Here are a few more things to think about……….

The differences explained

The most important thing to consider if you are not from the UK is that British English differs significantly from English spoken in other countries. US English is different in many ways from its British counterpart, in particular

1) different words are used to describe something – sidewalk (US) / pavement (UK)

2) same words have different meaning in US and UK English – a ‘fag’ is a cigarette in UK English and means something else in US English

3) spellings differ – colour/ color, socialise/ socialize and so on

There are also differences in usage which are based on custom and practice.

This means that there are many different ways to make errors and its difficult to provide hard and fast rules.

Popularity of .UK domains

The .co.uk ‘brand’ is well established and there is a high degree of trust in the extension.

UK surfers recognise websites developed on .co.uk domains as more lightly to meet UK specific needs i.e. plumbers or dentists. Whereas, where the market for something is global or international the specificness of the .co.uk domain may be an actual disadvantage.

It has been said before but it is worth repeating, that the resale value of .org.uk domains is very poor and although there is a small market for the best generics, they should be avoided, at least initially.

Some helpful resources

From Wikipedia:
American and British English spelling differences

List of American words not widely used in the United Kingdom

List of British words not widely used in the United States

List of words having different meanings in British and American English

UK Domain Name Forums

AcornDomains.co.uk
ccTLDS.com

Domain name sales

DomainPrices.co.uk

Cruises.co.uk £560,000 ($1,099,798)
Phones.co.uk £175,000 ($344,710)
FreeCreditReport.co.uk $300,000
4×4.co.uk £38,500 ($75,360)
FreeCreditReports.co.uk $70,000
BusinessNetwork.co.uk £21,500 ($41,000)
LegalJobs.co.uk £20,000 ($39,392)
GiftIdeas.co.uk $37,950
KGB.co.uk £18,000 ($35,600)
Glow.co.uk £20,010 ($31,015)
Flirting.co.uk €18,000 [euro] ($26,240)
DiscountTravel €16,000 [euro] ($23,633)
Searchers.co.uk £10,000 ($20,520)
ClassicCars.co.uk £10,100 ($19,897)
PetrolPrices.co.uk £8,600 ($17,028)

Some good sales over the $100,000 mark. Its also worth comparing these sales with domain sales during 2007.

Frequently, people try to put together some sort of league table of factors and there is even a list of ‘factors’ on this site.

Inevitably, there will be some argument about the relative rank of each factor. And every so often someone will add in “but of course a domain is only worth what someone will pay you for it!”.

Its not that this is a bad approach and these factors are important. The problem is that there  is something missing from the great debate about what a domain should sell for. There is one factor that is often ignored in the debate.  Its a factor that is rarely mentioned. This factor can make a big, big difference in the price a domain sells for, but is rarely discussed.

That factor is this -

the price you can sell a domain name for will be influenced by your ability to negotiate the best price possible for a domain name.

Think about that for a moment…………..

In January 2008, top domainer and industry expert Rick Schwartz negotiated the sale of iReport.com, a domain possibly worth “four or five figures” for a jaw dropping $750,000.
Or read how a UK based entrepreneur entered into negotiations that led to him rejecting a $57,000 profit.

And remember negotiation skills apply just as much to selling as they do to buying.

There are perhaps three areas that domainers need to have some familiarity with in order to negotiate confidently.

1.) Domainers need to be aware of general market prices of domains and the markets for different types of domains e.g. four letter domains, geodomains, forum domains, generics and so on

2.) They also need to be aware of the future potential of the area / industry to which the domain relates

3.) Domainers need to develop an appreciation of sales and negotiation skills and tactics – others will use them and you need to be aware of what people will throw at you

The need to exploit the full potential from a domain means that the price a domain sells for is influenced by how the various valuation factors stack up and (almost more importantly) the negotiating ability of the parties involved.

Part one of this two part article was a basic introduction to the need for effective domain name valuation. Part two below, discusses concepts, tools and resources available to assist in domain name valuation.

In the first part of this article the practical reasons for valuing a domain were explored. Now we come to the heart of the matter – domain valuation tools and techniques.

I have covered the factors that should be considered when valuing a domain name - else where on this blog. These factors include the length of the domain name, the domain name extension (e.g. net, org etc) and the amount of traffic it receives.

