wb

This post kind of follows on from Mark's thread, as the following quote reminded me about posting this:

Just wondering what others thoughts are on premium domains (specifically .co.uk) as long term investments? To put this in context, I'm referring to high quality domains which are realistically valued at five, six or even seven figures where the owners have decided not to realise value from them until a substantial offer is received.

Naturally there are some amazing portfolios of premium domains on this forum, and buying up more domains as investments is something I'm personally interested in. However, I'm interested to know different opinions about whether you feel they are high risk or low risk in relation to the future/growth of domain sales (e.g. if an expected offer is never received due to companies 'not getting it' or the domain market changes somehow in future, you could potentially lose on the total value of the asset).

Cheers

Frog

As far as high risk / high reward goes, its right up there with buying only 1 companies shares, buying a load of gold bars or putting it on a horse or something!

A good domain is illiquid. I'm not talking something worth a few k but something like say money.co.uk, its not like you can just sell it quickly if you want to (outside of a fire sale). It might take you years to sell it for what you think its worth, you might simply never be able to sell it at all.


If it works, it works well - look at Barry buying Gold.co.uk for 40k not so long ago and now seemingly selling it for 100 or so. But you don't hear of all the other people who're trying the same and not getting the sale.

For this to make sense as an investment strategy (rather than a gamble) I think you'd need to be looking at investing £1m across 20 high end domains. Anything less is not really an investment I don't think. Or you could scale it down I guess, but I think the key is to spreading it across a LOT of different domains.

richrf

I think there are risks associated with holding on to premium domain names, particularly the possibility that domain names may be in general devalued over time as other means of addressing may take their place. Also, the overall economic situation heavily impacts the prices of all assets. There was an overall asset deflation after the 2000 tech bubble burst and after the housing bubble burst. The latest rounds of loose monetary policies by central banks have again inflated markets but it is never clear how long these types of bubbles will exist before they burst.

Any asset, no matter how valuable carries some degree of risk, which I think has to be considered. Here is a good article which I found that describes some of these risks in more detail:

http://domainmart.com/news/Speculati...ain_Names.html

markb

I would say that buying premium uk domains as long term investments now for large sums of money, say £10K + is very high risk, especially if you have no plans to develop them.

If you regsitered a few premium domains in the late 90's early 2000's for reg fee, and are keeping hold of them, this is obviously not a risk because they cost a minimal amount, so if the price of domains devalue in the future your not losing out. Most people with quality domains asking 6 figure sums for them are usually people who registered them from new.

A better option for new investors would probably be to invest in one or two quality domains and actually develop them rather than just sit on them and hope for the best.

wb

That's true, and I guess this thread it more aimed towards people who have bought domains rather than registered from new.

The only difference I would add is that people who registered them from new are still at risk as there is a potential lost 'opportunity cost' (brings back the memories of studying economics) if they don't realise the value from them at the right time. For example it could be worth selling now for £10,000 but in ten years time may be worth £0.

Frog

I don't agree with that line of thought at all. If you could have cashed in today for £10k and chose not to, then end up selling next year for £1k at the bottom of the market I'd say you've still lost £9k even if you didn't pay that for it. Just because you bought it for reg fee doesn't mean you should blindly hold them forever, you still need to try and time your exit.


Since I can't afford to "do a Barry" and sit on hugely valuable domains in the offchance of an end user coming along, that has been my strategy

But you start blurring the lines between an investment and a full time job. I work on my sites all day, every day. I do kinda see them as an investment as I have one eye on the final cash in and walk away date, but there are not many normal investments that take 70hrs a week of your time! It also requires a fair amount of skill so its definitely not an investment option even open to a lot of people.

Get it right and you'll make a shitload of money - look at some of the sites forum members are building from nothing that are doing really well like Doug with discountvouchers.co.uk, Russ with his travel sites and my searchengineoptimisation.org (just trying to pick a few examples that people have posted the urls of themselves in other posts!).

But then on the other side of that equation you've got other ones a lot of us have built that have turned into absolute stinkers. Buy a domain for £5k, then spend £5k on content, £10k on coding and £5k promoting it and fail within a year and you've spent £25k to have an asset worth £5k at best (the domain base price), before you even take into account all the time you wasted... maybe thats one for another thread, "your most idiotic site builds". I've certainly got a few I could list

markb

I think some people who are holding out for that 6 or 7 figure offer on their domains may lose out. In my opinion in you had a domain which you valued at that amount, then why on earth would you still have a landing page or no website what so ever on it? Even if your not a developer, you could borrow or spend £30k and get a top quality website designed which would earn money.

binny

I know it's what no-one here wants to hear but I'd reckon that the popularity of Apps is going to put domain value at serious risk in the next 3-5 years. A step change in the method that the masses use to access information on the web is just around the corner, it won't kill domains but it'll be a royal kick in the nads.

Frog

Too many people think every single domain needs to go up and up in value...

Look at all the people who loading up on .mobi domains to have their investments destroyed by the launch of the iphone.

I would be very careful over choosing long term investment domains. Even the phrases people use for things can change over time, devaluing your domain. Or products themselves can become regulated (or outright banned) which would be horrible if you're the one holding the exact match .co.uk

I've already ate that loss once on mephedrone.net (which was a profitable website so not an actual cash loss, but a huge loss of a valuable asset overnight).

I enquired about paydayloans.co.uk a year ago and he told me "6 figures". He'll be lucky to get 5 if the government limit the APR on payday loans.

If you bought what appeared to be a premium domain to do with self certified mortgages I think you'd already have lost your shirt (or about to, don't keep very up to date with UK finance news now) as they were getting banned I believe...

If PDAs end up replaced completely by androids and iphones, then that is another one where someone misses the boat in getting out at the right time.

So loads of hurdles you'd need to get past as a long term investment.

BREWSTERS

It depends on the timescale. The fact there will only be so many (true) premium generic names means that they will continue to rise in value. The only risk being a change in the domain system.

Every top name is worth more now than 5 years ago, likewise 5 years before that etc. Couple that to more awareness and demand for top names - I'd say they are one of the best investments you can make.

Also, I'd say that top names are more liquid than poor names.

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