I’m sure some of you never sell to other investors because you have enough capital to play the buy and gold game. Most domainers however do end up needing liquidity for various reasons and decide to sell their domains at wholesale prices on the reseller market. Some even focus on that market (yours truly, for example).

I think it’s time to put it under the microscope a bit and let’s start by analyzing the “ecosystem” or in other words by seeing who the main players are:

1) beginners, people who are just starting to invest in domains

2) the average “buy and hold” domainer, who is mostly a buyer on the reseller market and only sells if he needs liquidity

3) the average domain flipper, who buys as well as sells on the reseller market

4) the experienced “buy and hold” domainer, who is pretty much only a buyer

5) the experienced flipper, who obviously buys as well as sells on the reseller market

6) the legendary/millionaire domainer, whom you don’t come across very often and who is obviously only a buyer on the reseller market

Alright, so how do reseller market transactions take place? Well, here are the main venue categories, the places where people buy/sell names:

A) Forums

B) Domain marketplaces (NameJet, Sedo, etc.)

C) Domain newsletters

D) Domain conference auctions such as the recent ROTD one @ NamesCon

E) Social media plaforms, chat platforms, etc.: so Facebook, Skype and so on

Do all of the 6 domainer types use all of the 5 platform categories?

No, not really.

The beginner (#1) will probably use forums (A), domain marketplaces (B) and domain newsletters (C) primarily. You can’t expect him to for example trade on Skype, since he’s new and doesn’t really know anyone yet.

The average domainer (I’m including both #2 and #3) probably uses them all. Perhaps the experienced domain flipper (#5) as well.

The experienced “buy and hold” domainer (#4) probably uses forums less and most likely doesn’t transact via social media frequently either. The same thing goes for the legendary domainer (#6).

Alright, so these are the players.

Let’s analyze each player one at a time and see how things stand.

The beginner (#1) for the most part spends less money on the reseller market in 2017 than in the past due to a new type of player appearing: the new gTLD registry. The many “shiny” new gTLDs out there attract lots of beginners (just like for example Dot Mobi attracted beginners in the distant past) and as such, they give money directly to registries such as Donuts through registrars like GoDaddy. The #1 consequence is that this category of investors ends up transacting less on the reseller (domainer to domainer) market

The average domainer (#2 and #3) is more experienced than a beginner and as such, feels less of an attraction towards new gTLDs. Still, some of the average domainers end up spending less money on the reseller market due to dabbling in new g’s but the percentage is considerably lower.

The experience domainer (#4 and #5) hasn’t really changed his behavior as a result of new gTLDs and probably never had much interest in them.

The legendary domainer (#6) however might very well decide to speculate on new g’s, even if only for the fun of it or to re-live the old days and so on. They have so much money however that this dabbling in new gTLDs does not come at the expense of their reseller market purchases. In other words, they can afford to play with new gTLDs without sacrificing their reseller market budget

… alright, I think that pretty much sums up my perspective on the top investor categories.

But what about the platforms?

Well, it all depends on the domain categories that frequent them. If the platform is primarily used by beginners, it will definitely suffer if some of these beginners decide to allocate capital elsewhere by buying new gTLDs directly from the registries through registrars. Again, it all depends on the profile of their users.

This much is certain: new gTLDs are without a doubt affecting reseller market liquidity.

Many people underestimate the importance of beginners but they bring a lot more capital to domaining than people think in my opinion. As such, I think we can safely say new gTLDs have a negative impact on the reseller market under normal circumstances.

Now sure, we can have exceptions like the Chinese domain surge, which brought a LOT of money to the reseller market (quite a bit of it from China, India and Asia in general) and which for a while generated a downright frenzy.

But leaving such exceptions aside, new gTLDs impact the reseller market in a negative manner for obvious/logical reasons:

1) Less money is spent on aftermarket purchases and since a lot of new gTLDs are expensive, have premium renewals and so on, it definitely adds up

2) The names people buy from registries don’t even end up being transacted on the reseller market for the most part because the reseller market liquidity of new gTLDs is very, very low. Let’s assume Joe buys Big.Horse (that’s what she said) from the registry, pays $1,000 and then $250 in yearly premium renewal fees. The name isn’t really worth anything on the reseller market but Joe keeps it for two years, hoping an end user comes along. Nothing happens, he ultimately just accepts his $1,500 loss after unsuccessfully attempting to sell the name on the reseller market and drops it. In this scenario, not one cent out of the $1,500 ended up on the reseller market. Only the registry + registrar made money and now the domain is back up for grabs. Maybe next year, Bill will pay the registry another $1,000 for it and the cycle continues, always with $0 landing on the aftermarket

3) Once beginners fail, some will give up altogether, whereas some will ultimately end up reconsidering their business model and will end up spending money on better domains on the reseller market

That’s pretty much how I see the reseller market in 2017.

New gTLDs are the dominant negative factor, whereas the short domain surge is the dominant positive factor. The negative factor takes money from the reseller market, whereas the positive one obviously brings money to it.

Again, this analysis is strictly from the perspective of what’s good or bad for the reseller market. Something that’s good for the reseller market can be bad for the individual investor. For example, the short domain surge created both winners and losers, never lose sight of that either!