Appraisals

Appraisals are frequently criticised within the domaining industry and while appraisals from legitimate companies such as Sedo.co.uk might be worthwhile a great many domainers never need to use them.

There are two types of appraisals………

Paid appraisals, such as from Sedo.co.uk. You can find out what a Sedo appraisal looks like in this post from the highly recommended Self Made Minds blog.

Free appraisals from discussion forums and from appraisal sites. You can find domain name appraisal sections on most domaining forums. For example, there is an appraisal sections here at DomainState and here at the UK domain name discussion forum AcornDomains.

Estibot.com provides free instant appraisals. When I tried it tonight Estibot appraised the domain name of this site – domaining.org.uk – at $180 and valued the site taking traffic into account at $640. 

Valiations based on sales of similar domains

One way of attempting to estimate the value of a domain is to consider sales of similar domains. There are many sites containing sales data. Website DNJournal lists weekly reported domain name sales and ‘year to date’ sales data. Afternic.com lists salse made through their site  and reported UK domain name sales can be found at DomainPrices.co.uk. Namebio.com is another excellent resource.

Discussions on domain name valuationThere are many discussions in forums and blogs on domain name valuation techniques. Here is an interesting thread from NamePros.com discussion forum, from 2005 which covers the topic well, and here is a quite old (2002) but still interesting discussion on domain name valuation, from Webmanster World forum. [The prices quoted are particularly out of date but the general concept is worth looking at.] In this discussion thread from the AcornDomains.co.uk domain name discussion forum a representative from domain name sales website Sedo.com provides a particularly valuable insight into how they go about valuing domains.

Other good stuff

You can check a websites backlinks with a number of sites, including www.backlinkwatch.com, www.backlinkfinder.com and perhaps the best known, www.MarketLeap.com. You can also see a history of all the websites ever built on any domain by entering the domain name into the search box at Internet Archives Wayback Machine. Finally, I’ll conclude with this article from internet entrepreneur Tyler Cruz on the Top 10 Reasons People Overprice Domains.

This is Part 2 of a series on valuing domain names. Part one can be found here. 

Do you have thoughts about valuing domains?  How would you work out how much a domain is worth? What do you think of domain name appraisal services – cool or rip off? Share your thoughts below…………………

It appears that around 50% have been registered so far and I must admit I am tempted to add to my modest holding. I have to say that even though four letter .nets are a longer term hold I am actively looking for any decent unregistered domains.

The hottest topics on the domain name discussions forums concern 3 and four letter domain names and the hype surrounding 4 letter .nets gets ever more frenetic.

The forum Namepros.com now has a short domain name section covering domains shorter than 5 characters such as “LLL, LLLL, L-L-L, 2c, 3c, acronyms, etc”. The LLLL.net countdown thread can be found here  and a more sober appraisal of the market for LLLL.nets is being discussed on DomainState.com, here.

There are also a number of bloggers reporting on the LLLL market, such as GFNB.net, the LLLL.net countdown website and QuadLetterDomains.com . Also worth having a look at 4letternoob’s blog.

If you want to find out more about LLLL.nets you may find this article from DailyDomainer.com is worth reading .

People who missed the LLL.com, L-L-L.com and LLLL.com gold-rushes want to get on the bandwagon. So do those who did well out of previous goldrushes and who want to repeat the experience with LLLL.nets.

However, not all domainers feel that way and a fairly large note of caution is required here. The demand for LLLL.net domains is different to that for LLLL.coms. If someone is looking for a four letter .com domain for their business, an alternative for that person may not be the same domain in a .net. What I mean is that a business called UKGB, which wants to buy UKGB.com but cannot because it is too expensive or in use already, may not see UKGB.net as a preferred alternative. For example, they may feel that a dot com is more memorable for their target market and if they use UKGB.net they are sending traffic to the dot com version. For them the preferred alternative may be ‘UKGBClothes.com’ or ‘UKGBProperty.com’ or whatever, depending on their business.

As I have said before I think LLLL.nets do have a market and news of some profitable sales to end users have been encouraging. The lure of a short memorable 4 letter domain in any extension will be too strong for some end users and so LLLL.nets will sell. However, in my opinion, in general, they need to be considered as longer term holds rather than a way to make quick money.

I think we should expect to see a modest increase in values as soon as the last LLLL.nets are gone. But when might we expect decent returns? Might we be looking at 6 – 12 months before the last ones are gone? After that there could be years of only modest price appreciation. Also, bear in mind that .nets have sold for 20% – 40% of the equivalent .com.

