What the secondary domain market looks like in Russia – in the author’s column Andrey Kuzmichev, First Deputy General Director of RU-CENTER.
The domain market has always been characterized by openness and transparency. As at the micro level, when information about the administrator of each domain and the terms of registration is available to everyone. So at the macro level – few industry can boast of daily statistics updates on market size, share of each player and a lot of other useful marketing information.
However, until recently, all this concerned only the primary registration market. The more dissonance arose when trying to assess the secondary market for domains. But it is also gradually disappearing into the legal field and, in fact, the numbers below are the first public attempt to indicate the order of numbers and market trends.
Three figures characterizing the market
At the moment, there are three main sites on the market where domains are bought and sold in the secondary market. All other resources actually carry out only listing, that is, they are an information guide and do not guarantee a safe transaction for both the seller and the buyer.
A significant part of domains are sold simultaneously on several sites. The approximate number of unique lots for sale can be estimated plus or minus at 300 thousand domains – these are only lots from Russian market participants, excluding international partners and players. There is also a “passive” part of the market, when domain owners do not put it up for sale, but in general they are ready to consider this option when offering a good price. Naturally, their number cannot be estimated.
Over the past couple of years, the secondary domain market has significantly transformed and below three numbers confirms this.
Firstly, growth of the average check… According to the domain store RU-CENTER, in the first quarter of 2021, the average sale price exceeded 100 thousand rubles. Back in 2018, the average check was about 30 thousand rubles and has been growing rapidly every year since then.
Secondly, growth in the number of transactions… Comparing with the same 2018 – the number of sales increased by 30%.
Thirdly, the demand for services to guarantee the completion of the transaction is growing… The average cost of domains is growing and the buyer increasingly wants to be sure of the correctness of the assignment of rights to the domain. In RU-CENTER, about 10% of transactions are conducted in private mode, when the domain is not for sale, and the registrar is used only as a guarantor of the transaction, the safe transfer of money from buyer to seller and domain from seller to buyer.
Two main trends
In the coming years, the secondary domain market will be characterized by two trends.
The first one can be called conservative. With all my love for new domain zones (new gTLDs), they are an actual solution in the case of initial registrations, since there are still a lot of interesting free domain names there. The market has not yet reached its fullness and in the near future, judging by the number of zones, it will not reach it. Therefore, there will be very few such offers on the secondary market.
The situation is completely different in our national domain zone .ru. In fact, the number of registrations in it has remained approximately at the same level for the last 5 years, and we can say that the zone has reached the level of “maturity”, when the secondary market will acquire an increasing role. It is .ru that has been the driver of the growth of the average check there in recent years. At the moment, the .ru zone accounts for 73% of the domains offered for sale in RU-CENTER and another 23% for the .рф zone.
The second trend is a decrease in speculation and a reduction in the distance between the offer to sell and the actual deal.
If we talk about record amounts, then with the help of the domain store this year there were several sales of domains for 5 million rubles, and the maximum deal was 13 million rubles. However, such amounts are rather the exception to the rule.
The gap between sellers’ expectations and actual sales figures, of course, persists. Since the pricing process has been opaque for a long time, there are offers on the market, let’s say, designed for an inexperienced buyer. A characteristic indicator is that part of the lots implies the possibility of bargaining and the average bargaining size is minus 43% of the original price. Moreover, the overwhelming majority of trades end at the first or second iteration of communication, that is, the seller is often ready to quickly reduce the cost in the event of a real sale opportunity.
Today it is still difficult to talk about the existence of fixed reasonable benchmarks in determining the real value. A big step in this direction was the emergence of a methodology for evaluating domains from the Coordination Center for .RU / .РФ domains. It, in particular, formed the basis of our automated name scoring system, which we will actively use in our store to increase market transparency, along with many years of expertise of professional brokers who successfully help in making fair transactions in both directions.
Thus, the purchase of a domain on the secondary market in the coming years will gradually become an increasingly clear, transparent and widespread decision, primarily for business.