “perfect” for a development project someone has in mind or an acronym they like.

With LLLL.coms and some other short domain name segments such as L-L-L.coms and LLLL.nets so much cheaper than they were in the past, knowing when a domain expires is more important than ever. When I look at a short domain, I always try to imagine it’s value to me if it were expiring tomorrow — how much would I be willing to pay for the domain if I had to immediately renew it? After that, I’ll look up when it expires and determine a price that I’m willing to pay for the domain largely based on that..

Now I completely understand not listing the expiration date if your domain is expiring tomorrow, next week, etc — it’s not going to add any value to your domain, as people are just going to pay what they see the domain being worth as I described above.

But what about when the domain is 6 months, 12 months, 18 months from expiration? If a short domain, say, an LLLL.com is worth $10 to you if were to expire tomorrow and it has 18 months until expiration, you should be willing to pay somewhere around $20-$22 for it, whereas if that domain does expire in the very near future, you should stick to your original assessment.  Seems like basic math, right? If it’s $8 per year to renew the domain and the seller of the domain has paid for the domain’s renewal in advance so that the domain has 18 months from expiration, then I should be willing to pay about 1.5 years of renewal ($12) premium on that price to compensate for those future savings. It might not be $12 for you — maybe you’re buying the domain to try and develop a website and plan on dropping it if it doesn’t work out, however one thing we can all agree on is that any cheap domain is going to be worth more if it has a long ways to go until expiration…

So with that in mind, why do so many sellers not list the expiry date on their short domains? Bottom line is that a seller can say all he wants about “check the WhoIs before buying”, however most of us  often don’t have time to do that — if I’m looking at a bunch of different domains from a bunch of different sellers, eg. like on eBay, am I really going to take the time to check each and every domain’s expiration date? So what do I do? I place my bids as if the domains were expiring tomorrow — if I win, there’s no way I’ll be unhappy with the outcome and if I lose, well that’s that. On a $10 domain, it being renewed 18 months in advance has essentially doubled the value of the domain — why would you settle for potentially losing 50% of what you could have made just because you chose not to list the expiration date? How many potential sales has this cost you? I know that when I see a couple cheap domains I consider relatively equal in quality, I’ll rarely go with the domain expiring soonest — there’s nothing wrong with buying a domain expiring soon so long as that is factored into the price you’re paying and with all else being equal, the domain closer to expiration is essentially a more expensive domain. Worse still are those who try to “guess” when their domain expires and are often horribly wrong. I recently saw an LLLL.com on eBay which the seller advertise as expiring in 2009 which actually expired in 2011 — oops! If you’re not prepared to put in the effort to get the expiration dates listed, at the very least don’t guess what you think they are.. If they expire sooner, you’ll potentially anger the buyer and if they expire later, you’ve likely caused yourself to achieve a lower sale on these domains than you would have even without listing the expiration date — at least some of the people browsing your domain sale will check and find out it’s real expiration date if no date is given in your domain listing.

I know that plenty of domainers still haven’t used MassPay or don’t even know what it is, so I’m going to use this post to explain it. First off, let’s see what PayPal has to say about MassPay. For starters, PayPal MassPay allows you to send out multiple payments at the same time. Suppose you made a thread on Namepros offering to buy LLLL.coms at $10 each and 20 different people decided to sell — would you really want to go through PayPal 20 times? While MassPay does take a bit longer to do for an individual purchase, it can lead to some pretty substantial time savings if the number of purchases you need to pay for is large. But that’s not all… Here comes the good part: fees when using MassPay are capped at the lower of 2% or $1and paid by the buyer — you can do a $100,000 transaction through PayPal MassPay if you want and it’ll be just $1 for you and zero for the seller receiving payment!

To send payment via MassPay, the buyer needs needs to have a verified PayPal account and MassPay cannot be funded via a credit card, so the risk of a credit card chargeback is zero. Furthermore, it’s not possible to a MassPay payment reversed — I contacted PayPal about this to confirm as there’s been some different opinions going around regarding this. It looks like the only situation you may have to watch out for would be in the case of a stolen PayPal account. As for sending a payment via MassPay, the best guide I’ve come across is still the first one I came across — Stian’s How to do PayPal MassPay payments and avoid fees. Sending payment by MassPay really is a nice thing to do for a seller, even if not explicitly requested — one dollar and a minute of your time might very well save the seller $XXX. It’s worth noting that not everyone is allowed to use MassPay, so if a buyer isn’t paying you by MassPay, it’s quite possible that the reason for that is because he doesn’t qualify to send payment by MassPay.

I’ve been quite surprised by the number of domainers I’ve seen posting on domain name forums lately asking questions about what are there odds of getting caught or what’s going to happen to their domains if they get caught… I understand that some people value their privacy more than others and I have nothing against people who would prefer to protect their details from being publicly available, but I really can’t say the same for people too cheap to pay for private registration who provide inaccurate WhoIs information.  To think there are domainers out there who would jeopardize the very safety of their domains for all of a few dollars per year… But what are the chances of getting caught they say? I don’t know but why take that chance when you don’t need to? Beyond having your domain reported for having incorrect WhoIs information, how do you think a panelist is going to view your decision to provide false WhoIs information? I’m guessing that if there was even a hint of doubt in his mind that the complainant had a case that we’re now going to see the complainant win. When your domain is registered with incorrect data, it just kind of makes it look like you have something to hide… I can understand why many domainers who’ve been around awhile opt for private registration — certain types of domains (like LLL.coms for example) will literally get you spammed to death if you own a decent amount of them.

Most of the domainers I’ve seen asking questions about private registration likely don’t have $XXXX+ domains however, more like $100 domains or domains they just registered. I’m not sure why many of these new domainers are afraid of having their details exposed.. If anything, for someone just starting out it might be a benefit and may result in an enduser sale or two you wouldn’t have had otherwise — how is an enduser going to contact you and express their interest in a domain if your contact information isn’t available? Maybe there’s a few of them out there, however I’m not aware of many endusers who’d go to the lengths domainers would of getting around stuff like private registration if there was a domain they were interested in waiting on the other side. I don’t know what the rules are elsewhere, however here in Canada we have a recently implemented national Do-Not-Call list which one can opt to be part of. — If a telemarketer is dumb enough to disregard that and call you, it might very well be the most expensive phone call he’ll ever make, with fines of up to $15,000 per call.

This blog gets about 1/4 of it’s traffic from Google and was getting about another 1/4 from type-in traffic prior to this domain’s development. I don’t know how many readers out there are new to the domain name world, however I felt it was about time I wrote an introductory post about investing in domain names. If you’re new and would like to see more posts written like this one, please leave me a comment or send me an email. If you’d like to see any or more of a particular type  of domain name related post, I can probably work that in sometime in the future as well.

I often get asked by new domainers what they can do to start making money with domains. Now there’s a lot of things a domainer would need to learn in most domain name segments — how to value domain name traffic, what revenue multiple to use on different kinds of domains, how to go about getting finding good domains to register, how to track expiring and expired domains and where to buy or take part in domain name auctions on expired and aftermarket domains. Then, if you want to make money with your domains through other ways then selling them, you’ll need to learn how to park domain your domains and once you have a decent domain name portfolio,  you’ll need to find a good domain name parking company that’ll pay you a respectable revenue share on the money your domains earn through parking…

I wrote a introductory guide about 18 months ago on investing in domains –not nearly enough to make you into a domaining superstar, but the information is still accurate today, as it was back then and should at the very least give you a glimpse into some of the knowledge you’ll need to acquire if you want to be the best domain name investor you can be.

