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2017-Q4

With $9M in disclosed sales, $18M in Escrow.com sales volume and over 5,000 domain transactions, Q4 was one of the strongest quarters of 2017.

Welcome to the 7th edition of the Liquid Domains Overview (LXDO), which focuses on the 614,928 .com domains we call “liquid”. The objective of the report is to present key statistics and generate a debate amongst the industry stakeholders about the fair value of such domains. We hope you enjoy it and we encourage your feedback and participation for the next reports.

DEVELOPMENT INDEX AND OWNERSHIP DATA

Following the trend in our past reports, China continues to be the largest net gainer of liquid domains, adding over 10,000 domains (1.64%) in Q4. China now owns 31.17% of all liquid domains, with Chinese registrants controlling over 50% of the 5Ns (a 5% increase from last quarter), 45% of the 4Ns and 42% of the 2Ns. The United States is a distant second at 17.51%, after losing 10% of the 2Ls and 8.28% of 3L domains in Q4. This loss could be explained by a rather large 9% increase in private registrations for 2L domains. Privacy also went up almost 5% on 5N .com domains, helping to reach a total of over 139,000 (21.67%) liquid domains under privacy. The rest of the world and Europe are stable at the 4th and 5th place, respectively with 7.64% and 7.13%. European owners represent approximately 10% of registrants in the most developed categories (2Ls, 2Cs and 3Ls), which suggests that liquid domains are perceived as brands rather than investments in the EU.


Most liquid domain categories showed increases in development, especially in the most valuable categories of 2Ls, 3Ls and 2Cs, increasing on average by 2%. The notable exception was a 1.68% decrease in 4Ls, the largest liquid domain category, which caused the overall development index to decrease by 1%, despite all other categories presenting positive data. The three most developed categories were once again the 2L .com (37.87%), the 2C .com (30.58%) and the 3L .com (28.98%). 5Ns remain the least developed category at 11.54%, followed by the 3Cs (13.69%) and 4Ls (14.57%) respectively

SALES DATA

In Q4, the disclosed transactions for liquid domains, as reported by ShortNames.com, nearly doubled from 5.4M to $9M. The total liquid domain turnover went up from 0.56% to 0.85% (3,449 to 5,256), confirming that there might be a negative seasonality factor in the 3rd quarter for liquid domain sales. At the same time, Escrow.com sales volume went down 25% from $24M to $18M. According to Escrow.com, the most traded category in Q4 was 3C .com domains ($6.4M), followed by 4Ls at $4.6M and 3N .com domains at $3.97M, boosted by the record 3N portfolio sale by Rick Schwartz.


The floor prices of the most traded domains registered in Q4 another descent, this time though only by a single digit (-9.6% for 4Ls, -9.03% for 3Cs and -4.51% for 3Ls). 5Ns were the most notable exception, with a staggering 29% increase. This temporary increase in price could be explained by a returned Chinese interest in these domains, as Chinese ownership of 5Ns went up 5%.
Finally, for the first time, we are going to report the 5th percentile values (and not the just the variation) of the most traded categories, to raise awareness of liquidation values for the most actively traded liquid domain name groups.

FORECAST

Q1 is typically a slow quarter, with fewer transactions due to a decrease in activity around the Chinese New Year. It is possible that the fall in the crypto currency prices could generate additional liquidity from the investors who are looking to hedge themselves from high volatility. The performance of the equity markets could also influence the liquidity flowing into domain names. While the market is still uncertain, the overall negative trend is likely to continue even if a few large transactions in the most valuable categories might keep the overall sales volume high.

About the Data

Some of the information provided in this report, such as the category breakdown, trademark analysis and valuation data was derived using proprietary systems built by Intelium Corp. or its affiliates.

The domain sales data was provided by ShortNames.com. It was also generated using automated means and through the use of proprietary technology. The data is verified on the best available bases and may be subject to inconsistencies or errors that are corrected at the sole discretion of ShortNames.com.

The Escrow.com sales data is verified on the best available bases and may be subject to inconsistencies or errors that are corrected at the sole discretion of Escrow.com.

Index, ETF and all security return data was initially computed by Morningstar, Inc. and is shown in this report for display purposes only. This data is not, nor is meant to be used as, actionable investment advice; nor a direct comparison between any exchange or market traded security, or individual stock, or index and any category of domain names. We cannot guarantee the accuracy of any such data, as it is maintained by a third party and may be subject to errors, or unavailability. Morningstar, Inc. did not participate in the creation of this report and reserves all intellectual property rights in regard to its own materials or data.

Disclaimer

This report is not intended to be interpreted as investment, legal or tax advice of any type. No entity or person associated with the production of this report currently holds or has the intention to hold themselves out to be a registered investment advisor or attorney. The readers of this report are responsible for performing appropriate due diligence in considerations with any action they may take as a result of this report. To the maximum extent permitted by law, the Authors, the publisher and their respective affiliates disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations in the report prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.

The reports’s commentary, analysis, opinions, advice and recommendations represent the personal and subjective views of the Authors, and are subject to change at any time without notice. This publication is not a solicitation or an offer to buy or sell any securities, domains or any other type of investment or commodity interest. References to specific domain names, extensions or any third parties is for illustrative purposes only and are not intended to be nor should be interpreted as, recommendations to buy or sell domain names.

The Authors or entities participating in the creation of this report may be affiliated with some of the third parties mentioned in this report.