Following this mantra has paid off handsomely for many domainers. The value of three letter dot com domains has soared in recent years. According to the leading site for tracking prices for 3 letter domains, 3Character.com, the minimum wholesale price of an LLL.com has gone from $3,700 to $7,600 in the last year. That’s more than doubling your money in just one year – a rate of return that’s hard to beat.

What’s more, this year, while much of the rest of the domain market has been flat, declining or even collapsing, the 3 letter dot com market continues to do extremely well, likely outperforming every other segment of the domain market.

Generally, I like LLL.com domains. In addition to their historically high rate of returns, they are attractive particularly for novice domain investors. While understanding and valuing generic domains is complicated and can take a lot of time and experience to understand, the three-letter domain market is fairly straightforward to understand in comparison.

In addition, three letter domains offer liquidity that most other domains do not. If you need to raise some money, you can put a three letter domain up for sale, and get a decent price for it in days, rather than weeks or months.

As well, there’s always the potential of a big payoff from an end user sale. If your three letter dot com contains decent letters, chances are that there is a company out there for which those letters form an acronym. Usually end user sales of three letter domains are for a solid five figures.

In all fairness I should also point out that there are some risks associated with owning 3 letter dot com domains. Companies have been aggressively launching UDRPs on these domains. And three letter domains tend to be particularly targeted for theft because of their liquidity and popularity.

Three Letter Domain Advice

Despite all of these good things going for them, and despite the fact that I generally like three letter domains, I recommend that you start selling off your holdings of these names. This does not necessarily need to be done immediately, but should be done gradually over the next few months.

While there are a lot of good things to be said about three letter dot com domains, the current market looks significantly overheated. It simply does not make sense that this one segment of the domain market significantly outperforms the rest of the domain market, and even does so much better than quality generics. There are no fundamental market reasons for it. While LLL.com domains are great, one can’t say that they are significantly better than good generics.

I don’t think that the situation will change overnight. The LLL.com market seems to be going strong and I expect this strength to last for a few more months, at which point there will be a market correction.

In addition to this, over the course of the next year, given the recessionary environment, there are likely to be a lot of good bargains to pick up. It will pay to be in a strong cash position. Selling off domains that are overpriced in the current market is one way to raise that cash. LLL.com’s fit the bill nicely.

Think that three letter domain prices can’t collapse? After all, supply is fixed and demand seems to grow each year. However, believe it or not, there have been price crashes in three letter domains before. For instance, in April 2007, three letter .us domains were going for a minimum wholesale price of $110 each. By April 2008, their minimum wholesale value had fallen to $45, and even now their prices remain stuck at that level.

In short, I have nothing against three letter domains and in the past these have been a solid investment. However, the LLL.com market appears to be significantly overheated. It is significantly outperforming the rest of the domain market and there is no fundamental reason for this. While this will likely continue for a few more months, it can’t continue much longer than this before there will be a correction and LLL.com prices will drop. Make sure you aren’t holding any LLL.com’s at this time; use the funds you free up to bargain hunt for recession induced domain fire sales.

Here are the final results that I saw (unofficial results). Some of the names were regular Sedo auctions that were closing at the same time:

taille.com – no bids
autosocasion.com – 1,500 EUR – reserve not met
zmp.es – 70 EUR – reserve not met
bankingcareers.info – no bids
mediacareers.info – no bids
cellulitecreams.co.uk – no bids
coutume.com – 110 EUR
biométrie.com (IDN) – no bids
biométrie.com – 100 EUR – reserve not met
estrogencream.co.uk – no bids

lumbarspine.co.uk – no bids
cosmeticsurgery.vc – no bids
doctor.sc – no bids
conocer.net – 90 EUR – reserve not met
criticasliterarias.es – no bids
monolithique.com – no bids
secrétaire.com (IDN) – 250 EUR – reserve not met
multinationales.es – 70 EUR – reserve not met
bmb.de – 1,210 EUR
confectionner.com – 70 EUR – reserve not met

amueblar.es – no bids
multicines.net – 250 EUR – reserve not met
reservar.es – 300 EUR – reserve not met
preestreno.es – no bids
sexualdiseases.org – $70 – reserve not met
aeroplanecharter.co.uk – no bids
leisureboats.co.uk – £70 – reserve not met
southarabia.info – $70 – reserve not met
micronesie.com – 500 EUR – reserve not met
telling.com – $3,600 – sold!

