Summaries

One the worst quarters for 5th percentile values, 3 Letter .coms were the most traded category with over $11M in Escrow.com sales.

Welcome to the 10th 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

The overall development index increased by 1.9%, with signi#cant gains for 2 number and 4 letter .com categories. The most developed categories remain the 2Ls at 34.6%, followed by the 3Ls and 2Cs, both around 28%. With the exception of the 2Ns, the numeric domain categories maintain a development index under 10%. China remains the king of liquid domains, with a 26.4% market share, followed by the US (21.9%), which gained 2% in Q3. Contrary to the previous trend, we noted a negative variation in domains owned by Chinese registrants for the second consecutive quarter. The rest of the world and Europe also lost market share at 11% and 3.2%, which could be attributed to GDPR coming into further e”ect. As a result, private registrations now constitute over 30.7% of all liquid domains, which is nearly a 50% increase since the second quarter of 2018. The 3Ns and 5Ns are the categories with the highest percentage of domains under privacy, with 62% and 58% respectively.

SALES DATA

In Q3 the total volume of disclosed sales almost doubled from $5.4M to $9.2M. We also registered a 50% increase in the volume of escrow.com sales, which jumped from $12M to $16.7M. According to escrow.com, the most traded category were the 3L .com domains, with $11.4M in sales, followed by the 4Ls ($3.2M) and the 3Ns ($1.1M). According to ShortNames.com, the disclosed volumes for these categories showed a similar pattern with $5.2M for 3Ls, $1.7M for the 4Ls and almost $1M in 5Ns. Even in Q3, the most traded categories for the number of transactions were the 4Ls (1,713), the 5Ns (1,116) and the 3Cs (596), which registered a record turnover of 2.1%. The positive numbers in terms of volume are in stark contrast with the continued decline across the board in 5th percentile values, which recorded the worst quarter since the inception of our report. 5Ns and 3Cs lost 38%, 4Ls lost 28%. The only stable category were the 3Ls, which registered a modest loss of -2.8%.

FORECAST

The copious inventory released to the market on Q3 had a positive impact on the sales volume but quite a negative impact on the $oor prices, which, with the exception of 3Ls, registered signi#cant double digit losses. The challenge for the last quarter of the year, which is typically a strong quarter for end-user activity, will be if the Western market manages to absorb the inventory being released for sale in China. Strong end user transaction might keep a$oat the most developed categories, however, a potential increase in .com registration prices, to be decided in November, might have a negative long-term impact on the market. Caution is advised.

As GDPR takes effect, Escrow.com reports the lowest volume of sales since the start of LXDO.

Welcome to the 9th 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

Development index fell over 1% to 12.82%, the lowest level ever recorded in our report, signaling a clear downward trend since 2016. The categories that su!ered the most were the numeric domains, in particular, 3Ns, 4Ns, and 5Ns. 2Ns. The letter domains remained relatively stable, with 3Cs being the only category gaining new developments. 3Cs also recorded a small increase in the 5th percentile value (+4%) and a sizable (38%) median price increase in disclosed transactions.

The inception of the GDPR last May brought signi#cant changes to the ownership data. For the #rst time, we recorded a drop in Chinese ownership, coupled with a sharp decrease in the number of domains associated with European registrants (down to 4.6% from 7.4%). This could be easily explained by the new privacy rules a!ecting European owners. The gainers were the “rest of the world” (+4%, from 7.7% to 11.7%), the N/A category and, in small measure, the US, which gained 1%. China remains the largest owner of liquid domains with 165,000 domains associated with Chinese registrants.

