Domain name value

In recent years, with the popularization of networks, companies are increasingly using network domain names for production management, sales, and information exchange. The use of domain names has played an increasingly significant role in the development of enterprises. At the same time, the transfer of domain names has also gradually emerged, and even the abnormal phenomenon of domain name repurchase has emerged. Based on this, many accounting theory and practice practitioners propose to manage network domain names as an intangible asset or expense of an enterprise after registration, this not only effectively protects and improves the business value of the enterprise, but also enables the enterprise's accounting information to better reflect the principle of income-to-cost ratio. However, whether the domain name is capitalized or charged, the evaluation of its value has always been a challenge. Although some accounting professionals in China have also proposed some domain name value evaluation methods, these evaluation methods have not yet formed a complete system in general, and they are also complicated to use in practical work. To address these practical problems, we believe that these methods can be improved to form a complete and applicable evaluation method system.

I. Principles of optimization and selection of evaluation methods for network domain name value

1. Principles of simplicity. When evaluating the value of a domain name and ensuring the objectivity of its evaluation results, we should try our best to make the calculation method and evaluationProgramAnd so on. An optimization evaluation method is to simplify complex problems without being separated from reality, and simplify the evaluation, saving a lot of manpower, material resources and financial resources. At the same time, when multiple evaluation methods are available, you can choose the simplest and most optimized one.

2. Applicability principle. The ultimate purpose of the domain name value evaluation method is to apply it in the actual evaluation work. Therefore, its applicability has become an important criterion for optimizing and Selecting domain name evaluation methods. The applicability of the evaluation method includes two aspects: on the one hand, the evaluation method should be applicable to the specific national conditions of different countries. For example, we can optimize the "3C Evaluation Method" adopted by greatdomains in the United States during domain name evaluation to the "3C Evaluation Method" applicable to China ". Therefore, when learning from the advanced methods of developed countries, we cannot copy them. We must make improvements and optimizations based on the specific circumstances of our country. On the other hand, the evaluation method should be applicable to different acquisition methods of domain names. Domain names can be obtained through self-creation, outsourcing, or donation, or investment. The value of a domain name obtained through different channels varies greatly, so you need to select the value evaluation method of the domain name under different conditions.

3. Objective Principle. As with the objective principle of other assets evaluation, "one evaluation for one purpose" is provided, and the validity period of this evaluation is one year. This requires that the domain name evaluation method selected varies with different purposes. For example, the actual cost method can be used for the evaluation of the domain name created for the enterprise's own use, the "3C Evaluation Method" can be used to evaluate the value of a domain name that accepts an investment or a donation.

4. Principles of certainty. The quantity of each element in the formula of the domain name value evaluation method should be available. That is to say, the value of each element must be determined, and at least it should be estimated, such as the expected benefits of the domain name. Only in this way can the value of a domain name be measured. Therefore, the determination and selection of domain name value evaluation methods should be subject to specific conditions such as the number of elements and certainty.

5. The principle of foresight. The domain name value evaluation method that has been optimized should not only apply to the present, but also take into account some foreseeable future situations so as to ensure the consistency of the evaluation method. Therefore, the premium principle requires that the domain name evaluation method should be a complete system that can objectively evaluate domain names in different situations.

Ii. Optimization of the Evaluation Method for network domain name value and Reasonable Selection

Evaluate the value of a network domain name. Because of the differences in the domain name acquisition method, the elements used in the calculation formula are different, resulting in a great difference in the amount of domain name value. For example, the value of a self-built domain name % obtained through application is easy to determine, and the value is low. For a domain name that has been purchased, donated, or invested, its value is generally relatively large. However, because there is no perfect domain name trading market in China, there is no unified rule for determining the market price. Therefore, the evaluation methods of domain names can be discussed in the following two categories to optimize the evaluation methods and make reasonable choices.

1. methods for evaluating the value of self-built and purchased domain names

① Actual cost method. It refers to the method of billing based on the actual cost paid by obtaining the domain name. When using this method, the number of the following elements can be determined, the actual cost of the domain name includes the registration fee, service fee, the salary of the network administrator during the network establishment period, and other fees. If the domain name is purchased, the actual cost includes the purchase price, commission of the domain name transaction agent, and other expenses incurred during the transaction. Therefore, the evaluation value of self-built and purchased domain names can be expressed:

Self-built domain name value = registration fee + service fee + network administrator salary during the creation period + other fees

Purchased domain name value = purchase price + Commission of the domain name transaction agent + other expenses incurred during the transaction

② Present Value Method of cash flow. This is a billing method that converts the amount of cash inflow due to the use of domain names in the future to the current value based on a certain discount rate. The formula is as follows:

Among them, V -- the value of the domain name;

N-estimated validity period of the domain name;

Ik-the K-year (month) cash inflow, mainly from the advertising revenue of the Network;

OK-the amount of cash in the K-year (month) is mainly the registration fee, software fee, and the salary of network management personnel ;,

I -- the predefined discount rate.

