It’s Time To End Pattern Domaining

October 19, 2008 · Print This Article

There is one thing that current tough economic times for domainers has made abundantly clear – it’s time to end pattern domaining.  Although values for all domains have decreased recently, the values of pattern domains have been hit particularly hard.

What is pattern domaining?  It’s buying and selling domains simply on the basis that the domains fit a particular pattern.  The best examples are the buying and selling of “short” domains – like LLL.com, LLLL.com, and NNNNN.com.  But pattern domaining is not just about short domains.  It also includes buying domains because they are one word domains – despite the fact that the odds of an end user every choosing to brand themselves under that word are less than the odds of being struck by lightning.  It includes buying domains with an “i” prefix simply because iReport.com sold for a large sum, or buying thousands of domains prefixed with “Iam.”

Domainers are attracted to patterns the way that moths are attracted to light at night.  The lure of pattern domaining is clear – it looks like you get all the benefits of owning domains, without needing to be an expert at valuing the domains.  This expertise takes a lot of time and hard work to develop, so, unfortunately new domainers tend to be the most attracted to pattern domaining, and in the end, the ones who are hurt the worst.

Pattern domaining tends to follow…..  oh, let’s just say a pattern.  You’ll find an increasing number of forum posts that set out recent sales for domains that meet the pattern, the number of domains left of that pattern that aren’t registered, talk about increasing minimum reseller pricing, and so on.  The posts will be full of spin and hype, and made with the goal of drumming up interest in the pattern.  Sometimes even entire blogs are created to discuss a particular pattern.

Pattern domaining has a serious flaw – and that is the lack of enduser sales or traffic.  One characteristic of pattern domaining is that most sales are to other domainers rather than to end users.  Prices can’t continue to rise constantly unless endusers are buying domains.  There needs to be a significant number of enduser sales – not just the odd one that gets pumped up on the forums.  And the prices that endusers are willing to pay have to be high enough to justify the reseller prices.

This flaw is now being exposed.  The examples are numerous.  The reseller value of a low quality LLL.com has fallen by about 1/3 over the last 5 months;  the reseller value of high quality LLL.com has fallen by about 1/2 over the last 5 months.  The value of low quality LLLL.com has fallen a whopping 90% over the last 8 months.  LLL.in’s are trading at less than reg fee.  Sure, all domains have been struggling recently, but the decline in the value of pattern domains has been staggering.

Sustainable value does NOT come from the fact that a domain is rare.  It does NOT come from the fact that all of the available domains that fit a pattern are sold.  Sustainable value comes from the fact that there are a significant number of endusers out there willing to pay a premium for a particular domain name.  Sustainable value also comes from traffic.

Ultimately, each domain is unique and should be valued based on it own merits, rather than the fact that the domain fits a particular pattern.  If you approach buying domains this way, you’ll never get sucked in by the pattern domaining fads that regularly hit the domaining world.

Comments

25 Responses to “It’s Time To End Pattern Domaining”

  1. No More Pattern Domaining - Indian Domain Names Forum on October 19th, 2008 4:50 pm

    […] Domainers are attracted to patterns the way that moths are attracted to light at night. It’s Time To End Pattern Domaining : Domain Bits […]

  2. Snoopy on October 19th, 2008 6:38 pm

    Very well said.

  3. Kevin Jackson on October 19th, 2008 7:01 pm

    This is a brilliant article. I personally fell in this trap as well.

    Pattern domains could work, but it will require a lot of time and money for someone to really bring out the branding potential in them.

    I don’t know if its the same thing you are referring to, but the EasyGroup does it very well with their brands:

    easy.com
    easyJet.com
    easyCar.com
    easyMoney.com
    easyPizza.com
    etc.

    Visit easy.com tgo see the full list.

    So pattern domain could work, and work successfully.

  4. admin on October 19th, 2008 7:23 pm

    Thanks Snoopy and Kevin!

    I don’t know much about EasyGroup, but I think that’s different because they’re dealing with developed businesses rather than just the domains.

