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2018-Q3 A STRONG QUARTER FOR 3 LETTER .COM DOMAINS

One the worst quarters for 5th percentile values, 3 Letter .coms were the most traded category with over $11M in Escrow.com sales.

Welcome to the 10th edition of the Liquid Domains Overview (LXDO), which focuses on the 614,928 .com domains we call “liquid”. The objective of the report is to present key statistics and generate a debate amongst the industry stakeholders about the fair value of such domains. We hope you enjoy it and we encourage your feedback and participation for the next reports.

DEVELOPMENT INDEX AND OWNERSHIP DATA

The overall development index increased by 1.9%, with signi#cant gains for 2 number and 4 letter .com categories. The most developed categories remain the 2Ls at 34.6%, followed by the 3Ls and 2Cs, both around 28%. With the exception of the 2Ns, the numeric domain categories maintain a development index under 10%. China remains the king of liquid domains, with a 26.4% market share, followed by the US (21.9%), which gained 2% in Q3. Contrary to the previous trend, we noted a negative variation in domains owned by Chinese registrants for the second consecutive quarter. The rest of the world and Europe also lost market share at 11% and 3.2%, which could be attributed to GDPR coming into further e”ect. As a result, private registrations now constitute over 30.7% of all liquid domains, which is nearly a 50% increase since the second quarter of 2018. The 3Ns and 5Ns are the categories with the highest percentage of domains under privacy, with 62% and 58% respectively.

SALES DATA

In Q3 the total volume of disclosed sales almost doubled from $5.4M to $9.2M. We also registered a 50% increase in the volume of escrow.com sales, which jumped from $12M to $16.7M. According to escrow.com, the most traded category were the 3L .com domains, with $11.4M in sales, followed by the 4Ls ($3.2M) and the 3Ns ($1.1M). According to ShortNames.com, the disclosed volumes for these categories showed a similar pattern with $5.2M for 3Ls, $1.7M for the 4Ls and almost $1M in 5Ns. Even in Q3, the most traded categories for the number of transactions were the 4Ls (1,713), the 5Ns (1,116) and the 3Cs (596), which registered a record turnover of 2.1%. The positive numbers in terms of volume are in stark contrast with the continued decline across the board in 5th percentile values, which recorded the worst quarter since the inception of our report. 5Ns and 3Cs lost 38%, 4Ls lost 28%. The only stable category were the 3Ls, which registered a modest loss of -2.8%.

FORECAST

The copious inventory released to the market on Q3 had a positive impact on the sales volume but quite a negative impact on the $oor prices, which, with the exception of 3Ls, registered signi#cant double digit losses. The challenge for the last quarter of the year, which is typically a strong quarter for end-user activity, will be if the Western market manages to absorb the inventory being released for sale in China. Strong end user transaction might keep a$oat the most developed categories, however, a potential increase in .com registration prices, to be decided in November, might have a negative long-term impact on the market. Caution is advised.

About the Data

Some of the information provided in this report, such as the category breakdown, trademark analysis and valuation data was derived using proprietary systems built by Intelium Corp. or its affiliates.

The domain sales data was provided by ShortNames.com. It was also generated using automated means and through the use of proprietary technology. The data is verified on the best available bases and may be subject to inconsistencies or errors that are corrected at the sole discretion of ShortNames.com.

The Escrow.com sales data is verified on the best available bases and may be subject to inconsistencies or errors that are corrected at the sole discretion of Escrow.com.

Index, ETF and all security return data was initially computed by Morningstar, Inc. and is shown in this report for display purposes only. This data is not, nor is meant to be used as, actionable investment advice; nor a direct comparison between any exchange or market traded security, or individual stock, or index and any category of domain names. We cannot guarantee the accuracy of any such data, as it is maintained by a third party and may be subject to errors, or unavailability. Morningstar, Inc. did not participate in the creation of this report and reserves all intellectual property rights in regard to its own materials or data.

Disclaimer

This report is not intended to be interpreted as investment, legal or tax advice of any type. No entity or person associated with the production of this report currently holds or has the intention to hold themselves out to be a registered investment advisor or attorney. The readers of this report are responsible for performing appropriate due diligence in considerations with any action they may take as a result of this report. To the maximum extent permitted by law, the Authors, the publisher and their respective affiliates disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations in the report prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.

The reports’s commentary, analysis, opinions, advice and recommendations represent the personal and subjective views of the Authors, and are subject to change at any time without notice. This publication is not a solicitation or an offer to buy or sell any securities, domains or any other type of investment or commodity interest. References to specific domain names, extensions or any third parties is for illustrative purposes only and are not intended to be nor should be interpreted as, recommendations to buy or sell domain names.

The Authors or entities participating in the creation of this report may be affiliated with some of the third parties mentioned in this report.

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