OnlineDomain.com Domain Name News & Opinions
Matt Gill of Developed.nyc shared his experience selling .NYC domain names since October 2014.
First of all I would like to say that .nyc has smaller investor competition as you can only register this New gTLD extension if you live in the New York area.
Of course you also get a smaller target group, NYC buyers, but I think that many .nyc domains were and still are undervalued by the city (that owns the extension) and Neustar (that runs the registry).
If I could I would have probably bought a few domains myself. I have seen a few great .nyc domains sell at ridiculously low prices.
The main advantage on the extension is that .NYC does not have high premium renewals. Purchases of premium domains from the registry are one off with regular renewals onwards, similar to what .club is doing.
Here is a brief summary of Matt Gill’s experience:
- He made 31 .nyc sales (selling 33 .nyc domains)
- He has made $33,873 from these sales ($33,274 after commissions)
- Most of these domains were bought for $20 or $40 each and 7 were bought for $265 each
- He sold 1 .nyc domain in 2015, 8 in 2016, 15 in 2017 and 7 in 2018 (I am not counting other extensions in all my numbers)
- He points out that some people might not like his ROI but I don’t always look at ROI. In this case I think I don’t like his 3-figure sales. Too cheap.
- His average sales price is $1,093
- His average outbound sales price is $746 (that brings down the average and includes 6 of these 3-figure sales I don’t like). But when you have to make renewals you do what you got to do.
- Only one of the 7 outbound sales was for more than $1,000
- He has grown his portfolio from 5 to 578 .nyc domains these 4 years
- Other that the sales he made, he has rejected offers on 28 other domains worth $25,300
- His approximate registration/purchase and renewal cost since 2014 has been $56,000
So he is still in the hole for $22,127. I assume that he has included all the 2018 renewals in his figures so he now has 6 months to sell domains worth $11,238 (this is how much he made in the first 6 months of 2018). Then at this pace, at the end of next year he would be breaking even.
(I hope all my numbers are correct…)
The question here is this. Was it worth it? About 5 years for breaking even? Some businesses would be very happy with this number.
Of course he will still have about 550 .nyc domains in his portfolio at the end of 2019 (if he doesn’t buy more domains) and I am sure he had fun in the process, and he has his developed.nyc and kids.nyc websites (among others).
But would he have made more money if he had put all his power towards investing in .com? This is the hard domain investing question.
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Looks like reg fees are $20 each so with $12,000 in reg fees annually I’d say it is marginal. He has had a good first half of 2018 which would have lifted things overall but if you have a bad year it won’t even cover reg fees let alone an ROI.
Successful domainers blast out the cost of renewals in the first few weeks of the year, not in the 35th week.
For all that time spent on management, sales, acquisitions and doing outbound marketing to achieve some sales I really doubt it is worth it. The reg fees are the killer, $20 each is too high for domainers to make money. For a new tld it would need to be a couple of dollars because the sell through rate is lower than .com portfolios.
The average sale price is cheap considering the fact that NYC is a developed city. The market is less if we compare it with COM. I feel he would have done better if he just grabbed some .coms that he could specifically sell to New York business.
It is a small market. 8 million population versus 8 billion for .com.
Even big, rich countries typically have weak namespaces.
.NYC is popular in the wild and will become more so in the next 12 months. This is due to the intense pride that people have in the City, and to the City’s core strength, which is its function as the nation’s premier hype machine, as our current President so ably demonstrates. This explains why the advertising industry is so huge in New York City.
In Boston, I have yet to see a .BOSTON domain name in the wild. Not even the Boston Pops uses one, nor the Red Sox. No local pride in .BOSTON compared to .NYC. Zilch.
In the City .NYC domains are inescapable. If you see a .NYC domain in the City, you know right away that the service on offer is targeting New Yorkers, that the website operator understands local consumers, and that the service on offer is more likely to meet a New Yorker’s needs than would some vague .COM address. A good example is Ferry.NYC
What is the value of .NYC domains? There is some value in investing, but none of the seven .NYC domains that I’ve registered are for resale. They are only designed to capture mindshare in a single industry vertical. For me, its all about use value, not market value.
