With $9M in disclosed sales, $18M in Escrow.com sales volume and over 5,000 domain transactions, Q4 was one of the strongest quarters of 2017.
Welcome to the 7th 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
Following the trend in our past reports, China continues to be the largest net gainer of liquid domains, adding over 10,000 domains (1.64%) in Q4. China now owns 31.17% of all liquid domains, with Chinese registrants controlling over 50% of the 5Ns (a 5% increase from last quarter), 45% of the 4Ns and 42% of the 2Ns. The United States is a distant second at 17.51%, after losing 10% of the 2Ls and 8.28% of 3L domains in Q4. This loss could be explained by a rather large 9% increase in private registrations for 2L domains. Privacy also went up almost 5% on 5N .com domains, helping to reach a total of over 139,000 (21.67%) liquid domains under privacy. The rest of the world and Europe are stable at the 4th and 5th place, respectively with 7.64% and 7.13%. European owners represent approximately 10% of registrants in the most developed categories (2Ls, 2Cs and 3Ls), which suggests that liquid domains are perceived as brands rather than investments in the EU.
Most liquid domain categories showed increases in development, especially in the most valuable categories of 2Ls, 3Ls and 2Cs, increasing on average by 2%. The notable exception was a 1.68% decrease in 4Ls, the largest liquid domain category, which caused the overall development index to decrease by 1%, despite all other categories presenting positive data. The three most developed categories were once again the 2L .com (37.87%), the 2C .com (30.58%) and the 3L .com (28.98%). 5Ns remain the least developed category at 11.54%, followed by the 3Cs (13.69%) and 4Ls (14.57%) respectively
SALES DATA
In Q4, the disclosed transactions for liquid domains, as reported by ShortNames.com, nearly doubled from 5.4M to $9M. The total liquid domain turnover went up from 0.56% to 0.85% (3,449 to 5,256), confirming that there might be a negative seasonality factor in the 3rd quarter for liquid domain sales. At the same time, Escrow.com sales volume went down 25% from $24M to $18M. According to Escrow.com, the most traded category in Q4 was 3C .com domains ($6.4M), followed by 4Ls at $4.6M and 3N .com domains at $3.97M, boosted by the record 3N portfolio sale by Rick Schwartz.
The floor prices of the most traded domains registered in Q4 another descent, this time though only by a single digit (-9.6% for 4Ls, -9.03% for 3Cs and -4.51% for 3Ls). 5Ns were the most notable exception, with a staggering 29% increase. This temporary increase in price could be explained by a returned Chinese interest in these domains, as Chinese ownership of 5Ns went up 5%.
Finally, for the first time, we are going to report the 5th percentile values (and not the just the variation) of the most traded categories, to raise awareness of liquidation values for the most actively traded liquid domain name groups.
FORECAST
Q1 is typically a slow quarter, with fewer transactions due to a decrease in activity around the Chinese New Year. It is possible that the fall in the crypto currency prices could generate additional liquidity from the investors who are looking to hedge themselves from high volatility. The performance of the equity markets could also influence the liquidity flowing into domain names. While the market is still uncertain, the overall negative trend is likely to continue even if a few large transactions in the most valuable categories might keep the overall sales volume high.
