In my opinion, observing from the sidelines, majority of the people who promote Geo domains are doing so not because Geo is doing great but because they are invested in Geo. As such, by marketing Geo and affecting their value they are essentially marketing the value of their own holdings. Nothing wrong with that really but for you, the domain investor, you should question these things carefully as making the wrong assumption may as well mean investing in the wrong commodities. The more important question about Geo is are they making money today? Dr. Kevin Ham, in a recent DNJournal article, said it elegantly:
"We are building a new advertising and retail platform through Vancouver.com. The ambition and initiative is huge and if we can make it work for our city, then we can build it for the rest of the world. Geo domains are asset rich but cash flow poor. So if we can change that paradigm into one that is cash flow rich, then we will raise the level for all geo domains."
(emphasis added)
Note that in reality, today, Geo is a poor performer. That is not to say things won’t change in the future (they can go either way) but today, in present time, if you are buying these domains you are likely paying for their future value, voting against the two other strong possibilities that 1. They will stay the same and 2. They will go south in term of performance. In addition, you are likely assuming you can always flip it to others without taking a major loss. Haven’t we all made those assumptions before though, especially in great times? We don’t need to look further then the current Real Estate market in the U.S to know that contrary to popular belief things don’t always go up, things ARE cyclical.
In terms of cashflow performance, in comparison to other domain categories, Geo domains are extremely over rated. It is not something many like to hear, it is definitely not something you say if you are looking increase your popularity in the domain world, but it is what it is. As I see more and more in the domain space considering investing in Geo (1, 2, 3, 4, 5, 6) I feel an obligation to talk more about it, to expose the other side, the side many may not be aware of, many do not want to talk about.
With all that said, Geo can work for you. How you may ask? That is for another post.
Source: Posted on TheConceptualist by Sahar Sahid -- Reprinted with permission -- May 29, 2008