What is fun about spending countless hours on outbound marketing efforts and still losing five figures in the process?
On the positive side – for the registry which has no renewal costs there is at least a trickle of demand for the extension.
I guess the most fun part would be building his portfolio to 550+ domains.
@Leonard That’s the cost of the investment (and the risk). As Konstantinos mentioned, getting to 550+ domains is an asset reserve that can be partially liquidated if necessary or held as the market continues to mature.
Many folks will ask how can there be liquidity, but in my experience there is – and always at prices above cost+renewals, but not always at the price I think the names are worth. The liquidity exists in a light and very quiet domainer market as well as reconnecting with people who have made offers in the past and either taking a previously rejected deal, or negotiating it up a little.
Part of the calculation back in 2014/15 was that these things aren’t going to make money over night. They’ll also incur renewal expenses for a few years before they can make decent prices in the aftermarket.
My goal was originally to buy and develop a few premiums and at the same time flipping a few domains to pay for them but my position evolved to stay afloat and try and get beyond break even while growing the portfolio.
He should have bought good .com domains.
I often read this type of comment and I agree when it’s made on Sherpa in response to someone spending $2k on really random .com domains (yes they should have spent 2k on something that has a chance!) but here’s why I don’t think it’s necessarily a better alternative to my strategy.
Although ~$50k has gone into .nycs at no point in time did I ever have $50k to invest in a .com or in domains in general. The level of investment has occurred over a few years of cycling back in the $30k+ of .nyc sales. It’s been very incremental.
The deficit in the above, is CC debt that I honestly only feel comfortable with because of the $20-30k in offers that I’ve turned down over the years and the returns that I’ve seen with each of the deals I’ve made.
The incremental nature of my .nyc strategy has helped me get a feel for this namespace that has very little competition and continues to make available great names at reg fee (which means very low risk on individual names).
Here’s an example, a domain I just bought 15 minutes ago: fencing.nyc
It’s generic, great sport or construction/landscaping keyword, all other TLDs taken, multiple potential endusers who have a local audience, it’s the type of name that could be developed and later benefit from possible SEO benefit and it was $19.99
So maybe I sell this for $1,500 to $3,000 in a year. Reasonable price and huge return. If I want to adjust my risk I could drop to $700, or in an absolute fire sale I still make 10x at $200. There really are countless opportunities like this out there. Again this is my perspective as a newTLD investor, specifically geo newTLD and even more specifically .nyc.
One of the great things about the names I’m talking about and the $20 to $1,500 flips is that although the end price isn’t huge, the return is and it can be reproduced many times over with other names at $20 meaning individually low investment risk.
I am yet to see anyone give an example of an equivalent approach with a .com that is either reg fee or available now at a premium price where the logic shows reasonably that a good return will happen in future.
I’d genuinely love to see someone lay out compelling logic like I did with the fencing.nyc example with the sell positions I described above. Domain Sherpa attempts this when guests talk about upcoming NameJet auctions, but the sell side remains vague.
Credit card debt????
🙄🙄🙄🙄🙄🙄🙄
Uh no. Just no.
Why no? Debt is debt! The CC rates I pay are lower than any loan, but that’s a whole other article.
My separate personal cash investments I don’t want to touch because they bring in a minimum of 7% fixed guaranteed (NYC TDA).
It’s part of business and the risk reward calculation. I don’t advise anyone else do anything they are not comfortable with.
What is your CC rate? Sorry I am asking but I am in Greece and I am curious about US rates.
Konstantinos, you’re going to have to take me for a meal and introduce me to your parents if I share any more information.
I don’t have 20k on credit cards, but what I do have has been balance transferred. There are deals where you pay 0-3% of what you transfer and then the interest is 0% for up to 18 months.
(Without a balance transfer or intro offer, a typical rate is 12% but it could be between 8 and 30%)
Meal sure. My parents no. 🙂
Thanks a lot for the info!