Today I came across a long article written by a domain investor called Wei Tian LI (李伟天). While copies of this article can be found in some Chinese news and forums, I could not locate its source. However, because its content is very interesting, I decided to reorganize and summarize its main points here. This article was written after the author attended the Global Domain Industry Summit.
Warning:
(1) Bulk trading has no truth because of the burden of renewal, so the boom of 2015 will not come again.
(2) Weixin is eating websites (domain names). Weixin public accounts have quickly grown to 15 millions — much more than the 4.2m Chinese websites developed since 1984. Companies are shifting to Weixin to reach their customers.
(3) While new gTLDS are here to stay, many (such as .ee and .gg) are highly risky as investment because of lack of test of time and wide recognition.
(4) Domain securitization does not work because Pinyin names are hard to appraise and short number/letter names are too small in quantity to support the market; lack of supervision and trust in the market are the other factors.
(5) Increasingly tight control of the Internet by the government makes it difficult to have boom in domain sales.
(6) It’ll take longer to find the right buyer because huge supply of new extensions gives end users lots of choices.
(7) Domain names may be replaced by something new if the younger generation go for something else.
Advice:
(1) Shift thinking from “domain name” to “short domain names”.
(2) Make sure your domain name can be used to develop into a website.
(3) Stick to meaningful .com names as their values will continue to rise. cn, net, and org are OK as they will survive. But, beware of other ccTLDs and new gTLDs as they can be manipulated by registries and big money funds.
(4) Avoid debt but keep cash. Watch more, buy less.
(5) Review domain names and drop the bad ones.
(6) Treat domain investment as secondary income source, not primary one.
(7) Do not expect mega return. 20% should be considered very good.
As I’ve said, I don’t know the author so I can’t tell his track record in domain investment. Therefore, make your own judgement when dealing with the Chinese domain market. A copy of the article in Chinese can be found at: http://www.22.cn/news/2016/0608/6380.html.
Warning #4- caught my eye. recent attempts at securitization of shorts
lack the quantity to support that kind of market. -Good point!
Advice #3- Disagree. A widely held “speculation” justification that meaningful .com’s will continue to rise… A Reason in favor of “other” tld’s taking hold is because of .com valuations. Another better reason is “relevance”. Global relevance in the end users market! Meaningful in the language of the market the business is related to and the customers it wants to reach will be more relevant than simply .com Think “relevant.location” rather than “.location”.
Both reasons will put price pressures on “what’s left” of the .com era.
The short high priced .com’s that aren’t in use have an incredibly small buyers market compared to the broad market. One could easily suggest “the top .com’s” would have to maintain 6+% ROI yr/yr without paying commissions just to cover tax and inflation to keep that kind of investment tied up. Not likely to happen. While hundreds of “other” tld’s will disappear, hundreds will remain in the wonderful world of competition putting price pressure on all domains deemed irrelevant by the broader market, including .com. It’s like saying one should stick with a hard wired land line instead of a mobile simply because it’s been around longer and it’s more reliable. No longer relevant and also impractical in a large part of the world. .com is no different.