Sunday, December 07, 2008

So What Are Domain Names Worth?

The answer is that it depends. Like a lot of intellectual property, the vast majority of domain name sales bring prices in 3, 4, 5, or 6 figure range. Nevertheless, there have been roughly sixty seven transactions of a million dollars or more (see top 20 above).

This year (2008) Fund.com at just under $10 Million tops the list so far. Pizza.com went for $2,605,000 while DataRecovery.com reportedly sold for $1,659,000. Domain Name Journal reports that Invest.com has sold for $1,015,000. Link.

13 Comments:

At 12/07/2008 7:57 PM, Anonymous poor boomer said...

You have to either have a lot of money or be really fast to get a valuable domain name. Not to mention the speculators buying up every name that MIGHT, eventually, be valuable.

 
At 12/08/2008 2:14 PM, Anonymous Mark said...

I disagree, Poor Boomer. What you need to do to get a valuable domain name is buy a domain name that no one else wants (www.google.com, before the Google search engine came out) and build it up. There's no reason that www.tfsczx.net can't become an even more valuable investments website than www.investments.com. It just needs to be more useful.

 
At 12/08/2008 2:45 PM, Blogger Fnarf said...

Most overvalued domain names, more like. NONE of these domain names are market leaders or even significant players in their respective fields. There's no there there; and only chumps believe that a hot (and generic) domain name is the key to internet riches. What matters is content.

 
At 12/08/2008 2:57 PM, Anonymous Dominik Mueller said...

Mark, the difference between Google.com and Sex.com is that Sex.com has built-in keyword value, while Google's domain is close to worthless as long as there is no brand behind it.

Regarding your Investments.com example, the DOMAIN NAME tfsczx.net will never be as valuable as Investments.com. When appraising a domain it should be separated from its content, unless, of course, you're going to acquire the entire website or online business behind it.

Keyword value and direct navigation traffic (resulting from type-ins) is what makes even undeveloped generic domains worth thousands to millions of dollars.

Even established businesses with a brand name make use of generic domains by forwarding them to their existing websites, hence profiting from the additional traffic coming in every day.

 
At 12/08/2008 4:15 PM, Blogger Tom said...

Ref Mark - dear Xer/Yer - like "DUH!"

/snarky comment to snotty obvious comment

 
At 12/08/2008 5:50 PM, Blogger Heraldblog said...

I registered Hathetic.com last year after Andrew Sullivan used the word on his über-popular blog. So far no takers.

 
At 12/08/2008 11:47 PM, Blogger 1 said...

Hey Dominik Mueller regarding your comment about google: "Google's domain is close to worthless as long as there is no brand behind it"...

Isn't Google trying to make its own name a brand? They offer online services, applications, and now they are pitching some sort of Google phone...

BTW Dominik Mueller - Domain Name blog looks pretty interesting...

Kudos to you for it... One for the bookmarks...

 
At 12/09/2008 7:06 AM, Anonymous Dominik Mueller said...

"Isn't Google trying to make its own name a brand? They offer online services, applications, and now they are pitching some sort of Google phone..."

Yes, Google has become a brand name by now. But that wasn't my point. I was only saying that when talking about domain value you should look at the domain name only and separate it from its website or business.

Also, while it is correct that a generic domain is no must-have if you're going to launch a successful company, it certainly gives you a head-start.

"I registered Hathetic.com last year after Andrew Sullivan used the word on his über-popular blog. So far no takers."

I would concentrate on keyword domains rather than highly speculative domain investments such as hathetic.com. Generic domains provide long-term benefits to their end users, most speculative "made-up domains" do not.

 
At 12/09/2008 12:06 PM, Anonymous poor boomer said...

To 1:

Of course Google is - has built - a (strong) brand.

Google is the new Ubik.

p.s. I have a good - not great, but good - five-letter domain name which evokes both a place and a product, and rolls off the tongue (or fingers) easily. Now all I gotta do is develop it.

 
At 12/09/2008 12:42 PM, Anonymous poor boomer said...

Here is an encouraging quote from Dominik's blog:

"There is money to be made with newly registered domains. You do not have to get your hands on high-value domains, but it should be domains that can be resold for a profit. What you can try to do, is to register domains at $7 each and then resell them for $xx each. If you resell a domain at $27 you’ll make a $20 profit. This isn’t much money and it might not buy you more than a meal and something to drink, but if you choose this method of getting into domaining it is about volume. Your aim should be to quickly resell hundreds of domains."

This is PRECISELY something I think I could do well and with which I would be quite comfortable - this is a comfortable speed for me.

No profit is too small.

Only problem I see is that due to extreme cash constraints, I would have to start very very small.

 
At 12/09/2008 4:04 PM, Blogger Broken Yogi said...

Isn't it kind of backwards to start a whole successful business up, just to make a domain name valuable. Seems like a helluva lot of work, and very risky, and it would take years to suceed. A lot easier to simply register an easy to remember domain name, as people are doing here, and let the bidding begin. Like most people, I hate hard work, and the idea of registering sex.com for ten bucks and a few minutes of keystroking, and then selling it down the line for ten million or more, appeals to me. Is that too hard to comprehend?

 
At 12/09/2008 7:39 PM, Anonymous poor boomer said...

Broken Yogi -

I think it is safe to say that virtually all of the really good, easy domain names have been taken.

Therefore, in order to get a really good domain name for $7 (or $10), you have to jump on an emerging opportunity.

For example, approx two years ago, Maryland enacted a narrow employer health insurance mandate, which was targeted at Wal-Mart. (This law was overturned by the 4th Circuit on the ground that the Maryland law was preempted by ERISA.)

As soon as I read about the Maryland law, I entertained the notion that as other states follow in attempts to target Wal-Mart with mandates and regulations, a new legal specialization might emerge, which could be termed "Wal-Mart law." (That is, I was anticipating copycat legislation (which would be played out in numerous circuits before resolution) and thinking beyond the instant case.)

So I tried to register the domain name, but someone had beaten me to it two days earlier. (Whoever registered it did not bother to renew it, as the domain name is again available.)

 
At 12/10/2008 6:23 AM, Anonymous Dominik Mueller said...

Poor Boomer:

Don't forget that the quote you took from my site is from a post made in September 2007. Although much of what I wrote there still applies today, the domain industry (and the economy in general) has changed.

The number of buyers in the lower end of the market has drastically decreased, only the mid- to high-value market has remained stable and continues to grow. So, be careful with speculative domain investments. The "volume approach" to domaining does not work that well today anymore. Today, quality is the most important thing to consider when looking at a domain as an investor. Because only strong keyword domains will continue to have value in the future; purely speculative names might be worthless tomorrow.

Broken Yogi:

Indeed, it is not about developing a business to make a domain valuable (that would be pointless because the value would remain in the actual business and not in the domain name), but, if you are an end user, it is about picking a good domain to give you a competitive advantage over the other businesses in your market. If you are an investor or a domain reseller, you should look out for underpriced domains that you can flip for a profit without or with very little effort.

 

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