Image via WikipediaWhen considering investments, most people don't even consider
internet domain names. 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 even changed the english language in many ways. For instance the immergence of one previously obscure domain name based on the mathmatical "GooGol" changed the idea of "search" On the world wide web people now "Google" a word or a phrase to find what they are looking for. The term "Google it" is now part of the daily lexicon.
Google.com is now the most visited domain on the web.
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%
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."
Microsoft Research
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?
