Boston Consulting Group (BCG.com) put together a very detailed look at the secondary market for domain name sales.
There were four authors who contributed to the piece. Ramiro Palma, Raj Varadarajan, Jaison Justin and Stephen Robnett.
The authors wanted to better understand a market that in their opinion is not well understood. They had questions about who participates and why? How big is the actual market? The article highlights the decline in the Chinese secondary market from 2017 to 2020.
Their findings will prove interesting to many investors in my opinion.
Here was one finding from the study:
The net result is that, on a dollar basis, the secondary market, at $2.1B/year, is almost as big as the primary market, at $2.3B/year, and nearly double the size of the registry’s wholesale revenue of $1.1B/year. In other words, nearly half of the dollars end-users spent buying new domains go to domainers.
They break domainers down into 4 segments:
Corporate domainers. These number in the dozens of domainers. Each of them owns more than 10,000 domains and together they hold ~26% of secondary market inventory.
High-volume domainers. This segment has a few thousand domainers. They each own 101 to 10,000 domains—and together hold ~18% of secondary market inventory.
Low-volume domainers. Each domainer in this segment owns no more than 100 domains. They are too numerous to count reliably, and together hold ~13% of secondary market inventory.
Private domainers. The final segment is one that is opaque, i.e., a segment where ownership patterns and numbers are difficult to estimate—these domainers hold ~43% of secondary market inventory.
There is also a slideshow that is worth reading, you can find it here.
They did a nice job thank you for posting.
Is this more Verisign sponsored nonsense?
I did not see Verisign mentioned anywhere.
That is the point, this smells badly like Verisign paid propaganda. Why would a consulting company do a report on domainers and arguing the registry doesn’t make that much in comparison?
Someone must be picking up the tab for this?
The report looks only at revenue and not profits, and in so doing, it states that the secondary market (“Domainers” as they claim) generates more revenue than the registry and the registrars.
What they don’t mention is that close to 70% of the registry (Verisign’s) revenue is pure profit – the company is as fat as a company can get, its perpetual no-bid contract to operate dot com earning it close to $800 million a year in extra cash flow from registrants. A billionaire, Warren Buffet, is the registry’s largest owner because he knows a protected cash cow when he sees one.
Further, much of the revenue the report says goes to domainers in fact goes to the large corporate platforms that auction expired domains – Godaddy Auctions, Snapnames/Namejet, Dropcatch. Their massive earnings from running those platforms are risk free as they do not hold expired domain inventory and those earnings do not go to the domain investor in any way or to the original registrant who let the domain drop only to be snatched by the highly-profitable auction funnels operated by those big companies. They are the ones soaking up all the money in the secondary market, not domainers.
Did some troll write they didn’t report on profits? You mean they did not have the acquisition prices?
I really blame the owner of this blog for allowing the trolls to populate the comments.
The comment on profits is 100% accurate. Verisign has massive margins whereas in domaining overall money is lost each year. That money goes mostly to Verisign via reg fees.
The owner of this blog should also consider looking at the unpleasant way you communicate with people in the comments section and speak out against it rather than allowing nasty insults like yours to fester. You can have a difference of opinions without resorting to calling the other side names. Sad to see adults talk to other people like that.
No I was talking about the guy saying they did not say how much profit. No shit Sherlock, they did not have access to that data, so duhhhhh.
Some of you really need to get a new hobby.