Why the Domain King’s Quote is Misleading and Incorrect
“Domains have and will continue to go up in value faster than any other commodity ever known to man”. This quote was said by the self-proclaimed “Domain King”, Rick Schwartz. Many of the major domain investors would love to believe this, but let’s take a reality check folks. A domain name has a $0 (or close to $0) value unless it has value to an end-user.
What is the point of owning a domain name that has not been developed. Some would argue that one can make money through parking their domain name, which can add a lot of value to it. But let’s be honest with ourselves, how much can one really make off of a parked page? Maybe, with a VERY, VERY, VERY good name, a person can make an amount in the 3-digit range or low 4-digit range per month.
This is where opinion comes into play. Some might say that they’re happy making a 3-digit or 4-digit number in a given month. But I think we can all agree when I say there are so many other commodities you can invest in that would allow you to make those kind of numbers or even a greater amount.
The commonly known quote, “value is in the eyes of its beholder” is something that I used to be a big believer in. But really, unless the beholder is an end-user, value is in the eyes of the end-user who eventually ends up with the domain if they do. I know it’s a bit confusing, but you may want to read that last sentence over a few times to understand it. The main point: Don’t be mislead by the “Domain King’s” famous (in the domain industry) quote.
Message to Rick: I love your blog, read it everyday, but I just had to write my opinion about your quote.
I guess where I don’t see your POV, is in the simple fact that ‘nothing’ really has ‘value’ if – no one buys it to use it!!! But is not buying something ‘not to use, but to resell it’.., not putting a ‘value’ on it? Because for that buyer who ‘paid for it’ with intentions to resell it, ‘that is’ the purpose ‘he is using it’ for!! (Of course his value expectations and whether he paid ‘too much/too little’, is another discussion.)
@Kevin – The thing you haven’t considered is how much profit can you really make reselling a domain name. Once again, there are many more commodities you can buy/sell/trade and make that same amount if not a whole lot more. So I guess I can say that the only way a domain has a very profitable value is when the last reseller sells it to the end-user. But my point is that Rick Schwartz’s quote makes no sense because there are plenty of commodities that you have a better chance of making more money than investing in domains.
“…there are plenty of commodities that you have a better chance of making more money than investing in domains.”
Really? Which commodities? If someones buys stock, gold, real estate, oil, cotton, sugar, concentrated orange juice, etc and they double their money it would be said that they “hit the ball out of the park” and made a fabulous return on their investment.
But double your money with a domain name and most domainers I know will simply shrug it off as no big deal. Rick is 100% correct.
@Steve – “How much profit can you really make reselling a domain name.”
Well, that depends on whether you’re basing it on monetary or ROI values. Buying a domain for $8 and selling it for $80 is 10x ROI. Some would consider that a ‘great ROI’ investment. Buying a name for $5100 and reselling it for $14,500 is not as good ROI, but a nice sum of profit to make anyone happy. (See DNJournal this week for this sale of NewYorkers.com.) If you know any ‘singular’ commodity, as in ’1′ share or ’1′ unit of, that that kind of return can be made, please stop keeping it a secret. Even 1 share of Google at $500, won’t sell for those kinda ROI’s or profits. However, if someone wanted 1 share of Google so bad they’d pay $1,500 for 1 share, then that share would have a ‘value’ of $1500. – To that buyer! And remember too, that any commodity only has a value of what it’s current market brings. So if you buy gold today at $1000, and it goes down to $600 in two years,…you’ve lost in that investment!! And many a homeowner that bought into their ‘investment home’ in the last 3 years, knows this too!!
Sam – As somebody who knows a little bit about what domains generate a day parking. I can tell you just with us we have more than 100 that generate 5 or more figures a month. We even have domains that generate 5 figures a day.
Domains will always go up in value, it just depends on when you got in the game. Somebody had to buy computer.com at some point for $35 from Network Solutions, and we bought it for millions. So for that person basically a $35 investment returned quite a nice return.
If you started buying domains last year, then Rick’s quote many not work for you. But if you started buying domains 5-10 years ago or longer than you are probably in really good shape right now.
wow. this does not make one bit of sense.. how many people can claim they made 12 million dollars on porno.com of free cash flow?
i think your jealous of rick and domains are assets..
but ok….
@Donny – I think what you’re really missing is how many domains generate those figures. Very few, and very few domains are fortunate enough to own those types of domains, so for those who didn’t get into domaining at the time the internet started (which is a large percentage of domainers), it’s VERY hard to to make that type of money and acquire those types of names. So other commodities could work better. I’m really just playing the devil’s advocate here.
Sam:
You’re raising a good debate here, but it’s not all about people like Rick or me and my brother who got our names in 1995-1997. Every year we also hand reg names that we could easily flip in no time for 500%-1000% profit, but we hold them for long term gain/development. Even the best stock can’t do that. However, like anything else, it takes a good eye, timing and patience. And like any other investment market the best way to get burned is by jumping on a bandwagon along with everybody else. For example, I can assure you that most of the people who bought dotCm will not see a profit and many of them will eventually blame the “domain industry” for their poor choice of investment.
You can still buy domains for $200 on drops and sell them for $2000 on a regular basis.
There is NO investment you can name that matches the returns of domains.
Name one.
Disclaimer: If the world economy sinks into a depression gold, and especially silver, might just beat domains.
I support Rick Schwartz on this one. I wrote a nice long reason why, but when I hit the space button, it got erased from this comment section, couldn’t get it back.
Domains are the most powerful commodity in the world for those who understand the dynamics behind their purchase, monetization methods, development, aftermarket sales, and promotion.
You don’t have to be Rick the Domain King to make good money with domains selling under $1000 each… Just listen to Rick’s advice, take it with a pinch of salt, and lower the price margin to meet your portfolio sales points. Rick started out with a lot of money in this business. He was already a successful businessman. Now he’s more successful… thanks to smart domain purchases and sales.
“Domains have and will continue to go up in value faster than any other commodity ever known to man”.”
Actually this is the very reason why I thank God for bringing me into this industry.
Rick is an inspiration, period. It’s not what he says that makes him King, although what he says automatically gains weight, but what he has achieved or symbolizes. Many buy lotto tickets and hope to win because many did win and became instant millionaires. The money is real. The reward is real.
But domaining is not a game of chance. It is a serious business that requires skill and intellect. You can not register xyszdvbvc.com and hope to land in DNJournal. Not at least in this century. There’s a formula that has to be followed. Fortunately, it’s not a secret.
I became a domainer because I want to get rich. That I believe my $20 investment could turn into hundreds, if not thousands, if not millions of dollars, one day. I guess we all do.
Rick Schwartz didn’t come up with that statement while dosing off. And certainly he didn’t make it to please or disgust anyone.
“Domains have and will continue to go up in value faster than any other commodity ever known to man”.”
It’s insane but it’s happening….and it’s good for all of us.
Domains have a lot of value without content on them. Sometimes the content is a hinderance since the new owner wants to change the entire thing.
Candy.com is an ideal example of a good no content sale. On the other hand some names add a lot of value with content. Six of one, half dozen of the other. Take your pick.
I’m maximizing each one to it’s potential. It’s just a business decision.
Guess it really depends on who is bidding right Mr Brady?
To add to your comment about social networking in-game, it also needs a user-friendly block system. (this is what I get for reading the bad_rpers_suck community on LiveJournal–500,000 complaints about bad roleplayers on WoW that people never, ever want to deal with again.)