If you buy a domain like Sex936.com (which by the way is registered) and ask for an appraisal on a domain name forum, probably the first thing people are going to tell you is that letters and numbers don’t generally mix in keyword domains. Same goes for L33tspeak — some people think “it’s cool” to register domains with numbers replacing the letters.. The only person who will most likely find these types of domains “cool” is your domain name registrar — as far as they’re concerned, “it’s cool” that you’ve decided to register your domains with them! Exceptions apply with everything of course — a name like N00b.com would certainly be worth registering if available, but a term like that pretty much borders on being a word.

Some people choose to invest in foreign languages.. My advice: Proceed with caution unless you speak the language yourself. I speak French and find it quite funny some of the words domainers have registered thinking they meant something else. As a general rule with popular languages (not talking about Internationalized Domain Names here), if it’s supposedly a category killer term and it’s available in .com, it’s probably because it isn’t actually a category killer term. If we take French as an example, a verb may have many different tenses, so even if it does mean what you think it means, it isn’t the term commonly used, and hence is likely of little value. Think of it like synonyms in English — I could in a sentence say: “That’s good, great, excellent, incredible, fantastic, phenomenal, prodigious”… They can all mean more or less the same thing — that someone is happy or very happy with the outcome, or that someone is impressed or very impressed.. As a domainer however, one isn’t just concerned about what something means in a dictionary, — as a domainer, we’re concerned with what it means to your everyday person and more importantly, what they’d be most likely to use if given the choice, because they always have that choice when doing a search on a search engine like Google or when typing in a web address. Ultimately, we’re hoping they end up landing on our site.

You know, I started this post with the title “Becoming a Better Domain Name Investor”, however this has really morphed more into a post about what not to do if you want to be a good domain name investor — I guess it’s stuff you’ll have to learn just the same and if you learn it now before buying 50 or 100 worthless domains like most domain newbies do, then it was well worth reading. So on that note, I’ll add one more thing not do when first investing in domain names and that is: Don’t invest in speculative domain name extensions. Some experienced domainers have made a lot of money investing in extensions like .mobi and .tv and I’m sure in time we’ll hear about a few who had similar success in .tel, however these are not newbie-friendly domain name extensions. Avoid them at all costs until you get a much better understanding of how to invest in these markets. Similarly, be careful with ccTLDs. A lot of people (including me) like to turn domaning into some sort of statistical science, where one can analyze data, calculate probabilities, and attempt to predict outcomes. That’s all fine and dandy, but what we do have to remember are the circumstances under which those domains were sold. Most experienced domain name investors will tell you that final prices seen in domain name auctions are a much better proxy of the market than private sales, and they’re right. If someone comes along and offers $100M for Sex.com next year, that doesn’t mean similar adult domains are also going to see similar price rises (it doesn’t mean they won’t, it just doesn’t mean they will) — this may have been a highly motivated enduser who has a vision for this particular domain. The big problem with ccTLDs is that we don’t see a whole lot of sales in most of these extensions, so what ends up happening is that people start mixing private sales data together with auction data to arrive at conclusions of where the market is at, and that’s a dangerous path to go down. If we take a short domain name example, last year iREIT (a domain name company) sold several LLL.coms for under a grand when the going rate was about $7500 — this obviously doesn’t mean LLL.coms overnight fell by $6500, rather, it means that whoever priced out these domains either made a typing error, or was utterly clueless about how much these domains had appreciated over the past few years. This is basically why a private sale means nothing.. If iREIT would have accidentally put these domains on auction for $500 each, they would have all ended up with $7500+ prices, because that was what the worst of the worst were going for and someone would have been willing to pay it. Another thing to remember with ccTLDs is that even when there are big sales, in some of the more obscure ccTLDs, they may be few and far between. In dotcom, it’s pretty easy to think of one domain as being better than another, and so on.. If you can find enough sales data in a small window of time, you can get a pretty good idea of the value of that domain which has yet to be sold but whose quality you estimate is somewhere sandwiched in between.  In ccTLDs however, it might be years before you see similar names sell — even more popular ccTLDs like .ca don’t see a whole lot of reported sales outside the short domain name segments like CC.ca and LLL.ca.

Not having a lot of domain name sales data out there can be both a good thing and a bad thing. As a newcomer to the domain name industry, it’s most certainly a bad thing, however as you become more familiar with this extension, you may be able to profit from the fact that some people aren’t clued in to what domains are worth. If we take short domains as an example, it’s very easy to price cheaper LLLL.coms, up to the $500 or so range — I’ll be pretty much give or take 20% one hundred percent of the time. Why? Because I’ve observed thousands upon thousands of past sales for domains selling in this price range, so I have a fairly good “feel” for what a particular LLLL.com is worth. But as the price starts going higher and higher, there start being fewer and fewer sales. CVCV-type LLLL.coms which are greatly overrepresented in $1000+ LLLL.com sales make up but 2% of the LLLL.com market.. I’m working with 50 times less data than I am with the sub-$1000 group. This in itself explains why sales data is all over the place — how does a domainer clue himself in to what a domain is worth when there’s so little data out there. This is exacerbated by the fact that pronounceable LLLL.coms are already the most difficult ones to price.. If any segment should be having 50 times more sales data than another, it’s CVCVs, because there are so many more factors to consider in this particular segment than in other ones with many of them such as brandability and pronounceabilty being entirely subjective and opinions varying greatly from one English speaking domainer to the next.

While all the things I’ve mentioned above are important and it’s unlikely you’ll be a successful domain name investor unless you understand at the very least most of them, there’s one thing a domainer really can’t go without knowing, and that’s domain name sales comps. How would you go about appraising estimating the value of a domain otherwise? Like pretty much everything we do in life, we learn from experience and that means you’ll probably pay more for a few domains than you should have and sell a few domains for less than you could have gotten — was it just an expensive mistake will you learn something from this experience that you’ll remember while domaining in the future? If you aren’t already familiar with these 3 sites, you best familiarize yourself with them now: DN Journal, DN Sale Price, Namebio. The large majority of reported domain name sales can be found on one of those 3 sites. There’s not much that can be done about private sales — if you want to learn more about domain name sales in a certain market segment, try to become buddies with someone already investing and having success in the market segment you’re interested in and see what you can learn from him.

Perhaps the biggest mistake that newcomers to the domain name world make is trying to tackle everything too quickly. Things take time and there will still be money to be made on the Internet a month from now just as there is today — the only difference between whether you start investing on day 1 or whether you put in a solid month of research is that the person jumping in with both feet is probably going to lose a very significant portion of what he invested and worse, is likely to learn very little because he doesn’t even have an idea about what there is to learn out there. This is the kind of guy that when you give him a low appraisal on his domain, he thinks that you’re just saying that because you want to buy it… Try to do the guy a favor and that’s what you get! Bottom line is that all the information is out there, all you need to do is read, read, and then read some more. And as I said about jumping in with both feet, the same applies to domain name extensions — start with one, preferably .com as it’s the one where you’re most likely to see at least some of your money back even if you do screw up when investing. Find yourself a domain name niche, a way to make money, and repeat what works for you. I was talking with one newer domainer about this earlier today — even in a very small niche such as LLLL.coms, other short domains, or geo domains, you can most certainly make a living off of it if you know what you’re doing. The great thing about these smaller niches is that they’re so much easier to become an expert in than something broad like trying to understand the value of all .coms. If you go that route, all I can say is good luck, because you will need it! I talked earlier about how some people are having significant success even in extensions such as .mobi and .tv which many domainers have written off as failed extensions — there’s money pretty much anywhere in domaining if you’re at the top of the game.

