konstantinos_zournas_largeBy Konstantinos Zournas, OnlineDomain.com, Sold.Domains

Editor’s note: Konstantinos  Zournas has emerged in  recent years as a first-rate  domain name investment  blogger. In his widely-read  blog, OnlineDomain.com,  he frequently advances  his well-structured thinking  around domain investment  strategies, often from a  new domain extension  point of view. Not only a commentator, Kon is an active  domain name investor in new and legacy domain extensions  via his Sold.Domains platform.

On inviting Kon to contribute this, his first article for State of  the Domains, he has kindly given our readers a new analytical  metric which he has been developing for the last six months.  We are grateful to Kon for allowing State of the Domains to  debut this interesting analysis, and he invites comments at his blog, OnlineDomain.com.

Introduction  

The purpose of this article is to analyze the number of  characters left and right of the dot of all public end-user New  gTLD domain name sales made by both registries and resellers.  The data can help New gTLD registries identify what domain  names to reserve or price as premium. Domain name investors  can identify what domain names to purchase for resell and  what domains to drop from their portfolio.  logo1500

Legacy gTLDs (.com, .net, .org) initially had a standard length of  3 characters. The introduction of some gTLDs, such as .biz and  .info in 2001 didn’t change much except add a single character  to just one gTLD (.info) and bring the maximum character length  to the right of the dot to 4. ccTLDs had and still have a fixed  length of 2 characters corresponding to ISO 3166-1 alpha-2  country codes.

This standard and almost fixed length of TLDs brought the  focus to the left of the dot where short domains are considered  more valuable. Enter January 2014 when new gTLDs were  released. New gTLDs have a minimum length of 3 characters  (.xyz, .nyc, .law) but have no maximum length and range up to  13 characters for non-brand New gTLDs (.international).

Methodology  

logo01-photoThis research was based on the 765 sold New gTLD domains  that are currently in the Sold.Domains database. From these  765 domains, the wholesale (registry to reseller, reseller to  reseller) domain name sales were removed, which also took  out most of the registry, reseller and expired auctions.

The reseller market is not always a good marker of what  end users want and purchase. The registry to reseller and  reseller to reseller market is often driven by short names (1-3  characters), numbers, and other domains perceived as highly  desired and premium. Often the same domains are traded  many times in a short period of time, and that skews the results.

That leaves us with about 400 sold domains, most of which  were provided by Sedo, the .Club registry and private sales.

Results

We first looked at the right of the dot because this is totally new  data. One would expect that 3-character New gTLDs would rule  domain name sales but that is not the case. 4-character TLDs  are the most popular followed by 5,6,7 and then 3-character  TLDs. Even if we take out .Club, which has more than 100 sales,  4-character TLDs are still in the lead. TLDs with 10 characters or  more are very difficult to sell.

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We then looked at the number of characters to the left of the  dot, the second-level domain (SLD) name. 4 characters are  leading the chart followed by 3,5,6 and 7 character domain  names. People often say that shorter is better but that is not  the case with New gTLDs. 2 character domains were just  released so we don’t have much data, but 1 character domains  have been available from Donuts since January 2014 and no  significant number of sales has been recorded. It seems that  buyers, and especially end-users, are not looking for acronyms  but words that complement the New gTLD string. They are  looking for left.right combinations that have a meaning. Any  domain with 14 or more characters to the left of the dot is very  difficult to sell. Sales of 2-word domains are very few and  rare. Less than 5% of the sales have 2 words on the left of the  dot. The number of characters includes letters, numbers and  hyphens.
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Finally, we looked at the total number of characters of both left and right of the dot. Very short (4 to 6 characters) domains are not selling. At least not yet, but this might change in the future. Most sales occur between 7 and 16 characters in total. Any domain that has a total of 20 or more characters is not easy to sell. Of course, every rule has its exception. It doesn’t mean that a domain name that has 25 characters in total will never sell. It could sell but it is going to be one in a thousand sales.

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Introducing the “Character Balance Score”

The advent of New gTLDs compels us to introduce a new term: the Character Balance Score or CBS. It seems that the balance between left and right of the dot, which the New gTLDs can offer, is desirable by domain name buyers. In legacy TLDs such as .com, a perfect balance is found in 3 letter domains (abc. com). That is one of the reasons they are so valuable.

The Character Balance Score is the character difference between the SLD and the TLD. e.g. home.guru has a 0 CBS, homes.guru has a +-1 (or 1) CBS.

A CBS of +-1 is leading the chart followed by 0 and 2. When you reach a CBS of 6 the chart drops significantly.

In legacy TLDs (.com), the most common CBS in domain name sales is 6 (a random Sedo domain name sales report was used). This means that the most common SLD length is 9.

There is a difference of 5 in CBS between New gTLDs and legacy TLDs. So buyers are seeking more balanced domain names in New gTLDs. Less-balanced domain names will be harder to sell.

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Problems and future work

The main problem in this research was the lack of data. More domain name sales would give better results. But the New gTLD program is fairly new and an aftermarket for such domains is just starting to take shape. Some registries, except .Club, are reporting little to no sales. Furthermore, GoDaddy and Afternic are not reporting domain name sales since the summer of 2014.

Most registries, except Donuts, have not released any 1-2 character domains. 2 character domain names were just released by Donuts. Some 2-character domains are still reserved by ICANN.

Domain name character length almost certainly has some price correlation that will be researched in a future article.

 

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