Pumping Up The Domain Name Speculation Bubble

from the buy-and-hold dept

Wed, May 10th 2006 9:49am — Joseph Weisenthal

A few weeks ago, USA Today wrote about how much money there was in domain name speculation. Now, the same author is taking a look at the people behind the business. They view the business the same way a lot of people view real estate investment, that it's as easy as buying a property up, sitting on it, and then -- voila -- selling it for more later. As we noted before, there seems to be a total lack of skepticism about the strength of the market among the participants and by the author of the article. There are trends that may undercut the value of the market such as greater use of search engines (are people still just typing in clothes.com when they're looking for an online clothing retailer?). Also, ICANN isn't slowing down on approving new domain name suffixes, each time diluting the value of the existing ones. Perhaps their naiveté is actually a shrewd business strategy. Almost any time a domain name speculator is interviewed in an article, they seem to go out of their way to talk about how easy the business is and how anyone can do it, which sounds like a tacit invitation for fresh fools to keep bidding domains up. As with anything else, anytime you start hearing how easy it is to make money, and how anyone can do it, it pays to be cautious. Hmm, is there any way to short domain names?

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24 Comments

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Ray Deez, 10 May 2006 @ 11:05am

Domain Name tom-foolery
I recently read the blog of Godaddy's founder at http://www.bobparsons.com/adddropscheme.html
He explains another way people are making money on domain schemes.
Not illegal, but not nice either....
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Dr. Daemon J. Thrion D.D., PhD., 10 May 2006 @ 11:10am

Shorter names?
"Hmm, is there any way to short domain names?"

How about http://www.shorturl.com/ :^)
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- Bob, 10 May 2006 @ 12:45pm
  
  Re: Shorter names?
  I think Joe was referring to Selling Domain Names Short, like short selling stock.
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- Streetz, 4 Feb 2008 @ 1:36pm
  
  Re: Shorter names?
  Obviously your PHD is not in finance. To short a commodity means to sell something as the price is about to drop in hopes of repurchasing it at a much cheaper price.
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J Taylor, 10 May 2006 @ 11:23am

most domain name lookup sites illegally sell data
You type in your desired domain name. It says it is available. Then after a few minutes you click on "buy". Already it was just taken that very day. Why? Because the same people who run domain name lookup sites also buy desired domain names.

Somebody call the DA already on these people.
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Anonymous Bum, 10 May 2006 @ 11:38am

Starting an appraisal business for stupid people
This is so stupid. Content and or services create revenue, not domains.

I should start up a domain appraisal business for all the idiots quitting their day jobs to open an ebay store in their basement. I am sure I can schuck Thirty bucks for a worthless appraisal saying how valuable their online property is.
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- Ivan Khanine, 10 May 2006 @ 11:52am
  
  Re: Starting an appraisal business for stupid peop
  The business in domain names isn't necessarily, a content-based type of site. As a recent advocate for the "domaining" hype - I see it as more then just creating a name, or an "ebay store". A lot of people are creating domain names, and parking them with AdSense codes in order to make revenue. In order for this to be successful, you need to feed off the "mainstream" sites that have already made it big, for instance, MySpace. MySpace is a great medium for advertising and networking for people that are in the market for your business. It's much more then just creating an eBay sotre. Its getting a "brandable" dot-com and sitting on it for a while. Me personally, I own a few domains. Including, ThatPig.com, InsomniacGroup.com, FreakinAssholes.com and aWhoreTrain.com. The first three, are brandable. The last one, is purely for advertising and marketing purposes running off the MySpace craze.
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  - Curious George, 10 May 2006 @ 1:21pm
    
    Profits?
    I know this won't seed your retirement nest egg, but do you make enough to buy a couple extra beers off those names?
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    - Ivan Khanine, 22 May 2006 @ 2:14am
      
      Re: Profits?
      Nope, not there to make a profit. I'm here to make a stand. I want to sit on these names for years to come. Maybe, when I DO make enough money that would allow me to create a brandable product. Until then, MY DOT-COMS!
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pl, 10 May 2006 @ 11:41am

godaddy doesn't sell data, and neither does frugalname
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Dr. Freud Langer D.D., PhD., 10 May 2006 @ 12:21pm

Tikiti
Its awhoretrain.com? That certainly must be in reference to MySpace.
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- Ivan, 16 Jun 2006 @ 1:10pm
  
  Re: Tikiti
  ... Yes. Yes it is. Very observant, doc.
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Buck, 10 May 2006 @ 12:45pm

Sometimes it is just a impulse purchase
I bought http://MyFreepress.com (years before MySpace) because I was hoping to sell a website to the local newspaper (Winnipeg Free Press). I just thought it sounded better. They didn't buy it, and I got stuck with the purchase.

