In 2008, Premium Domain Values Dropped By 11% While End User Sales & Development Increased By 76.42%

Premium domain names continue to be an outstanding investment. This is nothing new to domain investors, and despite a recent slowdown in the reseller market, the actual numbers confirm that the end user market remains strong.

Looking at DNJournal’s List of Top 100 Reported Sales of 2006, 2007 and 2008, the top 100 median sales price changed from $124,000 in 2006, to $197,500 in 2007, to $175,752.50 in 2008. After 2007’s massive upsurge of 59.27%, 2008 brought with it a 11% drop. However, 2008’s median price is still 41.74% higher than that of 2006.

A New Age of End User Sales

As we pointed out last year, with domain values shooting up so rapidly, very few domain owners were devoting any of their resources to actually developing their domains. There was simply no point in developing a domain you just bought if you could flip it a few months later at a significant profit. Broadly declining PPC (pay per click) revenues did not affect this situation at the time, but they have now contributed to the rapidly falling liquidity among domainers.

None of these developments appeared to have any effect on end user sales, which remained very strong in 2008. This is understandable as end users do not care about PPC revenues and the small isolated world of the domainer-to-domainer marketplace.

Let’s look at the 2008 numbers and compare them with those of 2007:

At the end of 2007, of the 105 highest priced domains sold in 2007, only 33 domains (31.43%) had been developed or redirected to a developed site, 3 (2.86%) were affiliate sites, and 10 (9.52%) were either abandoned or appeared to be under development. 4 (3.81%) domains didn’t resolve at all and a massive 55 domains (52.58%) displayed PPC ads.

At the end of 2008, of the 101 highest priced domains sold in 2008, 56 domains (55.45%) had been developed or redirected to a developed site, 2 (1.98%) were affiliate sites, and 15 (14.85%) were either abandoned or appeared to be under development. 2 domains (1.98%) didn’t resolve at all and 26 domains (26.74%) displayed PPC ads.

The most notable change is that the percentage of developed domains increased from 31.43% in 2007 to 55.45% in 2008.

Accordingly, the percentage of domains displaying PPC ads decreased from 52.58% in 2007 to 26.74% in 2008.

Much of the increase of developed domains can be accounted for by existing businesses (end users) purchasing these domains and using them for their websites. This is a very good sign for owners of premium domain names.

At the same time, actual development on part of domainers has remained virtually non-existent. Combined with shrinking PPC revenues, the future seems bleak for domainers who do not own premium domains and are unwilling to adapt themselves from an environment conducive to PPC parking and domain flipping, to one where the wholesale market has dried up, development is king, and opportunities abound for the small number of domainers who are, by accident or design, still flush with cash.

(Now the only thing that’s missing is for those geniuses who brought us the 2007 bubble to start talking down premium domains and tell us that the sky is falling so they can scoop up our assets for pennies on the dollar. Then the cycle will be complete and we’ll be back in 2001, as predicted here.)

source DailyDomainer.com