Categorized | Domaining Tips

What Were They Called? End Users?

Posted on 11 May 2016 by Andrei

Seeing the term “end users” written on my WordPress dashboard as I am typing this seems… well, just a tad bit strange. I actually took a moment and thought about whether or not I should use a hyphen between “end” and “users”, I kid you not 🙂

Over the past year or so, this term was nowhere to be found in domaining industry debates.

The surge in short domain interest and values made such big waves that most domainers stopped caring about end user-related discussions. When you have skyrocketing reseller market values and activity, end user-related discussions seem boring all of a sudden.

You know, discussions about building a solid portfolio.

Then selling a percentage of your domains to end users each year, generating enough to cover renewal fees and book profits… all that stuff 🙂

Why?

Well, for many reasons:

1) There was a LOT of money in domainer to domainer transactions, huge *huge* growth, whereas the same level of growth was NOT observed when it comes to end user activity

2) End user-centric business models don’t exactly make sense for most of the domains which were being traded, simply because a lot of them have pretty much zero end user value. 5L dot coms, for example. I mean come on, let’s all take one step forward and admit there’s close to zero interest in 5L dot coms among end users

3) Even for domains for which there is reasonable end user demand, domainer-to-domainer prices went up so much that there was little to no upside for those who wanted to buy with the intention of selling to end users. When random LLL strings are fetching mid 5 figures, you can’t help but ask yourself: how much would you have to sell those names to end users for to make the business model worth it? The name of the game is buying cheap enough so that you have a WIDE margin. This is because no matter how good your portfolio is, not all of your domains will end up selling to end users. The percentage that do have to generate enough revenue to make up for the inventory that stays on the shelves.

… the list could go on and on.

At the end of the day, we do have to ask ourselves how sustainable this approach is.

Reseller market activity is great and everything. It generates liquidity, helps us sleep well at night and so on. But reseller market activity without adequate end user activity is unsustainable in my opinion.

The biggest mistakes which I think were made are:

1) People were constantly looking for the biggest ROI potential, so they ended up investing in domain categories which are utterly worthless from an end user perspective. I’m referring to 5L dot coms, 6N dot coms and let’s not even talk about lesser extensions. Too much dilution

2) The growth rate was unsustainably aggressive. At the height of the market, people were desperate to buy. Literally desperate. On forums. In private. You name it. Everyone felt they just *had* to buy that very instant and the overall “vibe” was a bit spooky to be frank

3) People tend to forget you also have to renew your inventory. Buying a domain for $0.99 or $1.99 using a coupon is great and everything but when you have to renew it at the standard rate, things can get tricky. Even for dot coms, which have a relatively reasonable renwal rate. Let’s not even talk about TLDs which are 2x-3x times more expensive to renew

4) People were sure values can only go up. Kind of like what happened with the dot com bubble. When the market goes up, everyone thinks he’s a genius. Why? Because whatever stock (or domain) you pick, it will probably go up in value while everyone’s euphoric as long as you don’t make downright awful choices. Therefore, people end up thinking they’re great stock or domain pickers. Some are but most aren’t, they’re just riding the wave. Their picks proved to be good choices not because they’re brilliant but because the entire market was moving up

… and so on and so forth.

Look, I have no idea what happens next.

Maybe short domain values will shoot up 3x within a month. Maybe they’ll drop 3x. I don’t know.

What I do know is that eliminating end users from the equation altogether is never a good idea and let’s face it: it’s kind of what has happened in our industry for the most part over the past year or so 🙂

4 Comments For This Post

  1. Rich Says:

    What is going to happen to the millions of 5 letter .com up for renewal starting in 2 months?

  2. Adam Says:

    Who needs an end user? 🙂

  3. Vincent Says:

    Domain sellers want ROI max, totally agree.

    EnduserBroker.com is what they really need.

  4. dot50 Says:

    Excelent point of view, I totally agree with you Andrei, 99% of the expensive domains are overvalued, many non-professional domainer tend to believe that any domain has a high value and endusers will stick to the content and marketing strategy instead a random registered domain name at $2k re-selling price.

 
 
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