  5. Jason on October 19th, 2008 10:06 pm

    Well, I wish I could BE a pattern domainer for LLL.com, but now I’m definitely staying away from the NNNNN.com and LLLL.net patterns, just for the sake of them…

    The ‘i” and “e” domain patterns still need to be paired with a VERY strong generic to be worth it…

  6. Ray on October 19th, 2008 10:20 pm

    I tend to agree with you on this. I think it is very easy for some people to get drawn into the hype surrounding the latest domain craze.

    There is a place for LLL, LLLL and NNNN domains in a well balanced domain name portfolio. However, a viable domain name portfolio must contain a solid core of quality generics. If a portfolio is robust there is nothing wrong with adding a small proportion of more speculative short domains, brandables, ‘e’ and ‘i’ domains and so on. Its a risky strategy but it can add a bit of excitement – as long as domainers realize the risk involved. Domainers get themselves into trouble when they overload their portfolios with these highly speculative domains and I think a lot of domainers have over bought in this area.

  7. Troy on October 19th, 2008 11:21 pm

    I have felt this way for a long time. I especially loved the part where you said

    “Sustainable value does NOT come from the fact that a domain is rare. ”

    but instead the value comes from what an enduser might pay for it, or what an enduser might use it for.

    For example, creditcard.com going for three million makes sense, there is a ton taht you can do to monetize this domain…

    Opens.com going for $5000 makes no sense, what the crap are you going to do with it? What open source software? I could think of reg fee domains that would be better then opens.com.

    Domainers are so easily suckered into buying a doming simply because they think that it is valuable because it is rare. Opens7jdjw4smwi4.com is rare as well, doesn’t mean that it is worth crap.

  8. sevent on October 20th, 2008 7:32 am

    “it looks like you get all the benefits of owning domains, without needing to be an expert at valuing the domains.”

    Actually, this is true to a certain extent. Buying short combinations is like betting on the overall direction of the domain market. Very few people are smart, lucky and rich enough to pick out names which will get killer end-user offers within a reasonable time frame, names which will be immune to any downturn related to the industry those domains represent.

    Meanwhile, decent short combinations don’t depend on a fantastic end-user sale, and, so long as the Internet continues to grow, their scarcity, wide range of uses, and relative protection from TM-issues should continue to guarantee value growth. These names also tend to be highly liquid, which is a HUGE benefit if the market goes the other way. Sure, if the domain market tanks your mediocre short names could lose some value, and I would stay away from any name too close to reg-fee unless your horizon is very long term. But compare having to sell your LLL or NNNN name in bad times versus having to sell SUVTires.com in a bad PPC and financial market. Your *only* option is to find an end-user. Otherwise you have a $100,000 asset you can’t sell for $10,000.

    Basically, unless you are a forecasting genius, or just want to gamble on domains, no strategy works better than recognizing the limitations of your own talent, and of your own time to spend finding individual gems. Of course stay away from dumb, risky patterns like putting a letter or one specific word in front of every word know to man. But short character names are still the best, safest long-term investments out there.

  9. Andrew on October 20th, 2008 7:57 am

    I agree with everything you are saying but please keep in mind that pattern domains can achieve substantial traffic if they are well optimized and contain “holy grail” keywords….by example, we have been able to successfully rank the following sites on the first page of google organically and we now have a network of 50+ sites based on this pattern…

    http://www.AllPrintableCoupons.com
    http://www.AllPizzaCoupons.com
    http://www.AllCerealCoupons.com
    http://www.FoodCouponsDirect.com
    http://www.BabyCouponsDirect.com
    etc.

    So if you can find key phrases with tons of traffic and reverse engineer pattern domains from that, I believe you can have a valuable domain(s)….make sense? You agree?

  10. Rick Latona on October 20th, 2008 12:30 pm

    Excellent article.

  11. lyn on October 20th, 2008 1:12 pm

    I totally agree with Sevent and Andrew. First of .LLL and .LLLL has busines and corporate value. Those were becoming popular because of that. It’s opinions like this article that ruin sales for those that own them.