So this is a long term investment and in my opinion only jump aboard if you are prepared to invest five or more registration fees for each name held, over the next five years before having even a chance of satisfactory returns.

So what do you think? When will the last .nets available to register run out? Are they going to appreciate rapidly, modestly or not at all? Are you jumping aboard or not? Tell us why.
 

While this article is aimed at more novice domainers it will be useful to experienced domainers who have little knowledge of this niche. I decided to write this article after researching the revenue potential of forums.

In this article, I provide some background information about how forums are developed and monetized and I think this will be of interest to domainers who need to buy or sell forum domains. Armed with information in this article domainers may be better placed to negotiate effectively with end users when selling forum domain names. Domainers will be better placed to negotiate down sellers who ask unrealisticly high prices for their forum domain names, while being better able to justify the asking prices for their own forum domain names. It also provides a brief introduction to forum development and will be of interest to domainers looking at the opportunities in developing forum domains.

Forum domain names ought to be big money makers! This is because:-

• forum software is free,
• website content is developed by site visitors,
• over time this content will be of considerable volume,
• the content is regularly updated which is a benefit in terms of search engine optimisation,
• there are many potential revenue streams such as Adsense and many others

The reality is very different but the reasons why are more complex than you might think.

Revenue: Forum owners argue that because their visitors are interested in the forum, and interacting with other forum members, smaller proportions of visitors click on the forum’s ads than visitors to other types of sites. This means that forum earnings are generally modest, as discussed here and here, for example. The reasons why this might be the case are discussed in this post from the Admin Zone Forum.

Forum owners resort to advertising to cover running costs and many are content with making a modest surplus out of thier forum. Some even return this surplus to members of their forum in the form of competition prizes and incentives.

Additionally, the amount of revenue generated by a forum is influenced by the forums discussion topics. Where the site is monetized by Adsense there is a wide divergence between the sums earned from high paying and low paying clicks on ads - business / finance ads produce more revenue per click than pets. 

A small number of forum owners offer premium memberships. These can generate significant revenues but are generally only viable on larger, more popular discussion forums. 

For domainers, the most important thing to bear in mind is that forums are cheap to set up but frequently only start to make significant revenue when they are popular and this can take a significant period of time (perhaps up to a year or more).

Costs: Forum software such as phpbb and SMF are perhaps two of  the best known free forum software packages. vBulletin is another popular forum software package, although it is not free. Altogether, I would guess that the vast majority of discussion forums are developed using one of these three packages.

Forums also require a hosting package that supports the php programming language and a MySQL database. Hosting packages that provide these facilities are likely to be slightly more expensive than those that don’t and larger forums may be very intensive users of server resources, which may also incur extra costs. 

Content:  Google loves regularly updated site content, and the pages of content produced by site visitors is a great benefit. However, early on in the life of a forum there is unlikely to be much content and in the ’start up’ phase of developement most significant content is frequently produced by the forum owner.  

It takes time, energy and luck before forums reach the size that allow the site owner to take a step back from intensively producing content.

Motivation: Generally, forum developers do not establish forums with profit in mind. Forum developers have a passion for their subject and work hard to set up communities that form around their chosen topic.   By setting up a forum, forum owners have made a comittment to work on their forum site for weeks, months and years. Obviously the domain name they chose is vitally important to them and this will help determine the selling price of forum domains. It is also worth saying that developers release value from their forums by selling their developed forums on the open market, although determining a forum’s market value may be a problem. Forum owner and expert on forum development, Martin Reed, discusses today how much forums are worth on his forum owner’s blog CommunitySpark .com .

Forum domain valuations: Forum domains rarely earn the fantastic sales prices reached by generic and some brandable domains. However, forum domain names are marketable, are frequently sought after and can sell for a good profit. (Especially if bought at registration fee). Notable forum domain name sales include Forums.co.uk in 2006 for £5,000 (around $10,000) and more recently SportForum.com for just over £2,600 ($5,300) and  CarInsuranceForum.org for around £1,200 ($2,400).

