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  #1 (permalink)  
Old 8th January 2008, 11:17 AM
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Good post by Jay re domain value

love him or hate him... Jay makes a very good point on his blog about domain values of the future

http://blog.domaintools.com/

in summary, he draws a parallel to that of house prices, and declares that houses only cost what they cost, because people can afford them (through mortgages)

if there were no mortgages available for houses, they would still be affordable, but in a different price bracket altogether.

If you relate this scenario to Domain names, it's a fair assumption to make, that should mortgages ever become available to purchase domain names, then the prices would rocket to "affordable prices", but on a different scale.

IMO It's a point worth bearing in mind next time you're out pitching your wares.
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Old 8th January 2008, 11:29 AM
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Re: Good post by Jay re domain value

Fair point, but you will always have to put down some kind of deposit.

In the domain business that is always likely to be 30% or more because of the difficulties in getting fair valuations for each name.

As most people here are asking much less than a tenth of reasonably projectable values, there is no reason to argue that the lack of availability of such finance would have much impact on prices.

I know for a fact that many members here would willingly pay more for an ASCII at the moment than IDN even if the keywords were grossly inferior. That is reasonable to some degree because of the existing incomes and the lower perceived risks. This alone suggests strongly that it is not affordability per se that is the problem with the majority of buyers, but risk aversion. Basically, they are not prepared to commit in a big way because they are not sufficientlly confident to do so. The problem is that seem to feel that the risk will come down signficantly whilst prices remain static. Of course this assumption is totally baseless and will lead to many missing out on excellent investment opportunities.

On the sellers perspective, there is distress in many instances due to the lack of cash flow. However, generating annual renewal fees is a very modest target in terms of income generation. Once traffic comes on stream these levels will be achieved almost instantly for domains of any real value. Those distressed sellers will be distressed no more, so although the risk will diminish, the availability of domains at anything resembling current prices will totally dry up.
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Old 8th January 2008, 11:55 AM
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Re: Good post by Jay re domain value

Main difference being that everyone has to live somewhere
.. not everyone has to .... oh well .. you get what I'm saying
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Old 8th January 2008, 11:59 AM
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Re: Good post by Jay re domain value

Domain financing is more comparable to business or club membership financing.
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Old 8th January 2008, 12:02 PM
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Re: Good post by Jay re domain value

Successful Entrepreneurs understand RISK:

The Intel chief executive said the firm had a roadmap for five more generations of chips, over the next 10 years.

"I have no doubt we will make all the breakthroughs necessary to make the five generations happen."

He told BBC News: "Intel, as a leader, has to advance the silicon technology every generation.

"Our business model is one of very high risk: We dig a very big hole in the ground, spend three billion dollars to build a factory in it, which takes three years, to produce technology we haven't invented yet, to run products we haven't designed yet, for markets which don't exist.

"We do that two or three times a year."

He added: "Everything we do has an inherent belief in technology."

'No compromises'

http://news.bbc.co.uk/1/hi/technology/7176177.stm

What exactly do most of the those that have signed up here understand?
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Old 8th January 2008, 12:02 PM
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Re: Good post by Jay re domain value

'Real' domains are grossly undervalued.
Question is for how long.
I don't see any comparable commodity/asset to domains.
A rare diamond is worth millions and can only go up in value for it's rarity.
The Prime domain of an industry enjoys the same benefit but also has another one which is the ability to grow a business...if not make the business.

Bodybuilding.com did not sell because of the domain, but without the domain it would not get to where it is imo, or it would but the road would have been ALOT more painful.
http://www.foxbusiness.com/markets/i...425857_15.html
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Old 8th January 2008, 12:53 PM
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Re: Good post by Jay re domain value

Note that all "domainmortages" domains were taken a long time ago!

