When considering investments, most people don't even consider internet domains. Most people see these internet addresses as just some digits, not unlike a phone number, in the mass of cyber space known as the world wide web. However, unlike a phone number, a proper, high end domain name is an address, a label and a powerful marketing tool that can draw in thousands and even millions of visitors.
Many domains derive their cachet and importance from the business world "prior" to the existance of the world wide web (circa 1996)
Examples include such obvious brands as NewYorkTimes.com, Time.com, Ford.com, IBM.com, etc. You get the picture. There are also companies who obtained "first mover" advantage in their industries in the early days of the web such as Yahoo.com, Ebay.com, Amazon.com and MSN.com Those companies thereby became household names as web search and usage grew expotentially. At the beginnings of the world wide web (www) in the 90's, Microsoft.com became a default website for millions looking for answers from the software giant, especially for it's windows operating systems.
Today social media domains like Facebook.com, Twitter.com,Youtube.com and gamers like Zynga.com have made their mark with great online businesses that have boosted those names from obscurity into the daily life of millions of web users. Other great business will no doubt follow, and will boost otherwise obscure domains into the limelight. However, because of the nature of domains and of search, it is the simple names and phrases used in domains that have the most value.
The world wide web has spawned many great opportunities and changed many ideas of business. In this case, it made the english language, simple words and simple phrases, into valuable property. It has subsequently done the same for every language as more and more countries piled into the new phenomenon known as the world wide web.
This chart from the Domain Name Journal highlights domain sales by category during 2011.
Those who saw the value of these "gold nuggets" of the digital world back in the mid 90's began to register as many powerful "word" domains as possible. The most valuable that come to mind are domains like: Business.com (sold for $200,000 then "flipped" on the secondary market for $7 million) Sex.com (porportedly sold for $12 million) Cars.com, etc. The ".com" domain extension has always been considered the most valuable with the .net and .org extensions initially labelled as poorer cousins which sold, on average, for about 10% of the .com leaders. However, Just last week, MY.net sold for $75,950 at Sedo.com
Not a bad return on an investment (registration fee) of less than $30 eh! Even if you bought such a domain in the past few years on the secondary market for, say, $10,000 your return is still over 750% On the low end of the scale, people are registering domains for 9.99 and selling them for $100 to $1000. You do the math on what your profit is on such deals. Certainly, you won't make those dollars on the stock market in 2012.
For those just now getting into the domain game, there are many new opportunities, such as new extensions. Besides country codes like .ca (Canada) .De (Germany) .au (Australia) .it (italy) etc., there are now a number of new extensions and the new domainers are scooping up names like it is 1996 all over again with extensions like .co, .mobi, .travel, .asia etc. etc. Now Icann (the International Corporation for Assigned names and numbers) is considering more proposed extensions including ".family,"".tech,"".law," ".mp3,"".free," and ".xxx. For future domainers, these are opportune times indeed.
Recently, Microsoft published a research paper identifying a new bias in online searches they have labelled "Domain Bias". The paper clearly defines what many searchers already know by default. That online searchers clearly favor high end domain names with direct words or phrases, in their searches as opposed to vaguely named domains or those with dubious background. Here is an excerpt from that paper:
"In this paper, we uncover a new phenomenon in click activity
that we call domain bias—a user’s propensity to click
on a search result because it comes from a reputable domain,
as well as their disinclination to click on a result from a domain
of unknown or distrustful reputation. The propensity
constitutes a bias as it cannot be explained by relevance or
positioning of search results."
For a list of current and historic domain name sales you can visit the Domain Name Journal at DNJournal.com Where I often turn for updated information on the subject. I also use SEDO and Afternic.com to buy or sell domains in the aftermarket.
2012 may well be another turning point in the domain market as new, more specific domain extensions are brought online and new entrepreneurs jump in to a thriving and growing market. Will you be one of them?
PS: Sedo is the world's largest broker in the domain aftermarket.
- Domain Bias in Web Search - Free Whitepaper (michaelhartzell.com)
- Common mistakes made when choosing domain names (marketing.yell.com)
- FTC Locks Horns With ICANN Over Domain Names - Quick Take (biztechmagazine.com)
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I own domains which are not listed in this article.