By 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.
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.
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).
This 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.
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.
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.
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.
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.
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.