Dot-Com Bust 'Echo' and Domain Names

Reader Writes:

"...the dotcom bust was in mar 2000, I never will understand why good domains expired in 2002/2003..."

Josh sends this timely link to a blog with a chart relating to online advertising. In March 2000 the stock bubble popped and for several months investors held their collective breath hoping for things to "correct" in the fall. They didn't correct and the ad market fell apart due to the removal of stock mad-money and a collapse of the ad model (Banner as opposed to today's PPC)

While you're correct in pointing out that the crash happened in 2000, the depth of the gloom didn't hit till Q3 of 2002 when online ad dollars practically vanished.

In the old-days, domain names had to be registered for 2 year periods..  It wasn't until Bulkregister came along selling 1 year renewals that all the other registrars Tucows, Register.com, NetworkSolutions.com also started promoting the one year standard. So roughly 2 years (one renewal cycle) after the dot com bust, amid the gloom of the October 2002 ad slump, great domain names rained down from the sky like pennies from heaven.

This lasted through 2003 and 2004. Google adsense rolled out to the masses in Dec 2003 and that was the beginning of the game changer..  By August 2005, amid a strengthening ad market, the rain of pennies slowed to a more historical trickle.

Comments

[Robb]

This chart goes to prove once again that the real money is made from market bottoms, not bull markets. The people who were accumulating names in 2001 and 2002, when most people stayed away from internet and tech, are the ones who made a real killing, regardless of what opportunities still exist today. You have to have respect for people who are willing to pile in their money when 99% of others think different. Now if only I could learn...

***FS*** there's still oportunity today.. it's just different opportunity. Secondary market sleeper deals, CCtlds, IDNs??, sophisticated high-brow arbitrage ... lots of ways to ride this wave.

[Kevin Tidwell]

What we learned from the first dot com boom and bust is that nothing on the Internet is immune from cycles.

I expect that the amount of ad money spent on Internet advertising will continue to grow quarterly at a healthy rate as more people spend leisure time, which previously was reserved for television, on the Internet. We also have more time to spend on the Internet than watching television since we can surf the Internet for information or entertainment while at work on our computers (mostly during our breaks) and on our mobile phones. This translates to greater opportunities to reach an advertiser's target market.

As the Internet and television become one and the same, the trend of spending more money on the Internet to reach that target audience will likely increase at a greater rate especially as video advertising opportunities continue to increase in niche markets.

[David Wrixon]

Pattern with IDNs was similar, but the collapse was much deeper. At one point competition for even excellent Generics was virtually non-existent and people were picking them up for $7 dollars a time. Even when the competition kicked in, it was until last year that Snapnames started supporting IDN.

To give you some idea I hand dropped 24 single alphabetic characters in isolated form in Arabic, in other words, in Arabic I was able to take the same kind of position that IANA took in English.

The situation has changed somewhat now. Last week DNJournal posted a $36K sale of a Korean IDN at Snapname. Next week we expect a similar name to be posted at $42K. IDN are still very cheap but momentum is now building.

We are not, however, getting the full picture as private sales are not being publicized at all even between Western Speculators. We do now that a Hebrew IDN changed hands for around the $35K mark.

We do, however, generally get some clues about these. What is happening in the real markets of Korea, Japan and China, we can only really guess at. We are clearly, however, close to the point of breakout, where the markets become much more transparent. Once that happens, I would expect prices to climb steeply.

[Charley]

What about Hindi IDN's ? Do you not think that they are catching up?

[David Wrixon]

Hindi domains are a long way behind Arabic, which in turn are a long way behind Korean, Chinese or even Japanese. I believe they will come good but it will take longer. IDN in other languages, however, will plot out their route map, so when the moment is right development could be comparatively rapid.

What is required is for far more Indians to be connected to the Internet. At the moment only a tiny percentage are connected and that group is also the group that is able to navigate comfortably in English. When more average Indians are given access their need to navigate in Hindi will become increasing apparent. The Indian Government understand the need for Indians to surf in their own language, as do many of the large US corporates that are active in India.