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.

Related posts:

1. Short Domain Name History: LLLL.coms III
2. Short Domain Name History: LLLL.coms II
3. LLLLL.coms