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The Paradox of Thrift – Reseller Market Version

Posted on 19 May 2014 by Andrei

Since I’m also an economist, I try to occasionally analyze certain terms/theories/principles from a domaining perspective. The paradox of thrift is easy to understand. Let’s assume that all of us decide to start saving money. Now for the average person, saving money would be a good thing but if *everyone* were to do it, the economy would grind to a halt and we’d all be ultimately be worse off.

Is the same principle valid when it comes to the domaining industry’s reseller market?

In my opinion yes, it is.

These days, a lot of people don’t know what to do. Should they invest in new gTLDs or should they stick with what they’ve been doing so far? Some of them are so confused that they’ve decided to simply hang on to their money for the time being.

Is that a good thing?

For an individual investor, it might be a good thing or it might be bad thing, it depends.

But for the reseller market, I’m 99.99% certain that it’s a bad thing.

Why?

Because there would be less money in the “ecosystem” if everyone would stop investing for the time being.

Domaining isn’t a zero sum game.

In other words, as explained back in April, the reseller market can help all of us ultimately be better off.

It’s not an “if I make money, it means you’ll lose money” scenario.

Not at all, it’s the exact opposite.

A vibrant reseller market is good for all parties involved.

Therefore, understanding the paradox of thrift is very important in my opinion. If everyone were to simply say “I’m hanging on to my money for the time being, no investments for now” or something along those lines, the reseller market might even end up no longer existing.

Is the reseller market currently at risk?

Well, for certain domain categories, the liquidity levels are quite poor.

In other cases however (numeric domains, for example), there’s plenty of liquidity so for the time being, the reseller market is hanging in there.

We shouldn’t however take this situation for granted and that’s why I decided to start a gTLD case study yesterday.

If you’ve bought at least a new gTLD domain or two, I encourage you to do the same thing.

Exchange thoughts with other domainers so that we can try to draw conclusions together.

Is investing in new gTLDs worth it or not?

I hope that within let’s say a year or two, we will make a lot of progress with this question so that domainers finally have the answers they’ve been looking for since new gTLDs started appearing.

That way, there will once again be much-needed clarity in our industry and the reseller market will adjust accordingly.

Otherwise, if fear and uncertainty will prevail, the very existence of the reseller market might be at risk.

Again, it’s hanging in there for the time being but I can’t stress this enough: we shouldn’t take it for granted!

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