Don’t fall into that circa 2007 trap that being a good domainer means you have to own 10,000 domains — whatever amount of domains you choose to invest in at the end of the day, just make sure you’re fully aware of the renewal fees that’ll accompany those domains each and every year. Like I said earlier in this post, this isn’t anywhere near enough information on domaining to make you a successful domainer, but it’s a start — hopefully you know more now than you did at the start of this post. If you found this long and boring, I’m afraid domaining probably isn’t for you, because you’re going to need to read 100 articles this size to really understand most of what is out there — every domainer is still learning and never stops. You can’t just put in a few hours your first month and stop — you’ll have to constantly keep up with sales results to make sure you aren’t paying too much or selling for too little. I’ve made a lot of money in the past buying domains from sellers who offer to sell their domains for too little. I’m not a lowballer — I don’t go around making cold calls or sending mass spam via email hoping to find a non-domainer I can score a quick buck off, however at the same time, I’m not going to offer to pay more for a domain than the person currently owning it is asking for it. Economically speaking, you must value a good as being worth more than the amount of money it cost, else you wouldn’t buy them. If you’d be willing to pay an 5 bucks for the good, would you give that consumer surplus of yours to the producer just because you would have been willing to buy it if his price were 5 dollars more? I wouldn’t either.

Do yourself a favor and enumerate some of the things I mentioned as being crucial to domain name investing (second paragraph) and make it your goal to understand at least one of them to a level where you could have a casual conversation with a seasoned domainer without him “dumbing down” every sentence to make it comprehensible. Within a couple months, you’ll know most of what you’ll need to know. Some things you do need to learn through experience, however you can learn a lot from the experiences reported by those who came before you. As I’ve said many times in this post, all the domain name information you could imagine is freely available. Nobody is going to hold your hand, however plenty of domainers are happy to help. Have a question? Namepros has over 3 million posts on domain names — make use of their advanced search function and key in words such as “parking”, “backorder”, “expired domains”, “traffic”, etc.. You can find pretty much any information related to domaining you want between Namepros, DN Journal, DN Sale Price, and Namebio.

Add this blog to that list if you plan on investing in short domains

One argument I saw presented by a domainer on Namepros today sparked the idea for this post.. It went something along the lines of: “If more domains are registered, then less domains are available, so Economics 101 suggests domain name prices will increase as the supply of available domains decreases”..

The problem with this argument? This isn’t an Economics 101 class, this is real life. In real life, things are just a tad bit more complicated than Economics 101.  With domain names, the supply of available domains in any extension in essentially infinite — with ICANN allowing domains to be up to 63 characters long and there’s what, 37 possible characters (26 letters, 10 numbers, and hyphens)  you could use for each of those characters (of course no more than 2 hyphens in a row, nor can it start or end with a hyphen but I’m way too lazy to factor that in and it wouldn’t change the end result in a meaningful way), you’re looking at 37^63 possible combinations, which put into my calculator gave roughly 626 followed by 96 zeros.  So no, I really don’t see a supply and demand argument holding much weight here. One could say that the registration of good domains could drive up the price of good domains (eg. because they would now have to be purchased on the domain name aftermarket), however the total number of domains registered in a TLD is not why one TLD has more value than another, and ccTLDs like .ca are proof of this. Similarly, we can look at past bubbles like .mobi and observe that while the number of registered .mobi domains has decreased, it certainly hasn’t decreased by near the extent that aftermarket .mobi prices have.

Unlike Economics 101, we’re not talking about a supply/demand curve for a single good — every domain is unique and many endusers out there will only be interested in one or maybe a few names, regardless of whether there are 100,000 domains registered or 100,000,000 domains registered. Some people will choose to register a domain for regfee just the same — these people are clearly unaffected by the diminishing supply of what us domainers would consider to be good domains.

If I go out and buy 1,000 (good) domains related to real estate, it might drive up the value of some real estate related domains (supply and demand would be in effect here due to the fact there is a limited amount of good real estate related domains), however it would have no effect whatsoever on the rest of the domain market.

More registrations doesn’t necessarily mean more demand. In domain land, more registrations (and this is often the case with new extensions) may merely mean more speculation. Is that a real type of demand? Economics 101 largely covers consumable goods, not speculative intangible items like domains in new domain name extensions. Perhaps we should consider it a fake demand — a demand which is not built on one’s desire to purchase the good for oneself at such a price but rather to resell it at a profit to someone else, who will do the same,… Sound familiar?

So how do we relate this post to short domains? Simple. Domain name buyouts are not what give short domain name market segments real value, they’re merely something psychological which for one reason or another often causes domainers to behave irrationally (not unlike what we’ve seen in the past in the stock market…). Being realistic, why would LLLL.coms have been worth double what they were worth pre-buyout within a couple weeks of having sold out? Had they really become so rare that buyers now needed to pay twice as much to acquire them now? Threads buying and selling LLLL.coms were everywhere. Many of those who bought in pre-buyout expected prices to rise once LLLL.coms were no longer available for regfee. If enough people share this same belief and all decide not to sell, they’re limiting the supply of LLLL.coms available and now supply and demand does come into play and prices start to rise. The one thing about domains, stocks, and pretty much any other appreciating asset is that everyone has a price at which they’d be willing to sell. As LLLL.com prices rose so quickly, many people were encouraged not to sell their LLLL.coms, despite having had the possibility of selling at several hundred percent profits. As time went by, more and more people were buying and fewer and fewer people were selling. This lack of supply pushed LLLL.com prices to the $55 minimum wholesale I reported on in February 2008. What happened afterwards? I think $50 was the magic number for a lot of people. I know that back when I sold out, I was worried about what might happen above the $50 point, but felt if it got well past the $50 point, we probably wouldn’t run into problems until the $100 point. Either way, I cashed in my chips and many other people tried to. The thing is, when we have a whole bunch of people happy to sell at $50, all of the sudden there’s more sellers than there are buyers, and one seller decides to lower his price to $45, and soon enough another one is willing to sell his LLLL.coms for $40, and so on, and so on…

Moral of the story: Buy domains because you believe in them, not because you think you may be able to resell them to someone else for more. Don’t get me wrong, I’m not saying domain flipping is a bad idea or that there isn’t money to be made doing it — all I’m saying is that it’s probably not the best strategy to revolve your entire domain business around. As most domain flippers have found over the past year, successfully flipping domains at a profit to other domainers has become a whole lot harder today than it was a couple years ago.

My goal was to make 500% on my LLLL.coms and I ended up making a bit more than that. One thing that happens all too often in the domain business is that people get greedy — you see something rise, and rise, and rise and think to yourself “this is going to keep going on forever”, maybe even charting out the monthly growth and figure out how many months until you can retire… It doesn’t quite work that way unfortunately. When everyone is talking about a market and even those who didn’t believe in it are now actively investing in it… That’s when it’s time to think about getting out of the market.