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Old 8th January 2008, 03:37 PM
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Re: Good post by Jay re domain value

Quote:
Originally Posted by mulligan
Main difference being that everyone has to live somewhere
.. not everyone has to .... oh well .. you get what I'm saying
Every business will need a place to live, online.
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Old 8th January 2008, 04:37 PM
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Re: Good post by Jay re domain value

domainbackers dot com
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Old 8th January 2008, 06:33 PM
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Re: Good post by Jay re domain value

Quote:
Originally Posted by jose
Every business will need a place to live, online.
Ok .. let me clarify .. everyone on the planet needs a place to live .. not everyone needs a domain
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Old 8th January 2008, 06:38 PM
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Re: Good post by Jay re domain value

So, if I buy a big-screen TV and pay cash, the TV will cost $1000. But if I purchase that TV with financing, (like a credit card) than that TV should cost $5000.
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Old 8th January 2008, 06:39 PM
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Re: Good post by Jay re domain value

Quote:
Originally Posted by mulligan
Ok .. let me clarify .. everyone on the planet needs a place to live .. not everyone needs a domain
Yes, but that does not forcibly mean buying. I have forgone that please in pursuit of my IDN dream. I admit I was wrong I assumed houses were peaking much before they actually did, but I don't regret my investment decisions, nor will I! Those that will ultimately be successful will have made sacrifices to achieve it. Those that sacrifice nothing will achieve exactly that!
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Old 8th January 2008, 06:40 PM
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Re: Good post by Jay re domain value

Quote:
Originally Posted by Explorer
So, if I buy a big-screen TV and pay cash, the TV will cost $1000. But if I purchase that TV with financing, (like a credit card) than that TV should cost $5000.
Not exactly. Your example is fundamentally different because a television is a depreciating asset.
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Old 8th January 2008, 06:42 PM
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Re: Good post by Jay re domain value

Quote:
Originally Posted by Explorer
So, if I buy a big-screen TV and pay cash, the TV will cost $1000. But if I purchase that TV with financing, (like a credit card) than that TV should cost $5000.
What is self evident is that goods in demand with a limited/finite supply inflate to the affordability level. They ain't making any more gold or any more land, but they can make plenty more TVs and they will no doubt print plenty more dollars to pay for them. The US printing presses will be flat out until the Presidential Election is over. You may need a wheel barrow to buy a loaf of bread, but there will be no fiscal squeeze in the US this year.
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Old 8th January 2008, 06:44 PM
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Re: Good post by Jay re domain value

Quote:
Originally Posted by zenmarketing
Not exactly. Your example is fundamentally different because a television is a depreciating asset.
So, if I decide to buy IBM share with my cash account, I'll pay $100. But, if I use my margin account, I will pay $500 for that share since I am using financing.
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Old 8th January 2008, 06:52 PM
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Re: Good post by Jay re domain value

No, the fact that others are buying on margin is reflected in the $100 price. (At least, that is what is being said here in terms of home values / domain values. I tend to agree with it, to a point.)
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Old 8th January 2008, 06:55 PM
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Re: Good post by Jay re domain value

Quote:
Originally Posted by zenmarketing
No, the fact that others are buying on margin is reflected in the $100 price. (At least, that is what is being said here in terms of home values / domain values. I tend to agree with it, to a point.)
So, if margins were to vanish, for example, that $100 price for IBM would tumble to $20 and IBM would be 5 times less valuable?
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Old 8th January 2008, 06:57 PM
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Re: Good post by Jay re domain value

The IBM share will only be worth a multiple of earnings whatever credit is available. The moment the earning drop below the cost of borrowing then you hit a steel ceiling.
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Old 8th January 2008, 06:58 PM
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Re: Good post by Jay re domain value

as has been said .. 'love him or hate him' his concept is fundamentally flawed . it's apples and oranges .. To compare a domain to something you need for survival and your future well being is . well .. you work it out ... show me the man who is able to do this and I'll show you someone with more money than sense
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Old 8th January 2008, 06:58 PM
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Re: Good post by Jay re domain value

Quote:
Originally Posted by Explorer
So, if margins were to vanish, for example, that $100 price for IBM would tumble to $20 and IBM would be 5 times less valuable?
If all the credit in the economy were withdrawn overnight so affordability virtually disappeared, then yes that could happen. Mind you its earning would probably drop steeply negative as well so they could actually be worth nothing.
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