If The Number '5' License Plate is Worth $6.8 Million, What Is Your Domain Name Worth?

Domain names and license plates share some common characteristics.  Both allow only one person to own a particular word or number.  The supply of good words, vanity words and generic words is finite.  Demand for those strong generic or descriptive words is high.  Where does supply meet demand on the price curve?  Domainers can learn from what is happening in a similar market for - of all things - vanity license plates.

The number "5" license plate sold for $6.8 million dollars in Saudi Arabia and another 300 vanity plates sold for another $56 million at last week's auction.  It is estimated that the number "1" will be auctioned next month for up to $20 million dollars.

The free market is just realizing the value of a domain name, driven by the fact that each domain name is unique and - typos and cybersquatters aside -  their 'one-of-a-kind' nature. Domain names are in many ways like lake front property.  There are only so many lots on the lake. The best lots with the best views and lake front are unique. Once you own that lot, no one else can have it.  It is yours.  As all of the lake property gets sold, values for all lot owners go up.  The supply becomes constrained.  Value and price go up.

What is your unique domain name worth?

Domainers need to also learn to buy up all typographical versions of their most prized domains, so they can be packaged and sold together. There is less 'vanity-value' if your neighbor on the lake builds a house almost identical to yours and so on, all the way around the lake.  Just like trademark holders need to protect their 'space' so should domainers protect the area around their most prized domain properties. Make them unique by owning as much property surround your domain as possible.

Comments

[Enrico Schaefer]

Adam: I can't remember if I got to the CNN report through your reader or my daily read of CNN. But you should know that you are one of my top feeds for news and information about domain names. Keep up the great work. I'll work hard to be diligent on identifying domain news sources. Thanks for adding you link :-)

[Adam]

How did you come across such a great article ? ;)
http://www.domainnamenews.com/domain-auction/forget-about-domains-license-plates-fetch-big-bucks/1419

[webmasters blog]

wow.....great bucks

number 1 , number plate expexted to fetch more than sex.com.....really amazing

[Enrico Schaefer]

The domaining community has been making this argument for years. All of the 3 domains are taken. All of the good 4 letter domains are also gone. There is no more property on on the lake in those categories.

And why not buy those domain properties now? Domain names are likely to keep appreciating as the market matures and companies start to realize that domain names have real value because of, in part, their scarcity.

[Rick B.]

There is only one ireport.com in the WORLD. Rick sold this domain name too low. It is a great generic domain name. CNN got a great deal on that domain name.

I wonder how much of the ireport domain was driven by vanity? On the one hand, you can say that they needed the domain to match their ireport service. I would argue they 'wanted' the domain more than they absolutely 'needed' it. There must have been other options. As I recall, CNN started running ireport before they purchased the domain name from Rick. CNN's desire for the domain was driven by more than the pure 'vanity' component of a low number license plate, but still contained an element of 'want' over 'need.'

Domainers should not underestimate the role of vanity in their domain name sale negotiations. Domain name buyers are often driven by vanity at least in part on their domain name purchases.

[John Di Giacomo]

This is pretty interesting. I read last week that ICANN was again kicking around the idea of registering single letter domains. Talk about scarcity! It will interesting to see the going rate for a single letter.

A lake home that continues to generate wealth... I love that analogy.

[Domain Name Monetization]

Look at what Rick Schwartz did with ireport.com. CNN did not even realize he owned ireport.net. Rick threw it in for free on top of their $750,000 purchase of the ireport.com domain name. Could CNN have really been that dumb? They didn't even ask him what other domains or extensions he owned related to ireport?

It just goes to show that in this rapidly growing market, both domain buyers and domain sellers are still figuring it out.