③ Method of valuation based on the current value of the expected net income of the domain name. Because a domain name is different from other types of intangible assets, the value of the domain name decreases rarely during use. If an enterprise continuously invests in the use of domain names, the higher the degree to which the domain name is recognized by consumers, the more benefits it will bring to the Enterprise. Therefore, the value of a domain name will increase over time, so we can use the value of the expected net income of the domain name as its recorded value. The calculation formula for the recorded value of a domain name is:

Where,

V: The value of a domain name;

Rk indicates the expected network investment in the K-year (month;

N-estimated validity period of the domain name;

I -- the predefined discount rate. Among the above three methods, the advantage of the actual cost method is that the calculation is very simple and the expenses incurred are easy to determine. Therefore, the domain name value is highly objective and conforms to the simplicity and certainty principles of optimization. However, the disadvantage is that it is not commensurate with the company's popularity. For those well-known large companies, the value of their domain names is very large, and the actual cost paid at the time of creation is low. Therefore, based on the Applicability principle, the actual cost method is applicable to domain names and purchased domain names created by some newly-created and well-known enterprises. The current value of the net cash flow and the current value of the expected net income of the domain name both fully consider the time value of the currency and the profit level of the Enterprise Domain Name, the value of the domain name is proportional to the profit level in the future, which can explain why the domain name value of an enterprise with high benefits and popularity is high. However, the disadvantage of the two lies in that the future profit level of enterprise domain names is difficult to predict (that is, the certainty is poor) due to the uncertainty of the enterprise and the objective economic environment ). Therefore, according to the deterministic principle, the method of cash net flow present value and the current value of the expected net income of the domain name is suitable for the use of self-created domain names that have been established for a long time and have a stable profit level in a relatively stable economic environment.

2. Pricing of domain names invested by accepting donations and other enterprises

In principle, the value of the domain name obtained through the receipt of the donation is determined by the relevant creden; provided by the donor or by the market price of the domain name; in principle, the value of the domain name received from the investment is recorded at the price negotiated by both parties. But the difficulty is: first, from the perspective of the creden provided by the domain name donors and investors, it is not operable at all (for example, the investment in the network establishment period provided by him and the authenticity of the network manager's salary are poor). Secondly, because the domain name trading market is incomplete and it is impossible to know the reasonable market price of the domain name, the valuation method of the domain name that accepts donations and investment cannot be similar to that of other intangible assets. At the same time, because the domain name is different from other intangible assets, the value of the domain name will not decrease as the service life increases, and even the value of most domain names will increase with the service life, the valuation method of other intangible assets is not applicable to domain names, and the valuation method of domain names has its unique characteristics. To this end, we can use the domain name Evaluation Method of greatdomains, a famous U.S. domain name dealer, to optimize the method and obtain the following "3C Evaluation Method" suitable for China's domain name evaluation ". "3C" respectively refers to characters (Domain Name Length), credit (enterprise credit), and COM (the top-level domain name where it is located,. com as the benchmark, other top-level domain names multiplied by different weights), these three factors determine the value of the domain name. We divide each element into different levels (4 in total

Level, from 0-3), the higher the level, the greater the value.

① Characters: the length of the domain name, that is, the length of the domain name that does not include. com,. net,. Edu, and other suffixes. The shorter the length, the stronger the memory and writability, and the higher the value.

Level 3: domain name length ≤ 5, such as sina.com, sohu.com, 5460.net, etc;

Level 2: 6 ≤ domain name length ≤ 10, such as chinaren.net and chinesejia.com;

Level 1: 11 ≤ domain name length ≤ 15, such as greatdomains.com and americanexpress.com;

Level O: 16 ≤ the Domain Name Length, such as c10balsoccertransfers.com and sucai.silverstand.net.

② Credit: refers to the credit level of an enterprise. The higher the credit level, the greater the value of a domain name. .

Level 3: The credit level is AAA;

Level 2: The credit level is AAA;

Level 1: Credit Level;

Level O: The credit level is lower than level.

③. Com (whether the top-level domain name is. com):. com is used for commercial companies and is the top-level domain name with the highest value.

Level 3: top-level domain names are. com companies, such as Yahoo.com;

Level 2: top-level domain names are. Net companies, such as 21ky.net;

Level 1: All other top-level domain name companies;

Level 0: all secondary domain name companies.

Based on the above three factors and the evaluation criteria of greatdomains, we can get a reference table for the domain name value in China:

Level 3
1 million-10 million
0.5 million-5 million
0.2 million-1.5 million
0 thousand-0.25 million

Level 2
0.3 million-5 million
0.2 million-2 million
0.1 million-0.5 million
0 thousand-0.15 million

L-level
50 thousand-1 million
30 thousand-0.5 million
15 thousand-0.2 million
0 thousand-30 thousand

Level 0
0 thousand-0.1 million
0 thousand-50 thousand
0 thousand-30 thousand
0 thousand-10 thousand

Note: ① price unit: RMB)

② The table above is based on. com. If it is a domain name under. net, the price needs to be multiplied by o.25. If it is a second-level domain name, it needs to be multiplied by O.1.

③ The amount in the above table is an estimate, which is not fixed. As the economy develops, the price in the table should be adjusted accordingly to adapt to the current economic development level.

for the "3C evaluation method", the evaluation of domain name value is objective, unified standards, and highly operable; however, the disadvantage is that the price in the table must be adjusted as the level of economic development changes. This method applies to the valuation of domain names that accept donations and investments.