voyageslinguistiques.com – 200 EUR – reserve not met
candidatures.com – 70 EUR – reserve not met
industrialmortgage.co.uk – no bids
ukcarguide.co.uk – no bids
artesanal.es – no bids
overnightshipping.co.uk – 70 EUR – sold!
karbala.co.uk – no bids
eastmalaysia.info – no bids
neighbour.info – no bids
brasilia.info – £750 – reserve not met

wheels.at – 70 EUR – sold!
californiavineyards.com – 1,800 EUR – reserve not met
pox.com – $15,000 – reserve not met
beers.info – $560 – reserve not met
complémentaire.com (idn) – 500 EUR – reserve not met
rachatdecrédit.com (idn) – 750 EUR – reserve not met
privilegier.com – no bids
romanticmovies.com – 3,300 EUR – sold!
hushes.net – no bids
table.net – $5,000 – reserve not met

heureuses.com – no bids
vorwahl.com – 370 EUR – reserve not met
zty.com – $6,100 – sold!
ddp.com – $19,500 – sold!
mlk.net – $1,200 – reserve not met
onlinereifen.de – 70 EUR – sold!
illimites.com – no bids
schematics.com – $5,000 – reserve not met
runningman.com – $3,000 – sold!
cassettes.com – $1,000 EUR – reserve not met

trier.com -$1,050 – reserve not met
wfz.com – 6,000 EUR – sold!
matron.com – £850 – reserve not met
imails.com – $430 – sold!
regs.org – $120 – reserve not met
caucus.info – $500 – reserve not met
hosiery.co.uk – £2,000 – reserve not met
stiletto.co.uk – £555 – reserve not met
wild.co.uk – £3,500 – reserve not met
canes.co.uk – £750 – reserve not met

pizzashop.com – $2,500 – reserve not met
wintry.com – $300 – reserve not met
sastre.es – no bids
seine.biz – not bids
derisoire.com – no bids
delegates.com – $2,000 – reserve not met
digitalvideos.com – $2,300 – reserve not met
countrywestern.com – $10,100 – reserve not met
widows.com – $6,000 – reserve not met
los.com – $31,000 – reserve not met

secretingredients.com – $251 – reserve not met
boston.net – $21,000 – reserve not met
equipment.com – $151,000 – reserve not met
canadianflights.com – $250 – reserve not met
despedidas.com – 1,000 EUR – reserve not met
chinchon.com – 70 EUR – reserve not met
calculettes.com – no bids
ugly.net – $2,750 – sold!
holdem.de – $3,700 EUR – reserve not met
bajadas.com – 70 EUR – reserve not met

fianzas.es – no bids
adamas.de – no bids
diamondclub.com – $1,000 – reserve not met
warrant.org – 500 EUR – sold!
catalogue.info – £70 – reserve not met
pi.org – $12,500 – reserve not met
payment.de – 9,900 EUR – reserve not met
primerosauxilios.es – 70 EUR – reserve not met
debitos.es – no bids
casinoguide.de – 390 EUR – sold!

comunidaddemadrid.com – 500 EUR – reserve not met
unioneuropa.com – 300 EUR – reserve not met
viena.com – 2,000 EUR – reserve not met
ginebra.com – 1,050 EUR – reserve not met
agenciasdeviajes.com – 11,000 EUR – reserve not met
bruselas.com – 1,000 EUR – reserve not met
autopista.com – 16,000 EUR – reserve not met
foroavanzit.com – no bids
fenomenales.com – no bids
greathangouts.com – 110 EUR – sold!

inhalers.com – $4,000 – reserve not met
dvdburners.net – $510 – sold!
perceptible.com – $500 – sold!
gaj.net – $750 – sold!
persecute.net – $70 – sold!
freesavings.net – $80 – sold!
oboes.net – $251 – reserve not met
normalities.com – no bids
fixedmortgages.com – $4,000 – reserve not met
basketballbundesliga.de – no bids

fussballbundesliga.de – 70 EUR – reserve not met
accessoire.de – 510 EUR – reserve not met
digitalconverter.co.uk – no bids
adjustablemortgages.com – $4,000 – reserve not met
cdburners.net – $111 – sold!
samuraiswords.com – $15,000 – reserve not met
backhoe.com – $50,000 – reserve not met
rvtrailer.com – $5,000 – reserve not met
investigateonline.com – no bids
stockupdates.co.uk – no bids

sweepstakes.co.uk – £400 – reserve not met
eligiblemen.co.uk – no bids
tabloidphotos.co.uk – no bids

weights.co.uk – £1,500 – reserve not met
carribeansea.co.uk – £70 – reserve not met
tellys.co.uk – no bids
glastonbury.tv – £70 – reserve not met
britishpassport.info – no bids
anuncio.net – 1,111 EUR – reserve not met
temporada.es – no bids

