Friday, October 5, 2018

Are Average Domain Prices Decreasing?

Recently I looked at what years the top 100 all time domain sales took place.  The data shows some correlation to the strength of the stock markets, with a slight lag. Other than  that, there is not clear statistical evidence for a net increase or decrease over the two decades studied.  A more important question, though, is what has been  happening to the average  domain sale price. I look at that in this issue.

The Data

Let's start by taking a  look at a NameBio generated graph of the average weekly price over the past decade (click on the image to see a higher resolution view). It is clear that there was more variability in the early years. There is also an indication that the average weekly sales price has been decreasing.  Many weeks this year that average has been $900 and less, whereas in the early parts of the period covered in the graph the average is normally in the $2000 to $3500 range. The plot is for all domain extensions, with the weekly average used.

While the graph suggests that the average price has been decreasing, it is difficult to discern precise data from the NameBio generated plot.  I therefore looked at the average sales price in different intervals, with that data given in the table shown on the right. I looked at data for both all extensions and for .com only,  although the data is only slightly different since .com is dominates the market.


Certainly the data seems to suggest that prices are going down for domain names. For example if we look at .com domains only the average over all time represented by the NameBio database (about 20 years) is $2714.  If we look at only the last five years it is $1731 and has dropped to $1258 this year.

One explanation is that more low quality domains are now selling.  There is some evidence in the data for that hypothesis. For example 2016 had 67,600 sales of .com domains while 2017 saw 66,400 sales, but the average number over the last five years is lower, 58,500.

It would be interesting  to know if the median price was going down as well, but this can not readily be calculated for large datasets with the NameBio public interface.

It is relevant to look at resale of the same domain name to see if that was going up or down.  This is more challenging to do, but for a small dataset (I studied 13, 165 domain name sales over  a  61 day period) indeed prices seem to go down more often than  they go up. I found 288 domain sales with a previous sales history, 104 showed an increase and 184 a decrease in price. As I explain, however,  the apparent conclusion may not be valid, and in any case the statistical sample is small.

Over the years there have been some changes in which venues report to NameBio, and it is possible that there are systematic biases introduced by this. 

If it is true that domain prices are indeed falling that has serious implications for the viability of domain name investing.  If we view domains as a commodity it would mean that simply holding a portfolio of names will, on average, be a losing proposition. I will develop this hypothesis in a future blog post, although the apparent downward trend should be of concern to domain name investors.

Original post Oct 5, 2018.

Fine Print

This post is offered for informational and educational purposes only, and should not be considered domain name investment advice. While an attempt has been made to be accurate, there is no implied or explicit warranty, and you are responsible for verifying any information of importance to you. You also accept full responsibility for any domain investing decisions you may make. I have no association with the folks who maintain NameBio. I acknowledge the makers of these for the valuable products that they make freely available to the domain name community. 

I try to be fair, balanced and objective in my analysis.  If you feel this post does not meet that standard, please express your concerns to me.  I never accept compensation to provide favourable review of any particular service or product.

The text of this posting is ©R Hawkes, all rights reserved. However, you may, without permission, use reasonable length portions of the post as long as a link to this post is also provided. If you wish to use the complete contents of a post, please request permission. I am normally open to reprinting, but will consider each request individually. 

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