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What If the Domain Market Would Stop Working for 5 Years?

Posted on 07 January 2014 by Andrei

Today, I’d like to ask you to imagine the following scenario: what if there would be a let’s say 5 year ban on domain sales? In other words, if you were not allowed to sell your domains to anyone (domainer or end user, doesn’t matter) as of today for 5 years?

One of Warren Buffett’s most famous quotes is this:

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

Since we’re talking about the Internet which has its particularities for sure, let’s replace 10 years with 5 years.

What would happen to your portfolio after those 5 years?

Would the domains still be valuable?

Would they be more valuable?

Would they be less valuable?

Under which scenario would your domain(s) go up or down in value?

… asking yourself questions like these can be a pretty interesting experience because it puts your portfolio into perspective.

I say this on DomainingTips pretty frequently: hope for the best but prepare for the worst.

The 5 year ban scenario is *extremely* unlikely but not impossible. Maybe something else could happen that would render the domain market as we know it useless for a certain period.

Perhaps a black swan event if you remember the post I wrote back in December?

Now I’m not telling you this with the intention of scaring you.

Not at all.

In fact, I’m 99% sure something like this won’t happen but imagining how such a scenario would unfold can be an extremely interesting experience for domainers in my opinion and I think you guys might be able to draw some pretty useful conclusions.

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2 Comments For This Post

  1. gene Says:

    I’m glad you highlighted such a scenario. I really wish that it would happen, to be honest, because high-quality dot-coms would skyrocket in value from being off the market for enough time to allow the demand-side to catch-up.

    Real estate development is often subject to multi-year moratoriums (although sales on existing properties aren’t); and when they end, prices generally go much higher. Also, take a look at the art world, and how explosive prices have been there. High quality art isn’t ‘flipped’ – it’s collected, appreciated, and (often after long, long periods) put on the market: At which point it often yields a price far in excess of even the most optimistic appraiser.

    I’m 100% certain that most quality dot-coms would exponentially increase in price during a 5-year (…or even 1-year) moratorium. And I don’t understand why the ‘big’ domainers don’t spearhead such a movement — a voluntary moratorium, that is. I’d sign that pledge in a heartbeat. Humans always want what they can’t have, or what’s perceived as ‘exclusive.’ So it follows that this would be a very successful – and press worthy – movement.

    Go ahead, start it!

  2. Andrei Says:

    @gene: it would be an interesting experiment for sure but convincing everyone to do it is unfortunately pretty much impossible. Let’s refer to the reseller market and assume that 98% of LLL dot com holders would agree to decline all offers over a period of 5 years.

    However, the remaining 2% would be able to sell domains at very high prices for supply and demand-related reasons. Once some of the 98% notice this, they’ll most likely re-consider their decision and it would be all downhill from there :)

 
 
         
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