There have been a few short domain name buyouts over the past few years which have collapsed due to the fact that more emphasis was placed on buying out the short domain name market segments than on examining the market fundamentals. At the end of the day, us domainers survive because of endusers and advertisers (”domain parking companies”). Most of us domainers couldn’t develop anything more complicated than a blog if you gave us a month to put something together and most of us are too lazy to learn. I don’t mean to give a bad name to domainers here, but how many people came into domaining because they were looking for a job harder than what they were previously working? I certainly wouldn’t do that. The money is good but what’s even better about domaining is that you can work whenever you want. Isn’t that the real reason most of us are so attracted to domaining? Who wants to work a 9-5 and punch a clock everyday for forty years? I certainly don’t. I was also attracted to domaining myself because I like doing what I feel like doing, not what other people tell me to do. I think a lot of domainers have this quality — if they don’t feel like learning web design, they’re not going to do it, if they don’t feel like answering emails one day, they’ll get to them tomorrow. Maybe they feel like spending the day chatting on Namepros. Whatever floats your boat, right?

One unfortunate quality I’ve noticed many domainers have is that they’re always looking for shortcuts to getting to where they need to go. This might mean taking uncalculated risks or investing more in highly speculative domain name market segments than they can realistically afford to lose. By far the worst quality of all in my opinion is greed however. Domainers are hungry for money — nothing wrong with that, but when that greed starts clouding your judgement and leading you to make irrational decisions, … That’s not a road you want to go down. Greed is what kills most domainers — be it with speculative bubbles, be it replying to interested endusers with way too high of prices or being too stubborn to realize that time is money and maximizing profit on every transaction isn’t necessarily the most profitable way of conducting business. People talk about their return on their investment, but what’s most important is the amount of time it took them to earn that profit. Consider an example:

Domainer #1 invests $10,000 in short domains, being careful about what he buys and being reasonable on what he sells for. For the next 6 months, he averages 20% profit per month.

Domainer #2 invests $10,000 in short domains, also being careful about what he invests in, however Domainer #2 has his mind set on making as much money as possible in as few trades as possible. So Domainer #2 decides that rather than waste time with a whole bunch of little domain trades for minimal profit, he’s just going to buy one expensive domain and try to resell them at a huge profit. After 6 months of trying, he succeeds and resells the domain for $25,000.

Who ends up ahead?

Let’s look at Domainer #1 again.. He has $10,000 on Day 1 and since he’s earning 20% per month, he’s going to have $12,000 ($10,000 x 1.2) at the end of month 1. By the end of month 2, he has $14,400 ($12,000 x 1.2). By the end of month 3, he’s up to $17,280 ($12,000 x 1.2). By the time the 6 months are up, Domainer #1 has $29859 — about $5000 more than Domainer #2.

That’s the power of compounding. Banks like to give you fancy little pieces of paper that say something along the lines of “If you this amount of money by such and such an age and earn an annual return of X% per year, you’ll be able to retire with…” I must say, banks do a pretty good job of not mentioning the difference between a nominal interest rate and a real interest rate. If you discount the inflation bit however, what they’re saying is true — provided you have enough time, a small amount of money can grow into a very large amount of money at a reasonable rate of return. Getting back to domaining now, we can see that in some cases, it may make sense to take smaller profits and reinvest them rather than holding out for that one big sale. If we were to keep running this little example, Domainer #1 would have just over $89,000 after just 12 months. Think Domainer #2 is going to manage to turn $25,000 into $89,000+ by selling only a couple domains at a large profit? I’ll place my bet on #1.

As Warren Buffett once famously said: “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” If you truly believe in the long term viability of a short domain name market, why would you have any problem holding your short domain name investments long term if that’s what it takes to realize your goals?

Jeff posted a comment in my previous short domain name post about how he saw the future unravelling for the .in and .cn extensions as Internet penetration continues to increase in emerging markets such as India and China. If Jeff were investing in short domains (and Jeff, please feel free to correct me here if I’m wrong), my guess would be that he’d be investing in short .in domains.

When it comes to short domain name investing, there may be a few obvious bad choices (eg. 4 letter .ws domains), however there’s also plenty of good choices — both in .com and in other domain name extensions. While I do spend most of my time blogging about short .com domains, these are by no means all that is out there and diversifying your short domain name investments into ccTLDs is not only a great way to add variety to your domain name portfolio and expose yourself to a new domain name market but also a great way to reduce the investment risk associated with your short domain names — some may say putting a few bucks in keyword domains may not be a bad idea and it may very well not be, however us true hardcore domainers are going to stick with using other short domains to make our short domain name investments safer short domain name investments. The converse of course also holds true — those short domain name investors currently invested only in short ccTLD domains would be wise to add some short .com domains to their portfolio — preferably some more expensive ones, such as a good CVCV or LLL.com. The nice thing about both good CVCV and LLL.coms is that they’re much more established and liquid short domain names than many of the other short domain name segments out there. If you needed money to pay off some debts, which would you rather sell: 1 premium LLL.com for $7500 or 500 weaker LLLL.coms for $15 each? Unless you’re lucky and manage to find a buyer for all 500 or a few bulk buyers, you’ll probably be spending a whole lot of time communicating with all the buyers and pushing or transferring the domains to their accounts..

Seeing as this website is www.LLLL.com, I’m of course not going to recommend you completely ignore an entire short domain market, however it should be pretty obvious to most short domain name investors that the cheaper LLLL.coms aren’t the best domains to offload in bulk at a whims notice. Knowing this, a thoughtful LLLL.com investor who’s invested in cheaper LLLL.coms will diversify his portfolio in such a way that he has both a collection of more speculative short domains, along with short domains which are much easier to liquidate for $XXXX should the need arise. Not only do more expensive short domains tend to be easier to liquidate but they also tend to have more stable prices — that may be a benefit or a downside depending on what kind of a ROI you’re looking for. You’re not going to get rich anytime soon putting money in LLL.coms or CVCVs and reselling to other domainers, but at the same time, you’re probably never going to have to worry about your investments being worth zero — they might decline in value, but it’s highly unlikely these 2 classes of short domains will be of no value at any time in the foreseeable future.

Cheaper short ccTLD domains experience this same liquidity problem as do cheaper LLLL.coms with regards to bulk short domain lots and hence are best kept to a certain percentage of one’s total short domain name investments. It should be noted that when I talk about liquidity issues with short ccTLD and LLLL.com domains, I’m referring to the difficulty in obtaining something near full reseller value if trying to offload thousands of dollars worth of them — the small short domain name investor or the person for which short domains make up but a small fraction of their domain name investments won’t have anything to worry about when it comes to liquidity in either domain name segment.

Liquidity of course need not come in the form of domains. As they say, Cash is King. Investing that money in stocks at this time probably isn’t any safer than putting it in domains (maybe less safe if U.S. bank stocks were on your mind ).. Having at the very least enough money put aside to pay for next year’s renewals is in my opinion a must and this isn’t something that will necessarily come easy to many short domain name investors — if you have 2000 LLLL.coms, you’re looking at an approximately $16,000 per year for domain renewals. As I’ve recommended in the past, it’s a good idea to start spending money renewing your domains ahead of time if you know you plan on renewing them. If you can’t touch the domain renewal money (because you put it immediately on renewals as it comes in), you won’t have anything to worry about so long as you stick to the plan. If your short domain name portfolio consists largely of buyout LLLL.coms, you probably have a disproportionate percentage of domain renewal fees coming due somewhere between July and November, so don’t pay your renewal fees month by month and then gasp in shock when you realize you should have been saving much more all along, as there are now twice as many domains to renew! Open your domain name accounts and figure out when all your domains expire. Put it into Excel or another program which allows for easy manipulation of data and sort them by expiration date. Figure out how much money you’ll owe in renewal fees for the year and then for each month. Figure out a budget plan on how you’re going to come up with that money — eg. If you have $600/month worth of renewals the first 6 months, followed by $1200 in the next six, it’d be wise to make it a goal to put at least $900/month aside for renewals from Day 1. VeriSign will likely be increasing the wholesale price on .com domains another 7% (which means most likely so too will be your domain name registrars) in October 2009, so paying for renewals early may very well be the best investment you can make at the moment.

