Is China reliving the mid 1990’s domain name buying bubble?
As most of you know, a good portion of my posts on this blog have been primarily targeted at small to medium-sized business owners looking for SEO tips and tricks.
This audience (that’s you too!) desires to promote their website(s) safely to search engines in order to increase search rankings and results, and get more customers and cash.
In between the various SEO posts, such as today, I sprinkle a few blog posts about domain names or the domaining industry in general.
Today’s post will blow your mind as it pertains to domain names and China, and how both are settings records right at this very moment in time.
What’s going on in today’s domain market for both buyers and sellers is very much reminiscent of the mid to late 1990’s when the Internet was just budding into existence with premium domain names.
China’s virtual real estate wealth and investments
Whether you know it or not, there’s an interesting phenomenon happening in the domaining industry and China is leading the way. If you didn’t know, China has great wealth. And with this wealth, droves of investors are converting wealth into a digital, privately or publicly held, tax-free, portable investment: domain names.
China has become the largest buyer of domains over the last two years and counting, buying domains by the hundreds and thousands. Tens of millions of dollars are exchanging hands month after month. There appears to be no slowing down in this erratic domain name buying spree.
And like everyone watching this event unfold before our very own eyes, I, like everyone else, want to know why China is buying domains. In addition, I want to know, for those newly minted domain name investors and owners, what domains are they investing in?
What I currently know is that China is not buying common domain names that most would consider to be a great value. Most of the high-flying thousands and millions have been invested acquiring three- and four- character, primarily all letters or numbers, although five- and six- character domains may be on the rise too.
China domain buying hitting close to home
Owning a diversified portfolio of approximately 550 domains myself (I’ve cutback quite a bit over the last year), I’ve noticed a substantial jump in email inquiries for the handful of four-character domain names I own.
Most of these inquiries were in Chinese, or some form of broken English and Chinese with low four-figure offers.
The timing and values of the various inquiries had made me scratching my head even more. Inquiries have come out of nowhere in the last month, hitting my email inbox to the tune of 5-10 per week. Quite curious, I had to figure out what was going on for such offers to be made.
Reading DNJournal.com and Domaining.com, and listening to podcasts of DomainNameWire.com and DomainSherpa.com, I quickly figured out that three-character domains are going for a basement price of $50K or more. Yes, $50,000 for a domain and that’s just a drop in the bucket.
I’m not certain of the exact value of the four-character domains I own (CCCC .com domains, C = consonants), but I do know each is substantially more than the low 4-figure offers hitting my inbox weekly.
In fact, I’ve been setting alerts to watch GoDaddy Auctions while supplementing Chinese domain knowledge using Choami.cc, LLLLSales.com and Benmi.com.
I’m baffled by the Chinese market, and the buying and investing patterns. There appears to be no rhyme or reason for the buying and investing habits occurring in the .com, .net, .cc and .cn extensions.
Types of domains China flocks to invest in
Doing a good bit of research, I’ve found the following knowledge to be somewhat helpful in determining the various patterns of letters and numbers in domain names that Chinese investors are finding substantial value in:
- Mandarin Pinyin vowels are not truly visually and phonetically represented the same as English vowels, so typically vowels hold less or no value in domain names (depending upon context and how vowel is used)
- The letter v is considered less valuable
- Letters such as q, z and j are considered premium value in China
- Combinations of numbers contain meanings in Chinese culture (e.g. 520 means “I love you” and 5201314 means “I love you for a lifetime”)
- Shorter is best, and numbers appear to be valued higher than letters
- Repeating numbers carry weight although a domain like 8888.com will be more valuable than 288.com
- Sequenced numbers are valuable (e.g. 678.com, 123.com)
- Zero and Four at the beginning carries a negative meaning and energy (although I’ve seen quite a few domains purchased with a not leading Zero and/or Four in auctions)
- However, a single Four can lower domain values by 50-70%
- Zero at the end of a domain is good thing
- Eight is a great number and the more eights, the greater the value
- Two Three, Five, Six, Seven and Nine are not too far behind in moderate value
A few of the aforementioned bullets fly in the face of Western domain investing strategies. For instance, per DomainSherpa.com, letters such as j, k, q, v, w, x, y and z are considered non-premium letters, or letters of lesser or no value. In contrast to China, all other letters are considered premium or of moderate value.
Is this a repeat of the mid 1990’s for the domain industry?
In closing, I’m not certain where all this domain name buying and investing will lead us and the industry at large.
Will it last? Who knows. Is it a bubble that is likely to have a few people lose their shirt, house and car? Who knows.
As always, time will tell when we get a few paces down the road and look back at this event.
For now, I’m studying up on Chinese culture, market and getting in where I can with domain purchases, auctions and sales that are best aligned with my portfolio investment strategy.
Stay tuned for a follow up post about the various domain name auctions and types of domains I’m finding on a daily.
And yes, I’ll sprinkle a few SEO posts and domains in the mix as well. Okay, gotta go and study up… Bye for now.