Forum, chat and talk domain names: In my opinion, [keyword] + ‘forum’ is preferable to [keyword] + ‘forums’, but not everyone agrees. Hypenated forum domains are generally unlikely to be worth much. Domainers should expect [generic keyword] + forum(s) + .com domain names to be most sought after of all. Domainers need to know that while ‘forum’/ ‘forums’ is preferred, the words ‘chat’ and ‘talk’ are often acceptable alternatives to the words forum or forums such as in ‘cardschat.com’ and ‘webhostingtalk.com’. 

Conclusions

In conclsion, I think there will be demand for forum domains for as long as there are people developing forums. The best forum domains are probably worth holding on to for the long term until you find the right end user. In the meantime develop it as a forum, if you can, or set up a minisite to off-set hosting costs. 

The million dollar UK domain name. Perhaps the biggest news item of recent weeks is that the sale of Cruises.co.uk broke the record for the most expensive UK domain name. The buyer, who also owns cruise.co.uk,  paid in the region of $1 million, which is about £560,000.

Next – here is a question. Anyone heard that there might be a recession? Well there has been a lot of speculation about how a possible recession might affect domain names. At the time of writing it seems like the majority of economic commentators think there is a good chance that we will slip into a prolonged recession. So if it does happen what might be the possible impacts on our domaining activities. Paul Sloan writing in the US business journal Fortune Magazine says that domain names may be recession proof. I dont think he is right and neither does Mark Jeftovic, from easyDNS.com. His appraisal of the possible impacts is well worth reading.

King Domainer Rick Schwartz had a cool interview in Australia’s Sydney Morning Herald    

Social networking site MySpace recently won what might become a landmark decision after it won a case against the owner of MySpace.co.uk. Importantly, the owner obtained the domain many years before the site MySpace was created.Scott from the entrepreneurs blog Self Made Minds is an active domainer with some great names in his portfolio. He recently blogged about an domain name appraisal he received from domain name sales site SEDO.co.uk and reproduces the appraisal, which makes interesting reading. It is interesting to see what a Sedo appraisal takes into account. Scott is kind enough to share his domaining strategies on his blog. Here he taks about turning down an offer of $57,000 for a few of his domain names. Finally, domainers who use eBay for buying and selling domains will be interested to read how eBay now stops sellers leaving negative feedback for buyers. Whether this is a good idea that will improve the user experience or just lead to a increase in non – paying bidders remains to be seen.

To start off the year lets look back to 2007 for a moment.

UK domain names sales have been doing well in 2007. So I have decided to provide you with an up to date list of the top .co.uk domain names sales, during 2007 as reported to DN journal (DNJournal.com) .

They are listed below with rough US dollar equivalents in brackets ().

1. Recycle.co.uk £150,000 ($309,901) 
2. Mobile.co.uk £120,000 ($247,921) 
3. Fly.co.uk £87,500 ($181,042)
4. Connected.co.uk £80,000 ($157,931) 
5. Phones.co.uk £45,000 ($93,071) 
6. Reviews.co.uk £38,000 ($75,307)
7. Hero.co.uk £20,000 ($39,232)
8. Stationary.co.uk £17,000 ($34,320)
9. Theaters.co.uk £16,000 ($32,324) 
10. eBaby.co.uk £15,000 ($29,089)
11. College.co.uk £13,750  ($27,500)
12. MopedInsurance.co.uk £10,000 ($20,728)
13. Fashionista.co.uk £10,140 ($20,089) 
14. PDA.co.uk £9,000 ($18,453)
15. Dive.co.uk £7,500 ($15,236) 
16. Farms.co.uk £7,000 ($14,609) 
17. CarHireMarket.co.uk £7,000 ($14,465) 
18. Locals.co.uk £7,050 ($14,323)
19. ScooterInsurance.co.uk £6,600 ($13,640) 
20. Walk.co.uk £6,500 ($13,205)
21. Bikinis.co.uk £5,875 ($12,262)
22. Emigrate.co.uk £6,000 ($12,249)

A very impressive list with some surprises mixed in there as well. The sale of Recycle.co.uk which tops the list was a surprise for many. MopedInsurance.co.uk and ScooterInsurance.co.uk seem like bargains to me.

It is also interesting to see what sold domains have been used for.  For example, Bikinis.co.uk and Walk.co.uk are parked. Reviews.co.uk is a product review site and Fashionista.co.uk points to the ‘fashionista’ section of the Freemans clothing website. Finally, Locals.co.uk is a well presented buying, selling and swapping site – just the thing you need for those unwanted Christmas presents!