It’s pretty incredible how often I’ll come across a short domain I’d have no idea how to develop making us of an acronym and find out that someone’s found a way to make it work. As many of the short domain investors in weaker lettered LLL.coms and LLLL.coms will tell you, English isn’t the only language the world speaks. A short domain name post on Namepros shows that while the English world may revolve around what us short domain name investors refer to as “Premium Letters”, other languages do not. I had my own doubts about the mythical “J/Q/X/Z loving Chinese enduser” until I ended up with one such enduser sale of my own. These foreign language short domain name markets are only going to get stronger as time goes by and worldwide internet penetration continues to increase. What was China from an economic standpoint 50 years ago? India? Look at them now and imagine their future. I see 2 billion more potential endusers for our short domains someday..

In the Namepros post linked to, we can clearly se that there are a multitude of high quality German words which can be made out of semi-premium letters like K, U, V, and W, and even the bad letter Z has surprisingly more acronyms than one (not knowing the language) might otherwise have expected. For the English speaking domainer, this short domain name post on acronyms for short domains, is mandatory reading, as is using AcronymFinder.com and, surprisingly, I’ve even found UrbanDictionary.com to be indispensable. It’s almost overwhelming how many acronyms are finding meaning or new meaning with someone, somewhere, each and every day.

As if this wasn’t a large enough market already, let’s now consider abbreviations contained inside short domains. RXD.com might seem like not the easiest short domain to make an acronym for — eg. what is that X going to stand for? But, what if we take “RX” and have it symbolise what is very well known to be an abbreviation for prescriptions? Now RXD.com can be understood to mean “Prescription Database” and could be made into a site similar to Drugs.com. Farfetched? I actually used RXD as an example because I know of someone who’s used RXD to symbolize just that.. Take a look at RXD.mobi. As can be seen, this short domain has been transformed into a prescription database intended to be viewed on cell phones — hence the use of the .mobi extension. You can get an emulation of what it would look like on a cell phone by visiting Ready.mobi. Do note that Alexa rankings for mobile websites are highly inaccurate due to Alexa not counting mobile visitors in their calculation of traffic rank.

So we see that short domains containing RX can often be made into meaningful short domains, even in English, despite the presence of the letter X which has very few English acronyms. Any other examples? How about NY for New York? That’s right, we can make short geo domains by taking city/province/state/country abbreviations and making them represent some of the letters in the domain. A 5L.com like say, NYMag.com can suddenly mean “New York Magazine” and HKAT.com might mean “Hong Kong At Night” (eg. might make for a great directory of Hong Kong night clubs). With 50 states and countless cities in the United States alone, there are far more examples than I have time to give. Aside from RX and geographical abbreviations, other popular acronyms include but are most certainly not limited to: HQ (common abbrevation for headquarters), MD (medical doctor), FX (foreign exchange or effects / special effects).

Some of my personal favorites are LLLL.coms have C, I, L, and lastly, O as a fourth and final letter in an LLLL.com. An LLL.com will usually cost somewhere around $3500-$15000, whereas an LLLL.com with 3 identical letter, followed by C, I, L, or O can often be had for 1/50th the price. So what’s so great about C, I, L, and O? Don’t they make for great abbreviations of Corporation, Incorporated, Limited, or Online? So we’re in a recession, right? Money is tighter than it used to be, the big boss doesn’t want to spend $4000 on a short domain like PQT.com (which is what it sold for on April 30th). Any alternatives? How about PQTO.com (PQT Online) which sold for $80 on April 23rd? GJR.com sold for $4199 at the latest GreatDomains auction, yet GJRA.com (GJR Associates?), sold for but $90 a few months back. While OFJ.com went for $3777 in April, OFJI.com (OFJ Incorporated) sold for but $55 back in February. Similarly, MQV.com sold for $3000 in April, yet MQVL.com (MQV Limited) sold for $70 back in July 2008.

It’s hard to find too many examples here, as both domains need to have sold within a similar timeframe at public venues or having been reported as sold. Nevertheless, I think you’ll find most owners of LLLL.coms happy to sell their LLLI.com, LLLC.com, LLL”L”.com, etc for much under the $3500+ you’ll be paying for the LLL.com. In the case of LLL.coms, do remember that these reported prices tend to be D2D (domainer to domainer) prices — it’s not like any sane domainer is going to sell their LLL.com to an enduser for $3500 when they know they can get $3500 from another domainer for it any day of the week.

And lastly, something which in my opinion doesn’t get said enough, a short domain need not have meaning. There is nothing wrong with building a website or starting up a company using a short domain without that short domain meaning anything at all – this is especially true in the case of pronounceable LLLL.coms. I recently discussed the FOOM.com $21000 enduser sale on www.LLLL.com, but What is Foom? Foom may once upon a time not had any meaning (eg. just like Facebook), yet today it most certainly means something to it’s users.

One thing I discussed in yesterday’s short domain name post was that sometimes a short domain not having any meaning can be a benefit, perhaps even a big benefit. FOOM.com could have been made into anything and the reason for that is because of the fact that at one point, it meant nothing.

Acronyms played an important role in business long before the Internet came around.. It’s really no surprise that a short domain name is often more memorable than a longer domain. Which do you think is easier to remember: ICANN or Internet Corporation for Assigned Names and Numbers? Sedo or Search Engine for Domain Offers? WIPO or World Intellectual Property Organization?

I’ll take the acronym pretty much every time, especially if it’s easily pronounceable as these examples are. Even if your business has a memorable name, like Wordpress in example, there are other reasons in this Internet Age for going with a shorter domain — I can’t say I was surprised to learn that Wordpess recently acquired the domain WP.com. If we look at the soaring popularity of URL shortening services like TinyURL, one thing becomes pretty clear: Short domains aren’t just better, in many cases, they’re absolutely necessary. Consider this: If short domains weren’t better than longer domains, why would we both having domains at all? Why wouldn’t we all just use subdomains and save some money by not paying into the VeriSign/ICANN domain name registration monopoly? A lot of bloggers start off using subdomains — back when I first started blogging about LLLL.coms in November 2007, this blog was hosted over at Wordpress — which do you reckon is easier to remember: 4letternoob.wordpress.com or LLLL.com? Why do most bloggers eventually do like I did and move to a real domain? Real domains are shorter, real domains are more professional, and real domains allow you to brand them however you see fit.

