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Why do people keep investing in the same dud extensions year after year?

The .tv thread in th other forum got me thinking today about why people continue to invest in extensions that consistently perform worse than the rest of the market.

Here is an interesting case study on 3 letter domains which I think is probably a good indication of the market generally, the lower quality 3 letter domains are a pretty good "tracking stock" in my view,

All the data is from 3character.com via archive.org

Dec 2007

Current Observed Minimum Wholesale Price (regardless of letter combo) as of December 1, 2007:

* 3-Letter .com - $6000
* 3-Letter .net - $825
* 3-Letter .org - $285
* 3-Letter .info - $140
* 3-Letter .biz - $60
* 3-Letter .us - $60
* 3-Letter .mobi - $165

Pricing Guide for 3-Letter (Composed Of Letters Only) Domains:

Dec 2006

Current Observed Minimum Wholesale Price (regardless of letter combo) as of December 1, 2006:

* 3-Letter .com - $3050
* 3-Letter .net - $680
* 3-Letter .org - $235
* 3-Letter .info - $125
* 3-Letter .biz - $60
* 3-Letter .us - $100
* 3-Letter .mobi - $85

Late Nov 2005


Current Observed Minimum Wholesale Price (regardless of letter combo) as of November 18, 2005:

* 3-Letter .com - $1450
* 3-Letter .net - $275
* 3-Letter .org - $110
* 3-Letter .info - $75
* 3-Letter .biz - $35
* 3-Letter .us - $15

Breaking down these figures,

2007

.com 96.72%
.net 21.32%
.org 21.28%
.info 12.00%
.biz 0.00%
.us -40.00%
.mobi 94.12%

2006

.com 110.34%
.net 147.27%
.org 113.64%
.info 66.67%
.biz 71.43%
.us 566.67%
.mobi n/a

Overall 2 year return,

.com 313.79%
.net 200.00%
.org 159.09%
.info 86.67%
.biz 71.43%
.us 300.00%
.mobi - n/a

Despite all that I'm guessing there will still be people buying up 3 letter .biz and .info over the next year and I'm guessing they will once again produce returns of half or less of the most established extensions. What baffles me is, why do people keep buying these names?

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Nothing wrong with the analysis snoopy. you ol'tracker

I would imagine theres a 'value' input that may scew your averages

Otherwise Domainers = Mr Average
I've got two hopefully not three .tvs

Last edited by Bailey on 12-05-2007 at 06:40 AM

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I more or less agree with you, but just to play the devil's advocate:

1. From your stats, over a 2 year period, it looks like .us is a winner. That seems to contradict your argument. .mobi doesn't look too bad either.

2. Also, I suppose there could be fears of a bubble. For instance, after posting tremendous returns, it looks like the price of .us collapsed. .com is now posting tremendous returns, maybe it is overpriced and the price will go down.

3. There may be a belief that the market is undervaluing a certain extension and an investor should scoop up as much as they can before the market corrects itself.

4. I would imagine capital limitations play a role. A decent dot com is a 5 figure investment and that's a lot for most people starting out.

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quote:

---

Originally posted by snoopy
Overall 2 year return,

.com 313.79%
.net 200.00%
.org 159.09%
.info 86.67%
.biz 71.43%
.us 300.00%
.mobi - n/a

Despite all that I'm guessing there will still be people buying up 3 letter .biz and .info over the next year and I'm guessing they will once again produce returns of half or less of the most established extensions. What baffles me is, why do people keep buying these names?

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quote:

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Originally posted by snoopy
What baffles me is, why do people keep buying these names?

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Risk commesurates with return.
(sometimes...)

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What "DUD" they were all very profitable..


You make a a clear attack on "other" extensions and back up your attack with data that shows those other extensions to be very profitable !

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why does this topic always get people undies in a bunch? if you got all the great coms, and your making loads of money, like sir frank, then, be happy.
but there is only one home.com, car.com, humor.com- we all cant have them obviously.
if i buy a domain for 20 bucks and flip it for 3 grand, and its not a com, then i have no qualms- why would anybody?

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I think the question of serious domain investing might come down to what level the domain buyers are at, when it comes to these less profitable TLDs.

In your view, goodname.com is worth the big money...and goodname.us is practically worthless.

But seeing this from the end user's point of view, goodname.us is just about as good as goodname.com...the only difference between the two is that someone is selling goodname.com for $100,000, and someone is selling goodname.us for $2,000.

He could buy either name and do the same thing with it. His site will look the same, and stand the same chance of gaining rank in the US. So why worry about getting the .com?

Now from the investor's point of view, it would be silly for him to let goodname.com go for anything less than it's worth. But the .us version will be easy to sell (because it's cheap) and he'll still make money.

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The problem is the buyer of goodname.us will be aware that he is buying second best. Then after branding, advertising, developing he is still going to lose traffic to the .com.

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quote:

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Originally posted by Domo Sapiens
Risk commesurates with return.
(sometimes...)

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Not always...it really depends on whether the traffic comes from type-ins or links.

A web developer must always look at the necessity for the .com in terms of ROI. If he makes $1000 per month from his site, and buying the .com would less than double that, the price of the .com would have to be considerably low for him to want to invest in it.

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everyone who buys anything but com knows they are taking second, or third or fourth best- if they are happy with a 2 grand profit, then i still dont understand what the hubbub is about. :-)

98% of the domainers can not afford to buy the types of names that frank or rick or kevin have in their portfolio- and so........

so they make some cash with other extensions- and this is bad because? :-)

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I don't think anyone is saying it is bad...I think Snoop is just trying to point out that the big money is in the .com's and that the other extension domains have a much bigger chance of becoming wasted funds.

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i know theeenggle :-)
the big money is in coms- but we all know not just any coms- and once again, the ones that are generic type in money makers are not avail, and if they are, most can not afford to buy them- so you are only left with the other stuff, which people seem to be doing ok with-

we all know this, i guess i am not sure anything was brought to light. this is the domain industry- it is made up of different domainers buying different names in different extensions-

i dont know- i just dont get why people go on a forum and say- i hate .mobi. or i hate .biz. or why are you wasting your time.

why even ask at all is all i am asking- if your not buying them, and it is not affecting you, why even do stuff like that? do you walk up to people in a parking lot and say, oh my god, you bought a toyota????? do you stop someone in a mall and say why in the world did you waste your money in JC Penney?

you may chide your own friends, but this is all over the forums, in blogs, etc.. i guess i just see it so much- you gotta wonder why ;-(

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