What do you think is best for an end-user with a limited budget to buy: a spectacular term in .net or .org or a so-so term in .com?

Now the question Jeff raises is one that will become more common as the world wide demand for domain names grows.  The attraction of ‘good’ names in lesser (read cheaper) extensions is easy to understand. However, cheaper does not always mean better.

I will assume that the end-user is some sort of business start up - lets say a bricks and mortar business establishing their first website.

The short answer is that it depends on the names they are considering and it depends on the business.

In my opinion there are a number of factors which need to be taken into account when choosing between domain names with either .com or .net/.org.

Non .com extensions will leak traffic to the .com version of that domain name. Every business set up on a dot org and dot net domain will lose a proportion of their traffic to the  dot com version of that domain name, although the amount of that leak will be difficult to predict. 

The leak occurs because customers/ potential customers will frequently recall the name of the site and add ‘.com’ almost instinctively, unless they recall that it is on a relatively unusual extension .net, .org etc.

Inevitably, the more the .net or .org site is marketed, the more traffic is sent to the .com, however, the problem is that the .com domain may well resolve to a competing business’s website.  

Some businesses are willing to live with that loss (perhaps because the .net is a relevant, memorable generic, for example) – for them the .net or .org is a viable option.

However, without a compelling reason like the one mentioned above, I would argue that a business on a limited budget just cannot afford to develop a site using a .net or .org domain name.  It is as simple as that.

Additionally,  there are good .com domains still available at under $10,000 at the moment on the secondary market. If that sounds like a lot of cash, I suggest that $10K will not sound excessive when you look at the cost of placing one decent sized advert in any reasonably large circulation newspaper, journal or the like. 

Finally, there are still unregistered .com domains available and the fear of buying so-so domains needs to be put into perspective. The ’so-so’ domains of today may be the sought after domains of tomorrow. Contrary to what a lot of people think, all the best domains have NOT been registered. Three word domain names are becoming more common and we are going to see a lot more of these in future as one and two word generics become harder to find, or become relatively expensive.

End users will need to weigh up the pros and cons of developing sites on a spectacular .net against developing a so-so .com. Clearly, there are a number of factors that need to be considered when deciding the best course of action. The information in this article can help businesses in this situation to devloped an informed opinion on which course of action is best for them.  

So, in my opinion the .com will almost always be the better option for someone in this position – but what do you think? 

However, one area of domain names that is least likely to change is the fundamentals that support the internet addressing system. By that I mean the existing system of domain names and domain name extensions – the fundamental way that people navigate the internet.

It is not perfect system by any means – but in many ways we are stuck with it. While it is difficult to see how internet navigation will change in any fundamental way (were are stuck with domain names and domain name extensions for some time, I would think) there is at least one trends that I see emerging that domainers need to consider.

The .com domain name extension is by far the most easily recognised and understood domain name extension of all. For many, possibly most people their online surfing experience is limited to websites with a .com extension or the extension for the country they live in. The .net, .tv or .mobi extensions mean little to many people and I suspect that the problem is greatest with older users, and users in countries where internet usage is much lower than that of the US and UK.

Dot com is known worldwide – it is effectively a global brand – and this advantage gives it a dominant position that puts it far ahead of any other domain name extension. That is unlikely to change. As a consequence .net and .org as well as other extensions will never be viewed in the same light as .com, except for the purposes of search engine optimisation (which is not covered in this article). In addition, if you have a site that is not built on a dot com domain, it may be harder to market the site. This is because people who are looking for your site but don’t remember its name are likely to type in the dot com version of the domain name first. Having said that, there will always be demand for memorable, short, descriptive and compelling domains, regardless of the extension.

So, to put it simply, dot com will continue to be ‘king’ for the foreseeable future. What does that mean for domainers? Three things, I think-

• If your domain name portfolio contains names without the .com extension be aware that they are likely to be worth only a small fraction of the .com version.
• I believe that many domainers are avoiding non dot coms for the reasons mentioned in this article (except for premium generics)
• When valuing domain names be sure to factor in the unique characteristics of .com domains, as outlined below.

Having said that, I am still very optimistic about the .uk domain space, and I am encouraged by the healthy sales being reported. For this reason I will continue to seek premium generics in the .uk ccTLD.