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When the Domain Sales Boom Ends One Expert Thinks The Culprit May Not Be the One You Expect

As we near the end of 2021, many of us have begun assessing what kind of year we've had and what the prospects for our industry look like as we get ready to head into a new year. On one hand, we had clearly seen a continuing boom in the domain aftermarket. On the other, some wonder if competition from growing digital assets like NFTs and crypto could siphon off some of the revenue that has been fueling the domain surge. Last month, when I was in touch with veteran domain broker Neil Bostick (QEIP.com) about the launch of his new high-end domain marketplace, Graen.com, I got his thoughts on where we've been this year and what he sees ahead in 2022 and saved the notes to share with you once we got into this month - the closing stretch of

Image from Bigstock

2021. Bostick's view echoed the ambivalence about market prospects that I noted above. "In general, the market is obviously red hot and there are a few different things that really excite me and a couple small things that worry me," Bostick said. However, his biggest cause for concern turned out to be a different disruptor (and time frame) than that posed by NFTs and crypto.  

Neil Bostick
Founder, Graen.com

"For some perspective, my sales were relatively the same between 2018 and 2019 but then I did 3 times more sales in 2020 than I did in 2019. I think this was because there was a boom in new startups beginning after so many industries were forced online (with COVID). Then in 2021, I’ve done 3 times more sales (so far) from 2020. I think that this was because the bigger companies that were forced online in 2020, planned their 2021 marketing budget to account for larger domain purchases/upgrades (they couldn’t move as fast as the startups in 2020). With Graen, I expect to do more than 3 times my 2021 sales in 2022 …but I don’t think that will be because of market forces - more so just because of the platform taking market share. There is definitely a lot of funding still going on and that money is going to be spent in the next year or two so I definitely have a lot of confidence that the domain market is going to be hot for the near term."

"That said, it is keen to note that a lot of investor demand for domains right now may also be a side effect of just larger demand for

collectibles in general. This slightly concerns me as a major indicator of a bubble has tended to correlate with high valuations for non-productive assets (non-income generating assets) like collectibles, a category that some domains can fall into. So I worry if the collectibles/NFT market implodes, domains will likely be a casualty. I do have a lot more confidence in domains than I do in NFTs but I’d be remiss if I didn’t note their correlation. The biggest casualty might be Collectibles.com which I am trying to sell."

"As a lifelong ‘Devil’s Advocate’, a constant thing I always think about with domains is its lifecycle - any domain investor would be lying to themselves if they think that domains have an infinite life. They are intrinsically a main asset of one of the biggest technological developments in human history - yet as any technological asset, they are only as good as the system behind them (and all technology becomes obsolete at one point or another). The question in my mind is when is the climax for domains and at what point is the next generation of ‘global online real estate’ going to become available," Bostick wondered.

"With new developments like the focus on the ‘metaverse’ and all of these technology companies (like Google, Amazon, Facebook, etc.) having their own small version of an open source internet on their platform, I ask myself when will be the day that someone is crazy enough to invent the new network for the world (one faster, more efficient, safer, etc.). I think the implication that many people might not think about is that with a new ‘metaverse’, or platform to reinvent the internet, comes the new opportunity or threat to have domains be made obsolete (through the use of a new system)."

Bostick continued, "Many people are worried about .COM being made obsolete (or at least, less dominant) by the emergence of new TLDs, but I would argue that the risk of 

Image from Bigstock

domains in general being made obsolete (or going the way of MySpace handles) may be a bigger concern. That said, I ground my work/investments/businesses in domains on the fact that if domains are made obsolete, it would not be a fast process and so many tech companies would simultaneously become obsolete and the return of my domain investments and SP500 index might have similar percentages of loss. With all the faith I have in the domain industry, I remind myself that companies can adapt while digital assets cannot. That's me being a contrarian as a I don’t believe in over-selling anything - just saying it how I think it is. Regardless, I am very confident in the domain industry and hope that Graen.com will be able to weather the storm as a major player for the next 20 years!

 

(Posted December 3, 2021)  

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