semenales.es – no bids
maquinistas.com – 100 EUR – reserve not met
shoecity.eu – no bids
ponteya.com – no bids
ponprecio.com – no bids
plataformamusical.com – no bids
annuaire.com – 60,000 EUR – reserve not met
contraofertar.es – no bids
independentloan.co.uk – no bids
legalconsultation.co.uk – no bids

eaterie.co.uk – 550 EUR – reserve not met
hostile.com – $10,000 – reserve not met
dvdburner.com – $25,000 – reserve not met
iglesia.com – $1,400 – reserve not met
restoroute.com – no bids
jornadalaboral.com – 70 EUR – reserve not met
mezquitas.net – no bids
muster.net – 500 EUR – sold!
festivales.com – 750 EUR – reserve not met
dramatiser.com – no bids

planetafinito.com – no bids
expathomes.co.uk – no bids
hamburg.co.uk – no bids
profit.co.uk – £2,650 – reserve not met
lol.de – 7,500 EUR – reserve not met
030.net – 999 EUR – sold! (zero 3 zero)
verypremium.com – no bids
tv42.info – no bids
telephone.net – $5,200 – reserve not met
cremes.com – $4,100 – reserve not met

glaciers.co.uk – no bids
cellulitis.com – $20,200 – sold!
pda.net – $10,000 – reserve not met
wardrobes.org – no bids
upholstery.org – 333 EUR – reserve not met
industryexperts.co.uk – £70 – reserve not met
handheld.net – $1,000 – reserve not met
purchasetickets.co.uk – no bids
cricketsite.co.uk – no bids
phototravel.co.uk – £70 – sold!

globaltraveler.co.uk – no bids
webgamers.co.uk – no bids
techupdates.co.uk – no bids
relapsed.com – £1,050 – sold!
appartment.com – $31,000 – sold!
leatherchairs.net – $1,050 – sold!
chomage.net – no bids
encheres.net – 100 EUR – reserve not met
actualite.net – 1000 EUR – reserve not met
vhs.net – $1,500 – reserve not met

1a.net – 5,400 EUR – sold!
bottlebanks.co.uk – no bids
preseason.co.uk – no bids
britain.net – $1,200 – reserve not met
sleepingsickness.com – no bids
portail.net – 800 EUR – reserve not met
magasins.net – no bids
xws.com – 6,000 EUR – sold!
nouveau.net – 114 EUR – reserve not met
gaywedding.com – $10,100 – sold!

receiver.net – $510 – reserve not met
valleys.com – $5,300 – sold!
fbi.de – 4,999 EUR – sold!
sketchartists.com – $300 – reserve not met
istockoption.com – 380 EUR – sold!
handhelds.com – $30,000 – sold!
swing.net – $2,900 – sold!
letmego.com – £950 – sold!
coriander.com – $5,300 – sold!
mideast.com – $3,400 – reserve not met

tyc.net – $900 – sold!
alufelgen.eu – 2,000 EUR – reserve not met
mobilecomputing.com – $1,500 – reserve not met
blowjob.biz – $1,350 – sold!
autoreifen.com – 8,500 EUR – reserve not met
reifenshop.at – 398 EUR – sold!
autograph.com – $45,000 – reserve not met
entailed.com – 510 EUR – sold!
purify.net – $1,045 – sold!
musiques.net – 3,333 EUR – reserve not met

rigs.net – $1,850 – sold!
harlot.com – $4,998 – reserve not met
edv.de – 15,500 EUR – sold!
promohotels.com – 310 EUR – reserve not met
invents.com – $16,500 -sold!
eggs.com – $112,500 – sold!
coworker.com – $5,100 – sold!
lurching.com – £110 – sold!
infatigable.com – $80 – sold!
exchangestudents.co.uk – 260 EUR – sold!
bobbleheads.com – $29,112 – sold!

1. Please provide a brief biography so that my readers know who you are.

Here is my brief biography for your to reference:

I joined Register.com as Chief Executive Officer on November 1, 2006 with a history of building and growing Internet-enabled businesses and supporting small businesses. Before joining Register.com as CEO, I served as Senior Vice President and General Manager of the Small Business Group at Dun & Bradstreet. During my tenure at Dun & Bradstreet, I was instrumental in helping the company expand its digital offerings, including the acquisition and development of Hoover’s. I was a member of Dun & Bradstreet’s Global Leadership Team since joining in 2001.

I also served as Managing Director of Wealth Management at Goldman Sachs & Co., and spent twelve years at American Express where my last position was as Senior Vice President of Interactive Enterprise Development.

2. Why do you recommend people use Register.com? What about Register.com makes you proudest?

Register.com helps small businesses succeed online by operating as their web department. We get feedback all the time that we have the best service in the industry. Whether we are solving complex technical problems or offering general ‘how-to’ advice, the exceptional service we provide is one of the things I am most proud of.

