The February update of the Internet Domain Name Index IDNX shows a continuation of the strong and steady recovery of domain prices. Prices paid for domain names at secondary markets are almost back where they were before the financial crisis left its mark on the ‘virtual land’ values as well.
Will these high prices for domains last? Or is this just a bubble that will bust sooner or later? Dividing the Internet Domain Name Index (IDNX) by the NASDAQ100 or an index for online advertisement revenues sheds light on the relative over- or under-pricing of domains. Long-run ratio between domain prices and stock prices are not “out of balance”. If there was a bubble in domain prices, then it is a bubble not only for domains but for the IT industry as a whole.
Furthermore, advertisement spending in the US outgrew increases in domain prices. Domains are likely to catch up further to reflect this better business climate. Compared to ad revenues, domain prices are rather under-priced and definitely not too expensive right now.