But more interestingly, the percentage of recent registrants who have decided to re-register their domains has gone up sharply.
Last fall we looked at 250 random NNNNN.com domains to see how long they had been registered for, and this last week we ran the same test on 500 random NNNNN.com domains. Here is what we have found.
The significant decrease in domains registered within the last year is indicative of a market where supply is tightening rapidly., and where new registrants are deciding to hold on to their investments. Here is what we wrote last fall about registration rates for recent registrants:
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.It now seems that we were perhaps too conservative in our predictions, and that in fact we will get to the 10-20/day average drop amount much sooner than originally predicted. We are running around 20-40/day right now it seems. Plus, the percentage of new registrants that are renewing their domains is likely in the 70% range right now. If this trend continues the entire float will be virtually locked up over the next year.
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.
Why is this happening? Probably a number of factors, including:
* the rise of 4.cn as a place to easily buy and sell numeric domains in the Chinese market,
* increasing internet penetration in China,
* the general increase in .com registrations,
* the recent all-time high sale of an NNNNN.com for $16,000 (41186.com),
* and the simple fact that the domains are all bought out.
Marchex (NASDAQ:$MCHX), which owns about 40% of these domains as US zip code domains, has extended its registrations through late 2013. The "float" for five digit .com domains is very small, probably around 50,000 domains that are not owned by Marchex or already used as developped sites. Compare that to about 400k for LLLL.com's (four letter .com domains), and you can see how tiny the market is for numerics. When NNNNN.com holders decide whether to renew their domains, they see the float tightening and that process feeds on itself by encouraging existing registrants to renew. The recent increase in the number of offers we have been getting (and the increases in prices thereof) doesn't hurt either...