One of the things I like most about short domains is the same thing many domainers not investing in short domains criticize about them — many short domains don’t mean anything at all! If keyword domains lived up to the hype they once had or that some people say they still have, you’d be using SearchEngine.com for Internet searches rather than Google and Auctions.com instead of eBay. Now don’t get me wrong here — keyword domains have a certain set of advantages, namely in the type-in traffic and SEO departments, however they also have one very obvious disadvantage – Keyword domains place invisible barriers on what you can do with your domain. When it comes to choosing which type of domain name will best suit you and/or your business, it’s important to think about where you (or your company) plan on being in a few years time. Girls.com sounds like a great domain for starting up a website selling clothing for young women.. If the business proves to be successful however and you decide to move into men’s clothing as well, I think you’re going to have a hard time selling us men on buying clothing from Girls.com

Yeah, this is another one of those “is the glass half full or half empty” speeches.. One can choose to look at a short domain as meaningless or one can choose to look at short domain as domains with infinite possibilities. It can mean whatever you want it to mean or even nothing at all.. Do you really think anyone cares that Google is an incorrectly spelt term (”typo”) for ten to the one hundredth power and do you think having Googol instead of Google would have made a world of change for the better? I don’t think so. Matter of fact, I like Google better than Googol.

Another benefit of short domains composed of “meaningless” letters (like XJYQ.com) is that you often won’t have to worry about what your domain means in other languages as you’ll have to if you go with a pronounceable domain (including short domains) or dictionary word and plan on going global. As an example, ”FAN.com” might make a great name for a sports site (and looking at their homepage, that may very well be what they plan on developing the domain into), but you may not want to promote it in Sweden (where it means “Devil”) without registering a different domain name. I can think of a few more examples involving domains whose English/Foreign translation would be inappropriate to mention here…

I don’t want to dwell on the merits of short domains anymore today, so let’s get to some sales data we can all appreciate.. This week was another solid week for 3 and 4 letter short domains, especially for short .net domains, which had 5 reported sales over $1000. MML.net stole the show, selling for $18,000. On the short .com domains front, we saw 14 more sales since I last reported on their performance on April 28th. This time however, CVCVs only captured but one of the top 5 spots, with 3 of the others falling into the “very pronounceable” category. Most large short domain sales this week occurred at Afternic. One short .org, L-LL.com, and CCC.com also managed to make the cut. All told, there were 22 reported short domain name sales of $900+, as listed below:

MML .net $18,000
YCG .com $14000
FITR .com $5100
JUW .com $4600
PQT.com $4000
ZJP .com $3869
XFT .com $3669
QUS.com $3601
LATS .com $3500
MIRL .com $3500
ZNM .com $3317
UVML .com $2500
CEES .net $2186
LTIC .org $1988
GIDO .com $1871
A-EL .com $1700
TEZA .net $ 1417
SIYO .com $1400
PNCI .net $ 1288
PSAS .net $ 1200
HOFS .com $1000
LE8 .com  $990

With a whopping 329 reported eBay LLLL.com sales over just the past 3 days, I thought it was time to take another look at the eBay LLLL.com market. To put how massive a number this is into perspective, only 411 eBay LLLL.com sale were reported between April 1st and April 28th.

Of these 329 eBay LLLL.com sales since April 29th, 322 are of low enough quality to use in examining the performance of the low end LLLL.com market. When looking at the data below, please remember that only anti-premium, single premium, double premium, and triple premium LLLL.coms are being evaluated below. Furthermore, any pronounceable or rare LLLL.coms have been removed and only sales from eBay (which typically reports the lowest sales results) are being considered here. For this reason, this eBay price guide is not to be confused with the April 2009 LLLL.com Price Guide which presents a much better examination of the LLLL.com domain name market as a whole, rather than merely observing what happens on eBay for the weakest of LLLL.coms. I’ve been asked a few times lately what exactly these numbers given below mean, so I’ll try to provide explanations beside the values given.

Findings this time around are as follows:

5th percentile: $4.12 — I usually quote the minimum wholesale as being roughly around what the 5th percentile is. This means that 95% (or 19 out of every 20 sales) of all LLLL.com sales were greater than or equal to this amount.

10th percentile: $5.54 — This means that 18 out of 20 LLLL.coms sold on eBay sold for $5.54 or higher.

25th percentile: $8.50 — This means that 15 out of every 20 LLLL.coms sold on eBay sold for $8.50 or higher.

Median: $11.50 — This means that half (10 out of every 20) of all LLLL.coms sold on eBay sold for $11.50 or higher.

75th percentile: $15.50 — This means that 5 out of every 20 LLLL.coms sold on eBay sold for $15.50 or higher.

90th percentile: $27.68 — This means that 2 out of 20 LLLL.coms sold on eBay sold for $27.68 or higher.

Further interpreting this data, we see that 80% (16 out of every 20) LLLL.coms sold on eBay sold for between $5.54 and $27.68. Essentially, if you don’t have one of the worst of the weaker LLLL.coms and if your LLLL.com isn’t expiring within the next month or incorrectly listed, you are almost guaranteed to see it reach at least $5.00-$6.00. If this LLLL.com isn’t particularly strong (such as being a triple premium with a strong starting letter, ending letter, and/or having many possible acronyms), you shouldn’t expect to see your LLLL.com reach more than about $25 on eBay and it will most likely only reach that if 6+ months remain until the domain needs to be renewed.

Now if you read this blog everyday or even every week, you probably think that’s a silly question, as do I. Probabilistically speaking, anything which is possible (no matter how unlikely) could “technically” happen, however we need only be concerned with what is likely to happen. As an example, every time you get into your car, there’s a chance you’ll get in a car accident and possibly die — the odds are low enough that most of us aren’t going to resort to finding some other way to get around. Now that we’ve gotten the mumbo jumbo out of the way, let’s take a realistic look at the LLLL.com market today and as it’s been in the past.

As those who’ve been in the domain business at least a couple years will recall, the large majority of LLLL.coms were already registered before most domainers started taking any interest in them. The author of DYYO.com tried many times to convince the naysayers that despite all the hype around the LLLL.com buyout, it would have taken place eventually with or without domainers, as the link I enclosed just above will attest to. You can see that even in the months leading up to buyout, the number of LLLL.coms being registered was only roughly double what we had seen in past months.

When looking at the LLLL.com market trying to predict future events, there are a few things we must accept:

1. We must always consider the choice of venue. You will see that almost all low end LLLL.com sales are not only sold on eBay, but also incorrectly listed with “LLLL” and/or “LLLL.com” noticeably absent from the title for their domain name listing on eBay… It’s hardly fair to even call these sales when the large majority of domainers on eBay will never even have the opportunity to bid on these domains because they won’t even know they’re on auction and for that obvious reason, I would never consider an incorrectly listed outlier eBay sale to be indicative of a falling minimum wholesale on LLLL.coms.

2. We must understand that while minimum wholesales are interesting for domainers to talk about, they do a rather poor job of representing any short domain name market as a whole — and this is especially true in the case of LLLL.coms. If I told you that the current minimum wholesale on an LLLL.com was $4, would that help you determine what your CVCV is worth? Of course not! It might not even help in determining the value of an ordinary LLLL.com… There are so many factors that need to be considered when evaluating a domain — the number of premium letters, the number of wordtracker search, google search results, traffic/revenue, etc — it’s all nice but it’s still only giving us a better idea of where the market is at. How do we factor in that highly random pronounceability variable — it can turn a domain like FOOM.com from being a quad premium CVVC into a $21,000 enduser sale. Did the seller get lucky in finding an enduser? Maybe a little, however considering this domain was sold right at the very end of January — essentially right when the LLLL.com was about to peak, I feel reasonably confident he would have gotten 5 figures for this domain just the same. Only a narrow-minded domainer would consider all LLLL.coms to be part of one category of domains and assume for one second that the prices of all LLLL.com domains are somehow intrinsically linked.

