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Are LLLDirect Domains a Smart Investment?

December 20, 2012

This morning I was reading through Domain Name Wire’s weekly report of domains bought by end users.  Scanning the list, I came to GFIDirect.com, and paused briefly to consider why someone would have registered that particular domain with the hopes of reselling in the first place.

Googling the term “GFI Direct” in quotations returns almost no results and none that are meaningful.

A search on the letters ‘GFI’ alone shows that there are quite a number of companies whose name consists of or incorporates this acronym.  One can see how the domain GFIDirect.com could be a purposeful website address of value for any number of such ‘GFI’ companies.

However if that is so, then it stands to reason that any LLLDirect.com combination should also have the same or similar speculative value. (Perhaps casting aside those combination that contain only non ‘popular’ letters such as X, Q, K, Z, etc)

So just how many LLLDirect.com domains are in fact registered?   To find this out I headed over to ZFBot.com.  Entering the appropriate filtering criteria reveals there are currently 4,583 LLLDirect.com domains registered out of a possible 17,576 combinations.  That is about 26% taken.

Scanning over their name servers in an attempt to get a feel for how many might be in use by end users, as opposed to parked, one name server continued to jump out:  ns.buydomains.com.

It turns out that 1,193 out of the 4,583 LLLDirect.com domains in existence are parked with and thus owned under BuyDomains. Coincidentally this is also 26%.  So they own 26% of 26%, which turns out to be 6.76% of all possible LLLDirect.com combinations.

What is the total carrying cost of owning this many LLLDirect.com domains?  Taking $8.17 as a base (currently the lowest I pay for .com registration and renewal at GoDaddy) that cost would equate to about $9,750 per year.

Now, GFIDirect.com was sold through Afternic for $1,388.  At this rate, BuyDomains would need to sell about 7 of its LLLDirect.com portfolio per year just to break even on renewals.

Domain sales database NameBio shows that only eight LLLDirect.com domains have been publicly reported as sold since 2007, and only two of those (three counting GFIDirect.com) have occurred through Afternic.  That’s a long way from break even.

So do LLLDirect.com domains look like a good investment?

At this point I would have to question why BuyDomains/Afternic would continue to hold so many of these domains for resale.  I can’t imagine that many of them would get much direct traffic or earn enough PPC revenue to offset their own renewal costs.  If so, then that would certainly justify the investment.  Although its certainly possible, I wouldn’t guess it to be the case.

That said, far be it from me to criticize a company generating millions or more per year in domain sales and monetization.  They’re obviously doing something right, and there may be something I’m missing here.  What do you think?  Does this make sense?

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