SALES DATA

In Q2, Escrow.com recorded $12M in transactions, with the strongest categories being the 3Ls ($4.8M) and 4Ls ($4.3M). These values are in line with last quarter and signal a notable growth in the 3Ls category. The largest drop came from the 2Ls .com which did not register any Escrow.com, nor any other public transactions in Q2. ShortNames.com recorded $5.4M in transactions, with the most traded categories being 3Ls, 4Ls, and 5Ns, respectively at $1.4M, $1.6M and $1.3M. The 5th percentage values gave us mixed signals: on one hand 5Ns and 3Ls showed record increases (+56% and +31%), on the other, 4Ls – the category which accounts for 75% of all liquid domains – dropped 13%. The median values of disclosed transactions also recorded very large decreases in almost all categories. This calls for caution in view of the early Q3 results which are indicating sharp valuation drops for Chinese premium 4Ls.

FORECAST

A signi#cant decrease in the wholesale value of Chinese Premium domains might signal that the tide is shifting away from China and back to the West. Chinese owners might start to #nally sell inventory. Once again, we expect Western investors and end users to focus on the most premium liquid domains when looking at buying opportunities: speci#cally, acronyms with Western Premium letters and Keyword domains. We retain our recommendation for investors to focus on quality over quantity.

While 5th percentile values keep declining, Escrow.com reported nearly $20m in transactions in the quarter, suggesting a strong start for domain investors in 2018.

Welcome to the 8th 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

2018 starts with a continuation of the trends observed in our past reports: China continues to gain market share, especially on the 5Ns front where Chinese registrants added almost 4,000 domains, bringing up the total domain count up to almost 200,000 or 32.12% of the total market.

The US also gained 1% of market share, ranking as second behind China with a total of 18.54%. Europe and the rest of the world continued to hold a stable market share of around 7.5%, while domains under privacy grew slightly to 21.67%. There seems to be: 1) a positive correlation between the average domain value and domain privacy, and 2) an inverse correlation between domain privacy and the development index. In other words, the more valuable a domain is, the more likely it is that it will be under privacy if it is not developed. This translates to record privacy numbers for for Tier 1 categories like 2Ns and 3Ns, with nearly 50% of domain names under privacy registration.

The overall development index went down by 0.5%, with 4Ns domains making the biggest negative jump from 15.5% to 11.3%. 2Ls remained the most developed category at 35.95%, followed by the 3Ls (28.46%) and the 2Cs (28.08%). With the exception of 2Ns at 18%, all the other categories register development indexes between 10% to 15%, with 4Ls being the most developed (14.4%) and the 5Ns being the least developed (10%). 3Ns, 4Ns and 3Cs rank somewhere in the middle, respectively at 12.2%, 11.3% and 12.9%.

SALES DATA

2Ls .com domains registered a record $6M in escrow.com transactions, by far the best result since the publication of the report. 4Ls kept a consistent $4.8M in turnover, followed by another strong quarter for the 3Ls at $3.5M. 3Ns and 4Ns also posted good quarters, respectively with $2.8M and $1.3M in escrow.com sales. While escrow.com did not record any 2Ns transactions, the other categories (5Ns, 2Cs and 3Cs) posted an aggregate of almost $1M, respectively at $225k, $143k and $562k. The total amount of sales reported by ShortNames.com was $7.7M, with 4,108 transactions and 0.67% turnover.

The negative trends came from 5th percentile values which kept registering double digits losses: 3Ls -21.46%; 5Ns -16.93% and 3Cs -11.11%. 4Ls lost only -3.13%. The positive note came from the median values (not present in our report) which showed significant increases for the 3Ls, 4Ls and 4Ns. This disparity in performance could be interpreted in two ways: 1) the domains sold in Q1 might have been of superior quality compared to last quarter, or 2) the value ranges of liquid domains are starting to polarize again. Lower liquidity in the second tier categories might also play a factor.

FORECAST

The key question for investors is when to buy batches of domain names at floor prices, as opposed to cherry picking ones with the highest end user potential, or selling their existing inventory altogether. The mix of positive signals (high sales volume for valuable categories) and negative signals (constant descent of 5th percentile values for the least valuable categories), can only mean that investors should continue looking at fewer but higher quality domains.

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.