Let’s take that example one step further to elucidate my point — do you think ZXQ.com selling for less today than it did yesterday would have any impact on the value of FLY.com? Obviously not. Yes, FLY.com is a dictionary word and shouldn’t be categorized with other LLL.coms and everyone will agree to that.. However, we then have CVCVs and other strong LLLL.coms like the FOOM.com example I gave previously which routinely sell for just as much as dictionary words — shouldn’t they too be considered as a category of their own. Why the double standard?

3. As I blogged about in my most recent blog post on short domains and minimum wholesales, we must understand that it is not the minimum wholesale which determines the strength of a short domain name market, but rather the results obtained from much more reliable metrics such as the average price (with outliers removed), the median, or the geometric mean. Knowing that one short domain with a certain letter pattern sold for a certain amount tells us nothing.. As explained in point #2, we need to consider the venue at which the LLLL.coms (or other short domains) are being sold at, if there are any listing errors being made at the venue, and if there are any extenuating circumstances. For judging the strength of a short domain name market, I greatly prefer using short domain name auction data rather than relying on reported short domain name sales in which the domain buyer and domain seller had no contact with the outside domaining community. One can observe the short domain name market from a whole bunch of different angles in order to present an incorrect reasons for why the short domain market is appreciating or depreciating. At the end of the day, the only thing that makes any real sense to use is something that takes into account all short domain names for which reported sales (preferably auctioned) data exists.

It’s impossible for a third party like me to sit here and understand the motives of a domain buyer and domain seller on domain name transactions I play no part in. How will I know if this was a domain the buyer wanted to have or if it was a domain that the buyer needs to have? How will I know whether the seller was in a rush to sell and accepted an offer lower than he may have otherwise received because he had debts to pay, or alternatively, that the buyer presented an offer right off the bat that more than satisfied the expectations of the domain seller. With short domain auctions, we can put the speculation aside. Granted there will need to be at least two domainers bidding on the short domain to drive up the price, short domain name auctions shows that more than one person is interested in this short domain and  better represents what we may refer to as a domain name market — this is a market where the price at which the short domain name is sold likely best represents the conditions likely to be expected in the domain name market should we repeat this experiment tomorrow. Some short domain name segments, such as LLL.coms, show remarkable consistency — if the same domain is sold on the reseller market multiple times within a very short period of time (no more than 2-3 months), we’ll often find results no more than 20% or so apart. As I’ve discussed in the past, other markets such as CVCVs tend to fluctuate far more, sometimes selling for 100% more at an auction than they had at a previous one which took place but one month earlier. The fact that there are no clear-cut rules on how to evaluate a CVCV likely has a lot to do with this. You can teach “Joe Domainer” quite a bit about LLL.com pricing and he’d probably be ready to go out and make his own LLL.com purchases within a few days.. I have yet to see anyone who’s progressed at such a pace in a market as diverse as the LLLL.com market — it’s been a couple years now since this market first established itself and even today, we’re all still learning.

4. We need to make a real effort to understand the psychology of LLLL.com and/or short domain name investing. What motivates a domainer to invest in LLLL.coms? Is it to have a few short domains to use for email addresses, web hosting, subdomains, etc (eg. areas where a shorter domain may produce a real world  difference)? Does it result from the fact that over the past few years, short .coms have become “trophy domains” — a domainer must-have to prove their worth to their fellow domainers? Do domainers who invest in LLLL.coms and other short domains place a greater emphasis on liquidity than investors who opt for more traditional markets such as keyword domains? Do the domainers who invest in LLLL.coms and other short domains have a higher appetite for risk than domainers who invest in other domain name market segments, and knowing that their investments carry greater risk and the opportunity for potentially greater reward, are these domainers more prepared to hold out through the tough times, focusing on the long term than other domainers avoiding the short domain name market may be?

Do you know the answers to these questions? From what I’ve seen, short domain name investors most certainly have a greater appetite for risk than domainers who invest in most other market segments, with the exception of perhaps very speculative ccTLDs/gTLDs. With that greater appetite for risk, short domain name investors understand that their investments will go up and down — at times haphazardly, at other times, in response to changing market conditions. As I distinctly recall saying in March of 2008, shortly after LLLL.coms had started to fall in price, the days of making hundred percent monthly  profits are now long gone — that certainly holds true to this day. LLLL.coms and other short domains are not for the faint of heart or those without the necessary funds to renewal fees and any other costs associated with ownership of the domains. Unlike keyword domains, most short domains are not going to make enough to cover their renewal fee — if you’re like most short domain investors investing in cheaper short domains, your revenue from domain parking isn’t likely anywhere near enough to cover costs associated with maintaining your domain name portfolio. That’s the one real risk with short domains — the unpredictability of the short domain name market means that one really doesn’t want to be selling short domains to fund the renewal fees of other short domains, because there just isn’t anyway to know how the market will be doing at that future point when your renewal fees come due. Even if your keyword domains collapse in value overnight, you likely are (provided you intelligently invested in them of course) still making through domain parking more than enough to wait out the bad times until the good times return — or so a lot of those investing in keyword domains think. I distinctly remember people paying 8+ years revenue on domains that likely have absolutely zero enduser potential but were receiving traffic and earning revenue. Now 8 years of 2007 revenue is probably more like 16 years of 2009 revenue (your experience will of course vary with the kind of domains you’ve invested in) — doesn’t seem like all that great of an investment anymore.. Matter of fact, if we were to sell this domain based on it’s earnings (which really is the only way to sell a domain which doesn’t have domainer or enduser appeal), this keyword investing domainer hasn’t done very well for himself…

Are there risks associated with investing in short domains? Yes, there certainly are. Do the risks outweigh what one would expect to find in most other domain name markets? Yes, in my opinion, they do. So why would anyone want to invest in short domains — more specifically, in LLLL.coms? In my opinion, one invests in short domains for the very reasons most domainers would avoid this segment — the market hasn’t yet matured, so one doesn’t know exactly what to expect and therein lies the risk and possibility of larger potential returns on investment than possible elsewhere. While the money to be made investing in LLLL.coms today certainly isn’t as easy to make as it was pre-buyout for those of us who sold out at peak, the bottom line is that this market still has the opportunity to produce very sizable returns. You’re much more likely to buy a $5 LLLL.com and resell it for $10 than you are to buy an LLL.com or keyword domain for $5000 and resell it for $10,000, despite the return on investment being the same in both cases. If you can consistently turn $5 into $10 with LLLL.coms, would you be able to turn $5000 into $10,000 with them — it’s basically the same thing, just this time with 1000 times more domains and if you think about it, this is pretty much exactly what those who invested in LLLL.coms pre-buyout did and the very reason they ended up with the mammoth returns that they did. Mature markets are great for money you can’t afford to lose, but if you want to make money quickly or make money without a whole lot of capital, you very well may need to take some risks — possibly big risks.  If we look at CVCVs, they’re quite stable and have outperformed LLL.coms over the past year. Moving down the chain, we have rare LLLL.coms, most of which have taken devaluations of 30-50%. Further down the list, we have quad premiums which are down about 70% over the past year, and finally the weaker LLLL.coms, most of which are down 75% to almost 95%, with the higher quality weaker LLLL.coms nearer to 75% and the weakest of the weaker LLLL.coms nearing 95%. Looking at what I’ve just written, what comes next should be pretty clear — the more and more you move down the LLLL.com chain, starting from the highest quality LLLL.coms, the riskier and riskier the investments become.

