Wednesday, February 23, 2011

How much will a domain name be worth in the next decade?

This post is inspired by one of today's Internet Evolution articles "Domain Names Won't Matter in the iPhone/Watson Age" written by Seth Grimes. A fairly insightful article it is. In this post I extends the argument one step further, which intends to reveal some deeper thinking about the inevitable falling (really?) domain-name business model.

The domain-name business has been a rapidly expanding model since the age of Netscape IPO. According to Guinness World Record, the most expensive Internet domain name until today is sex.com, which was sold for $13 million on 17 November 2010. Some analysis said that the domain name might be worth $60 million in 2020.

May the price of domain names increase continuously in the next decade? This is the question we explore. Apparently Seth Grimes did not think so; and I second to him.

The value of domain names relies on two conditions. (1) The close association of the name relates to the resource people are interested. And (2) people type the domain name manually to get to the resource. If either one of them becomes problematic, the value of domain names must decay.

Among the two, the domain name owners can truly hold only the first condition. That is, they can decide whether the content posted in the web site represented by the domain name is about what the domain name implicitly means. For instance, food.com is always about food, car.com is always about car, and sex.com is always about sex. The second condition, however, it is assumed to be the default. Certainly many people type the domain name of the web sites to get to the resources in the site. Aren't they?

It is true until now and it is likely to be true in the near future from now as well. But may the answer to the previous question be true forever? Unfortunately, this answer is no, and the change has already started.

The rise of Google and the prevalence of Web search is the first challenge to the value of the domain names. Many readers may have noticed a fact. We do not really care about the spelling of the domain names when we search information using Google. By contrast, the site titles that Google listed about the site are often matter more to the ordinary Web searchers than the actual Internet domain names of the sites. For example, this blog is titled "Thinking Space" though its domain name contains no hint at all about this title. (Actually, however, I have registered a domain name thinkingspace.us that refers to this blog. But I have never actively advertised this more intuitive domain name.) Through Google search using the keywords "thinking space", however, one can easily get to this blog though its standard domain name has nothing about "thinking space". Does it hurt the popularity of the site? Sure, it must be in certain degree, especially at present and prior to the present. (Actually at the beginning this was just a test blog I created and did not intend to be popular. I had never thought that it could be so popular and engaged with thousands of readers world wide.) But the point is that many people do not care about and do not remember the real domain names when using the search engines to get to the information. And the number of these people is increasing day by day. When the search engines become more popular, the domain name spelling becomes less critical. It is the content that matters more, dude!

If the strike from the search engines is not hard enough, the rise of the Apple App store is a real killer to the domain name value. Does anyone remember the domain name of his favorite App, like, en., Angry Birds for instance? Certainly not, it must be the answer. And you may add, how dumb the question is. Surely it is a dumb question. When using the App store, actually nobody cares whether the application Twitter is really listed by the domain name twitter.com. As long as the content of the application Twitter is indeed the Twitter, who cares if its domain name is really lkdhjsioddhfsh.com (I randomly typed a string). In Apple's App Store, we use the product names and their logos to recognize the applications. Nobody cares their domain names, and few truly type the domain names online unless there is a rare critical need, such as to get registration due to some security concern.

If there is another more intuitive and more straightforward way for us to access the resource than typing the real URLs of the domain names, people is going to adopt this alternative quickly. Google has proved it to us. Apple has proved it to us. And more proofs are coming and are being invented. The domain names will gradually become historical heritage. Certainly it will still be very cool to have a very much descriptive and intuitive domain name. But it will actually affect less and less to the business performance. This is thus the decay of the domain name value.

If sex.com may still be worth one-tenth of the present value in the year 2020, I will say that, well, it looks like the virtual antique is quite a booming new market.

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