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Are We in a Numeric Domain Bubble? – Part Two

Posted on 15 May 2014 by Andrei

I wrote about this topic earlier this month and was glad to find out that The Sherpas covered it as well today. It’s an interesting discussion and I encourage you to read my post as well as watch the video.

Today, I’d like to make two clarifications.

On the show, Rick mentioned that we cannot talk about a numeric domain bubble because numerics have gradually risen in value.

Have numerics gradually risen in value?

Yes, I agree with Rick on this one.

However, does this mean there is no numeric domain bubble?

This is where I start to disagree.

You see, gold and silver for example have also gradually risen in value over a period of many years but that didn’t stop this asset class from entering bubble territory 25-ish years ago.

Let’s refer to gold first since it’s more of an investment than silver (silver is also an investment but it has more of an industrial element to it than gold).

Before the bubble started, back in the late seventies, the price was in the $200-ish zone. Over a very short period, the price skyrocketed to $800+ (today’s price is nominally higher but if you adjust it for inflation, we *still* haven’t surpassed the high I’m referring to now) but it collapsed just as quickly.

Something similar but even more pronounced happened to silver.

In the late seventies, the price used to be in the $5 zone.

It then quickly skyrocketed all the way to $50 but then just as quickly collapsed back to the $5 area. In silver’s case, it collapsed to back where it stared whereas in gold’s case, it collapsed as well but was still at a higher value than back before the bubble started.

These are just two examples but I’m sure you understand the point I’m trying to get across.

I agree with Rick, numeric domain prices have indeed risen gradually but that doesn’t mean they cannot enter bubble territory.

During the show, I learned something interesting (and this brings me to the second clarification I’d like to make), the fact that even six number dot coms are desirable nowadays. I knew that this was the case for 5 number dot coms but was surprised to find out that there is even demand for 6 number dot coms. As mentioned in my first post, I can definitely understand the value of NNN dot coms and I can kinda-sorta understand NNNN dot coms as well.

But 5 numbers and now 6?

In my opinion, the fact that even such domains are considered desirable at this point represents the #1 argument in favor of the fact that we are in a bubble.

Again, I’m not saying you should sell.

I’m not saying you should buy either.

I’m simply trying to explain that at this point, we are in a numeric domain bubble in my opinion and I therefore consider any approach that disregards this situation fundamentally flawed.

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4 Comments For This Post

  1. DNFlipper Says:

    I agree 100%.. We are in a bubble. NNN .net and NNNN .net are becoming more desirable.

  2. Johnny Says:

    When it comes to the very top NN.com and NNN.com, even 7 fig price tag is still very affordable relative to what large Chinese companies can afford. And Chinese companies take great pride in spending a lot or money on improving their web address, unlike western companies that are usually embarrassed about paying a lot of money for their perfect domain.

    Just based on the above, I would never bet against prices of the top NN.com and NNN.com increasing into 8 fig.

    As far as NNNNN+ domain go, that’s all speculation. But if more money in China is moving towards buying them, who knows if prices will also continue to move up for a long while.

    One thing is for sure. Certain famous domain brokers have been calling NN.com and NNN.com a bubble for over a year now. Their logic being that their western clients will not buy them at these prices.

  3. DNFlipper Says:

    @Johnny

    There are far more numeric domain investors than there are end-users. I think this bubble is going to last quite a while. Chinese investors and end-users will start to look for other alternatives..

  4. Mike H Says:

    Last week I thought I’d throw my toes into some 4N .net domains. Highlight on the .net

    I backordered an expiring domain. The dropcatcher got the domain and it went to auction with 3 bidders. I lost.

    I placed a backorder again this week for a different domain. It was again caught by this dropcatcher but this week 34 bidders are in the mix and the price has already doubled the closing price from last week. With my limited knowledge of the Chinese numbering system I would have said that the name last week was the better name.

    Obviously a very small sample, but, it’ll be interesting to see if this is more than just an anomaly.

 
 
         
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