3. Recently, Network Solutions has started registering names that were searched on their website but not purchased. What is your opinion of their actions?

Register.com has serious concern over Network Solutions’ recent practice of registering searched but not purchased names via their website. As a registrar, Register.com takes very seriously the need to protect the ideas and domain searches of our customers. If it were to become standard practice that anytime you search for a domain name, the registrar purchases it, the customer loses.

You can be sure that if you search for a domain name on Register.com, we won’t use any information that you provide us to take it away from you. In addition, Register.com offers Domain Hold, a service customers can opt into to protect their idea by reserving a domain name for free for up to four days and then only they can come back to us to buy it.

It is a betrayal of the customers trust for Network Solutions to continue this practice. We hope we can put an end to this and focus as an industry on the ways we can help our customers.

4. What is your opinion about the explanation offered for this practice by Network Solutions?

The explanation Network Solutions has offered doesn’t ring true. They are not solving any customer problems with their new policy – in fact they are actually creating problems in the industry and ultimately for the customer.

5. In your opinion, does this action by Network Solutions violate any ICANN rules?

The bottom line is this is just not a good business practice and has the potential to hurt the industry and all of our customers. Due to this potential damage and the fact that this practice restricts competition among registrars, we believe that ICANN should immediately review this practice and Register.com has asked ICANN to do so in a formal letter.

6. Do you expect other registrars to do this as well?

I sincerely hope that other registrars will not adopt similar policies. As I commented previously, if it were to become standard practice that anytime you search for a domain name, the registrar purchases it, the customer loses.

7. What is your opinion of the 5 day grace period for domain registration allowed by ICANN? Should it be abolished or changed in any way?

The 5 day grace period is a positive thing for customers because it enables customers to carefully consider their domain purchase. At Register.com, we have leveraged this grace period in the best interests of the customers by offering a service called Domain Hold. Customers can opt into this service to protect their idea by reserving a domain name for free for up to four days and then, only they can come back to us to buy it.

8. What does Register.com do to ensure that when someone searches for a domain name on their website the information is secure?

When someone provides us their personal information we treat that information as highly confidential. We have a strict information security policy and privacy guidelines which ensure the customer’s personal information cannot be sold to a third party and is only transmitted to the registries through a secure connection.

9. Would you please let us know more about your Domain Hold service?

Register.com offers Domain Hold, a service customers can opt into to protect their idea by reserving a domain name for free for up to four days and then only they can come back to us to buy it.

10. One comment I often hear from domainers is that they don’t use Register.com because the prices are too high. Why has the registration fee been set so high?

Domainers are not our core target customers – our focus is on small business customers. So, while domainers may not need solutions to help them establish and build an online business, these types of tools are vital to the small business customer. Because of this customer need, many of our prices are bundled (not focused on just one product such as a domain) so our customers can purchase complete online business solutions.

That said, if a domainer wants the level of support and service we offer we will work with them on bulk domain pricing because we recognize these customers have different needs and pricing standards.

11. Are there any interesting developments for Register.com coming in the near future that you can reveal?

Over the past year we have launched several new and enhanced products (Build-My-Website custom design service, Do-It-Yourself website design tool, Professional Business Email, Domain Hold – just to name a few). In the near future,
you can expect to see even more innovative solutions to help the small business customer succeed online.

Thanks Larry for taking the time to discuss this with me!

Sahar has a couple of excellent posts about the early days of domaining. He starts out by discussing which domainer started out the earliest. He mentions Chris Hartnett who then proceeds to give one of the most interesting stories I have ever heard about the early days of the domain industry. Well worth a read.

I did some further research and found this list. It appears to be a list of all the domains that were known to exist on December 15, 1987 – a rudimentary web directory, if you will. The most popular extensions were .com and .edu, which is no surprise. Also, several of today’s common extensions – such as .us and .ca – did not have any domains registered.

Sahar, Elliot and the members of DomainState give their predictions about the domain industry for 2008. Well worth the time to read and think about how these trends will impact you and your domain portfolio.

One thing I’m sure about is that there will be more .mobi madness during 2008. Also, I’m not sure what effects the problems in the subprime mortgage lending market and housing market will have on the domain industry. I do worry that this could translate into some problems in the domain market, such as decreasing the liquidity of domains and possibly worse. That being said, I think that of all industries, domaining is one of the most protected from these sort of economic shocks. So, you’re still in the right industry – but it is good to keep this potential risk in the back of your mind.

I wish all my readers a happy and prosperous 2008!

Also, please take a moment to introduce yourself. I’d really like to get to know the readers of my blog.