Why LLLL.coms?

                                 

Some would argue most LLLL.coms have little intrinsic value — I would say the same can be said about generics which are sold with little revenue/traffic. We’ve already seen that bubble burst once and I think we’re going to see it burst again sometime soon. Only a fool thinks they can buy a name like Pets.com and instantaneously become more successful than established brands — that was 1990s mentality and the hypers owning many of these premium generics are confusing new little domainers into believing that once again.

There really is very little logic in much of the domain world and aftermarket…

Why the heck would someone pay as much for an LLL.biz as an LLLL.com? Why would someone pay more for an LLL.mobi than an LLLL.com?

Why do people invest in extensions like .asia?

We can question logic, we can pretend we know the answers, or we can just accept that things are the way they are.

As many of you know, I’ve always been a strong advocate of “either LLLL.coms are underpriced or CCC.coms are grossly overpriced”, as I’m sure many others here are. Someone explain that one to me…

Phil gave a perfect example of why I like investing in short domains — Liquidity. Someone can pretend Pizza.com is worth 2.6 Million any day of the week but when someone offers me $25 on my low quality LLLL.coms, I know they aren’t screwing around. LLLL.coms (especially at min wholesales in the well established categories) have very understood values which are both relatively easy to track and relatively easy to keep up with.

Someone with no experience in the domain name market could quickly find out that an LLLL.com for $15 or a quad premium for $150 in example represent an excellent buying opportunity. What about Pizza.com at say, $1.3 Million?

Liquidity. Simplicity. Rarity. Collectibility.

There’s a lot going for the 4 letter market and there are various obvious reasons why people choose to invest in it. These 4 reasons work for me.

Liquidity – I like knowing that if I ever get hard up for cash I can get near full market value for most of my LLLL.coms almost instantly. Again, outside the short domain world, try that with just about anything and you’ll realize how valuable and unheard of this very well is.

Simplicity – As stated above, prices are very easy to track. While a new LLLL.com investor may not be able to readily differentiate between a $300 quad premium and a $500 quad premium, all LLLL.com investors know that a regular quad premium for much under $300 is a good deal and much over $500 likely not a good deal. How many markets are that easy to follow?

Rarity & Collectibility – These 2 market driving forces play into each other. Something which is rare is generally collectible and likewise, something which is collectible is oftentimes rare. You can collect LLLL.coms according to certain letter sequences (eg. RX, CA, MD, DR, UK, …), patterns (CVCV, VCVC, AABB, AAAB, BAAA, CVVC, VCCV, …), quality (quad premium, triple premium, double premium, …),…

I could go on but I think I’ve made my point.

At the end of the day one thing remains apparent — regardless of quality, brandability, memorability, and sheer enduser potential, most domains remain incestuously bought, sold, and resold among domain name investors. This is not an observance limited to the 4 letter market but one which describes domaining as a whole. Why have so many top generics and “premium keyword combinations” not found endusers?

Short answer: Many times, if not most times, domainers are the enduser. Whether that’s because you put your asking price that far into the stratosphere with your delusions of grandeur or because there just aren’t endusers out there for every “top generic and premium keyword combination” is anyone’s guess. I’m inclined to believe it’s a combination of both factors. Once reality sinks in, perhaps more investors who invest in shoddy keyword domains will open up to the LLLL.com market and understand that like any market in the domain world, domainers play a starring role.

 
Source: LLLL.coms
 

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~ by Reece on June 22, 2008.

4 Responses to “Why LLLL.coms?”

  1. You really present some good arguments here. As a novice domainer, I still haven’t been able to convince my wife of this logic, though! I think the liquidity is what really causes many markets to take off, so I am buying what I can.

  2. Reece,

    It is not very feasible to compare LLLL.com’s to generic or keyword domains. There is no comparison. I and many have heard the same thing about LLLL.com’s since 1999, and the same story is being told in 2008 with prices minimally increasing when compared to keyword and generic domains. 4 letter domains that are actual words have true value due to intuitive branding and type in traffic, this is a no brainer. This is what makes them valuable. LLLL.com’s that are not words hardly have the same traffic and are often non effective for branding or PPC. The example you gave with Pets.com is also poor IMO. The reason it failed was because of a poor business plan, not because of the name. The name delivered traffic, it was an intuitive brand, but the company failed to market and deliver quality services.

    I do agree with many other points you made however. The market will reset sooner rather than later. It is happening already if you analyze historical data to the current market. The economy is the culprit. Domainers are addicts and are the reason for 90% of sales reported. It is a vicious cycle that keeps on year after year. Just look at historical auctions to see how often names change hands. Look at all the major conference auctions and who the buyers are, they are mostly domainers. Of course most of the big purchases on auctions that are resold offline to domainers, are never reported.

    Additionally many domain sales are never reported and many of these are to actual endusers. People will chose the extension that makes most sense to them based on their business model. LLLL.com may not work for them the same that LLL.biz might. The secret to all is effective development.

    Also agree that many prices are inflated and wishful thinking. The bottom line, is if a true end user is interested in a domain for their business plan, they are going to pay the asking price after negotiating as much as possible.

    There is no doubt that LLLL.com’s have gone up in value since 1999, but to state that investors should give up shoddy keyword domains to embrace LLLL.com’s, is a bit of a stretch. Once LLLL.com’s have the same track record as generic and keyword domains on PPC and sales, then and only then will you see major players embracing LLLL.com’s mainstream IMO.

    With that being said, there is still lots of money to be made in every domain niche that one choses to embrace. I have sold many LLLL.com’s for nice profits in the past. There is money in everything in the domain industry, it is important in selecting the right strategy to exploit the maximum profits. There is no wrong plan if you are consistently making money. If you are consistently loosing money, then it is time to change strategies.

    Wish you continued success.

    Of course all this is just my opinion as well.

  3. I agree entirely – it is always interesting to hear other (usually non-LLLL.com) domainers’s opinions, but to start saying that one genre of domain is worthwhile, whilst another (i.e. LLLL.com) is worthless seems a bit odd to me.

    You can’t beat the market – no-one can.

    As you put it, you can’t really apply logic; you must just accept it.

  4. […] faster than random letter premium LLLL.net, but only at a few dollars above registration fee. To get a sense of domain liquidity head over to 4letternoob.com. As time goes on, I hope more types of domains will fall into the “liquid” category. As […]

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