This post looks at registration data for 250 random NNNNN.com domains to gain insight into the landscape.
The first item we will look at is how long NNNNN.com domains have been continuously registered.
As the results show, about 30% of NNNNN.com domains have been registered continuously for one year (meaning their expiration date is less than one year away from when they were initially registered). The second largest result was for domains registered for 7 years, which is when Marchex registered nearly all the US zip code domains. Domains that have been registered for longer are more likely to continue to be registered, and to be used for developed sites or cash-generating parked pages.
The average expiration date for domains registered for one year is February 8, 2012, which is close to six months away from today, suggesting that expiration dates are evenly spread throughout the year.
The big open question is how many of the most recent registrants will hold their domains for longer than a year. If nearly all of them let their domains expire, there may not be a buyout this year of NNNNN.coms that sticks. On the other hand, if only 1/4 of recent registrants renew their domains, it is likely that the buyout will stick at some point in the near future, given the strong continued buying/registering interest in NNNNN.com's and the increasingly tightening supply (over 99.9% are currently registered). And the data from past years suggests that this is not unreasonable to expect.
I have been looking at drops over the past month or so and approximately 58 domains drop per day. This shows that approximately 1/3 of new registrants (registered in the past year) are renewing their domains, and 2/3 are letting them drop. While this might suggest weakness in the NNNNN.com market, it actually shows that supply is tightening very rapidly, and that last year's 10,000 domains renewed by first-time registrants will likely be repeated this year. This is an incredibly bullish projection for NNNNN.com domains at this point, and suggests the buyout will likely stick at some point in the next year as continued interest from new registrants and tightening supply make it virtually inevitable. In two or three years it is likely that NNNNN.com drops will be as rare as LLLL.com drops (about 10-20/day) or possibly even rarer.
The next item looks at who owns NNNNN.com domains.
Of the 250 randomly selected domains, nearly half were owned by Asians, mainly Chinese, although some Japanese and Hong Kong owners appeared as well. The next biggest category of owners was Marchex, which I listed separately even though it is a US company. Interestingly, the next biggest owner of NNNNN.com domains is Italy, and these domains have been registered for several years. Although these domains are not currently developed it appears, perhaps they are being planned for use as Italian zip code domains, as Italian postal codes are also 5 digits.
The predominance of Asian owners suggests why supply has been tightening over the past couple years and registration periods increasing. Simply put, internet use is expanding rapidly in China and will continue to do so over the next few decades. We are likely in the early stages of an incredible bull market in numeric domains.