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.

Related posts:

1. Short Domain Name History: LLLL.coms III
2. The State of the Short Domain Market
3. Short Domain Name History: LLLL.coms I