  12. Kevin Jackson on October 20th, 2008 1:27 pm

    Lyn,
    Domains will sell as long as they are of reasonable quality and we can manage to advertise them to end-users.

    It does not matter what people write or say. Domainers should be confident to demand the prices that their domains are worth. The only way be able to this however, is to own domains that can really brand ebusinesses.

  13. admin on October 20th, 2008 2:39 pm

    @lyn – I agree completely with Kevin Jackson. The end users don’t read my blog and even if they did, nothing I say can change what a domain is worth to them.

  14. John Scott on October 20th, 2008 7:06 pm

    IMHO domainers have to keep in mind that a domain only has value if you can find someone who wants the domain and is willing to pay for it. Until then it is only worth the registration fee. Market your domains to end users and you are likely to get better returns.

  15. Martin W. on October 20th, 2008 9:54 pm

    You couldn’t be more wrong regarding short domains. Especially regarding endusers. It is particularly funny how you cite one single bulk sale from a Namepros thread and then base your “90% low-quality LLLL.com decline” on that…. totally bogus, as is the “peak” minimum price that you based the niche on. You should get your peaks and minimums in order before posting about such things. Oh and please do push my comments through to your blog, thank you. MGW

  16. Jay M on October 21st, 2008 8:34 am

    he couldnt be more right then what all has been said in his article about pattern domaining. Its ok untill and unless your doing to a certain extent.. And the market price for LLLL.com’s have dipped to low $xx that were selling for mid to high $xx earlier this year.

    Again his thoughts won’t change end users mind about buying a particular name or niche for their business, so allow him!

    Atleast we have certain knowledgeable domainer sharing their experience or whatever they have experienced wit fellow domainers.

    Nice article Admin!

  17. Steve on October 21st, 2008 12:19 pm

    Terrific article, I guess it all depends on the end user buying and the intentions they have in developing the domain.

  18. Rob Johnson on October 25th, 2008 6:36 pm

    This is just my opinion. Whomever acquires opens.com could stand to lose it to American Express if the domain decides to offer financially related services.

    American Express owns open.com which has international appeal. Given their financial and legal strength, opens.com could be an accident waiting to happen.

    Again, just my opinion.

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  20. Adam on October 27th, 2008 1:44 am

    I have personally registered and sold many domains that I bought based on a recognized success in patterns or phrases.

    I think that the bubble of LLL and LLLL was caused by latecomer domainers wanting to get in to the game and oldschoolers selling them off. . . I also think that the latecomers really have had no other choice but to buy on patterns. . .The majority of people when looking for something to buy to resell at a later date (flippers) will look at things that sold previously as a template or case study of what sells and what does not. There’s nothing wrong with this but much work must be done to investigate EXACTLY why a domain sold . 1 domain selling for a large sum doesn’t mean others will sell for a large sum.

    Lastly one thing in regards to patterns that does annoy the hell out of me to see the Obama or McCain or Palin domain names hitting ebay and in the comments of blog posts. What these people are NOT doing is investigating what does and does not sell and why . . . as they say, fools and their money.

    BTW, I think everyone should also stop registering all of the patterns of domains that happen to end in .com . .. that way I can pick them all up.

  21. admin on October 27th, 2008 3:06 pm

    Adam, I agree – I think the key to what you are saying is: “much work must be done to investigate EXACTLY why a domain sold” – too many domainers skip this step.

  22. Damir on November 3rd, 2008 8:28 am

    Great post – Your website Rocks

  23. DNfer on April 20th, 2009 11:26 pm

    Great Article!!

    anyways about a year back when short domains were going for inflated prices, i knew it will make a bubble burst as the prices were just inflated due to speculation. where on the other hand good generics with high enduser potential is undervaluated

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    IMHO domainers have to keep in mind that a domain only has value if you can find someone who wants the domain and is willing to pay for it. Until then it is only worth the registration fee. Market your domains to end users and you are likely to get better returns.

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