While not mutually exclusive, the super-premium CVCVs, rares, and other strong pronounceable LLLL.coms remain largely unaffected by the performance of the lower end of the LLLL.com market. There really isn’t anything to debate here — prices on minimum wholesale LLLL.coms fell almost 95% between their peak and their current price (which has largely remained the same since October 2008), while the higher quality LLLL.com segments mostly suffered losses in the 30-50% range — still large, but more in line with what a significant portion of the domain name industry has experienced resultant of this recession. There was clearly a positive correlation between CVCV and LLLL.com prices right up until the low end LLLL.coms hit peak, however the two short domain name markets have behaved quite differently in the aftermath. That said, I do share the same beliefs as some of the LLLL.com / short domain name skeptics that if the LLLL.com buyout were to fail, higher quality LLLL.coms would likely be greatly affected.

Like I said earlier, if you want to make money quickly, you’re going to need to take risks. Whether those risks pay off or not is going to be something you’re going to have to be able to live with, so investments in low end LLLL.coms or other short domains should ideally be money you can afford to lose (just like how most domainers treat speculative domain name extensions). One interesting observation that we see both in domain land and in the stock market is that for whatever some reason or another, people seem to get overwhelmingly excited when they see an investment start to rise quickly in value. All common sense (such as my often said comment to “do your own research”) soon gets thrown out the window and the domain name investor is buying domains at prices higher than he should be and spending more money on domains (which in this case happen to be in a speculative market segment) and represents more money than he can realistically afford to lose.

People often say buy low and sell high, but who honestly does that? I certainly know more people who bought high, panicked, and sold low. Even if you do want to “buy low” — how low is low, or perhaps more specifically, how low is low enough? The fact that there are renewal fees associated with investments in domain names make them in some ways completely different from the stock market — many people wouldn’t be able to afford to sit on a portfolio of cheap short domains until the market recovers, granted renewal fees are such a large component of the domain’s value and this alone most likely explains why the price disparity between minimum wholesale LLLL.coms and higher quality weaker LLLL.coms has widened to the extent that it has today — renewal fees are a killer. But are renewal fees enough to make a short domain name investor drop his short domains? Or, seeing as we’re talking about whether the LLLL.com buyout (which of course could also be applied to any short domain name market segment) will hold, it may be better to ask whether a sufficiently large number of domainers would be prepared to drop their short domains so as to possibly have an effect on whether the short domain buyout holds or not. Regardless of the activities of the current owners of short domains, the real test of time on whether a particular short domain name market will be able to survive is whether there are other short domain name investors out there prepared to purchase the domains that do get dropped, so as to essentially keep the buyout permanently in effect, and that’s something we certainly see today with lower quality expired LLLL.coms selling on SnapNames, NameJet, and TDNAM, often for many multiples of what the regfee is. And as I’ve said earlier in this post, in my previous post, elsewhere on this blog, and on Namepros — minimum wholesales on short domains mean absolutely nothing! Looking at the median price of even single premium and double premium LLLL.coms (see link in point #4) shows quite a different market from what others would have you believe — a market in which 50% of all anti-premium, single premium, and double premium LLLL.coms are fetching $15+. That’s a market that’s absolutely nowhere near failing!  I’ll say it one last time because it really does seem to need to be said a lot of times to sink in for some people (predominantly LLLL.com naysayers) — don’t judge the fate of the LLLL.com market and/or the LLLL.com buyout (and/or any other short domain name market) based on what any LLLL.coms (or short domains) happen to sell for in domainer to domainer transactions, as these are only good for predicting future outcomes of other domainer to domainer transactions.. Rather, look at what kind of prices are being paid in the expired short domain name markets. Are domainers willing to pay at least  the domain name renewal or domain name registration fee for these expiring or expired LLLL.coms? At present, the answer is an overwhelming YES. So long as it stays that way, the buyout will not fail.

When I speak of low end LLLL.coms here, I’m speaking of the lowest of the low — a ghastly LLLL.com that’s about to expire and perhaps has one premium letter. There are of course exceptions to that rule, however for the most part, these seem to be the type of LLLL.coms fetching the lowest prices. Between April 15th and 19th, we saw 4 LLLL.coms sell for between $1.54 and $2.26 (I’ll have to ask our Namepros resident eBay expert, however I’m willing to bet all or most didn’t have “LLLL.com” or “LLLL” in the title). April 21st saw UDXY.com sell for $3.24 and since then, all LLLL.coms have sold for $4+.

Despite all the flack low end LLLL.coms get for falling from the peaks of February 2008 (it’s domain speculators we should be blaming, not the LLLL.coms), the situation isn’t near as grave as some portray it to be. Let’s assume a minimum wholesale of $4 — it’s the number I’ve been using for awhile and seems to be pretty darn close to the minimum, at least for LLLL.coms sold anywhere but unintelligently on eBay.

Over the past two weeks (since April 17th), there have been 236 reported LLLL.com sales of anti-premium, single, or double premium quality. How do the numbers stack up? I put them into Excel and came up with the following:

10th percentile: $6.50
25th percentile: $9.50
Median: $15.50
75th percentile: $25.00
90th percentile: $60.00

The real numbers aren’t exactly as bad as many would have you believe. One thing which I don’t think a lot of short domain name investors noticed was the change in behavior of an LLLL.com buyer over the past 15 months. When LLLL.coms were at their peak, there was essentially no difference between a single premium or a double premium, and even triple premiums didn’t sell for a great deal more than the minimum wholesale (which maxed out at about $55). So while this may have been a minimum, I doubt the median at the time of single, double, and triple premium LLLL.coms sales at the time was much above $60. Today, we see pretty much the opposite, with buyers being ever more discriminating in what separates on LLLL.com from another. A terrible LLLL.com still saw about $55 at peak — maybe $50 if nearing expiration, while the very best of triple premiums (eg. triple premiums + U/W) typically saw prices of around $120-$140. Today, we see a minimum wholesale of around $4 on that same comparable LLLL.com that was previously fetching $55, yet a good triple premium that may have seen $120-$140 at peak still sells for at least $30-$40+ today.  It’s not hard to see looking at the February 2008 data versus the April 2009 data that the gap between the weakest LLLL.coms and the strongest triple premiums has widened substantially over the past year, with the price ratio going from about 1:3 to 1:10 on the minimum wholesale LLLL.com versus the strong lettered triple premiums.

Even with double premiums, we see 121 of the 169 (about 72% of) double premiums sold over the past 2 weeks sold for at least $10.00. Of those, 100 sold for at least $15.00, 81 saw at least $20.00, and 33 saw at least $30. Essentially, your double premium LLLL.com has about a one in two shot at selling for at least $20 (81/169) and about a one in five chance (33/169) of netting at least $30. That’s not so bad… Not so bad at all.

Okay, so triple premium and double premium LLLL.coms clearly refute “the sky is falling” theory of LLLL.coms. But what about single premiums? Of the 47 single premiums sold over the past two weeks, only 3 sold for under $5, 30 saw at least $10, 21 saw at least $15, and 11 sold for at least $20. Again here, you had about an almost one in two chance (21/47) of seeing at least $15.

Moral of the story: Minimums mean nothing. Examine the data and find what your LLLL.coms are truly worth. If they’re not minimum wholesale domains and they’re not expiring soon, they certainly won’t command minimum wholesale prices. As discussed earlier in this post, that has never been more true than now.