I use it, but I would sell it in an instant for a decent buck.

I also bought http://ConsumerEnergyAudit.com for the same reason. I thought I was going to sell it as part of a website deal. I just kept the website and stuff for myself in the end.
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- Buck Too, 10 May 2006 @ 1:41pm
  
  Murmp.com
  Kinda google-esque. I would entertain offers, but I do have a few plans for it. Its pretty catchy, 5 letters, and easy to spell once you figure out what it is.
  
  Bids anyone?
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Scott, 10 May 2006 @ 2:44pm

Not like real estate
When you buy real estate, it takes a significant investment and there is a lot of risk.

When you squat on domains.. you pay $9 to godaddy, then turn around and sell it for thousands.

I don't have a lot of money and whenever i am searching for a new domain for some new web project, it takes me forever to find a decent name because they are all taken by squatters!
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Chris Parente, 11 May 2006 @ 11:32am

The Domain Game
Agree with point in the article that search engines are changing the nature of web navigation, making the perfect URL less vital. But disagree that new TLD's blessed by ICANN reduce value for the established .com, .net etc. There would have to be big time adoption of alternative extensions like .biz and .info to affect the value of a top quality .com, which hasn't happened. And globally the national TLD is the most desirable, unlike here in NA.

.mobi may be an interesting new one, if it's adopted as planned to signify sites optimized for display on mobile devices.

For an explanation of how to get an expired domain name, this is the best description I've ever read:

http://www.mikeindustries.com/blog/archive/2005/03/how-to-snatch-an-expiring-domain.php

Chris Parente
www.gotostrategic.com
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Mike, 12 May 2006 @ 7:30pm

Domains is BIG.
I myself am in the "domain business" and have made quite a few bucks selling domains. I recently bought short domains and made lists of untaken short domains that sound "cool".

Domains can sell for 10.00-1 million+ (dollars)

It's happened before and can happen again. Since a shorter domain name means people are more likley to remember it, more people will come back each day (especially for companys). This is the same reason behind "cool" domains.

Not anyone good do it. Some people might put in 6 random keys "aaa
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Michael, 14 May 2006 @ 1:18am

Expensive names
I’ve heard a lot of stories about domain name importance. However, check out the figures below - here are the top five most expensive domain sales in the last few years:
Business.com – $7.5 million
AsSeenOnTv.com – $5.1 million
Altavista.com – $3.3 million
Wine.com – $2.9 million
Autos.com – $2.2 million

I am not sure how such an investment – paying millions of USD for a simple name – can be recovered and used to produce profit. There was a story about Coca-Cola, which said that if the company lost all its infrastructure, but kept the name and brand characteristics, it could bounce back in about 4 years. However, if the company managers were left with all the infrastructure, but lost the Coca-Cola name, the company would be very likely to go bankrupt. Do you think this is also true for domain names?

Regards,

Michael Rad
Web2earn.com – learn how to make money online
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Jon, 20 May 2006 @ 10:48am

The Real Story
For the real story on the domain name business see DNJournal.com (especially the Weekly Sales Report) and DNForum.com.

Diamond.com just recently sold for $7.5 million.
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s.f., 10 Jun 2006 @ 5:15pm

Domain name:
I am actually the owner of emega.com
Short, catchy, and memorable, five letter domain name that has many uses.

Comments on its value anyone?
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Manager, 7 Jan 2007 @ 5:06pm

This industry is alot harder than it sounds
I think this Domain Name Industry is alot harder than it sounds, because sometimes it takes years before you can get an offer for your premium domain name or if you unlucky it might never sale. This is noway you can comparing this shady industry with real-estate investment.
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Mark, 16 Mar 2007 @ 12:47pm

The thing is you don't have to make a lot of money on domains. Since you can register a .com name for $6-$8 a year all you do is have to generate enough traffic to that site to cover that small amount.

This results in a massive amount of cybersquatting which helps nothing.

If you can't make a useful webpage and a bunch of links isn't a useful webpage and it's easy to see a page that is links and google adwords it's worthless

This needs to be stopped.
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Ron, 17 Jul 2007 @ 5:57pm

Yep. I just sold a domain for $US20,000. It had been dropped several years ago. Thought maybe it might make a few dollars - but the right company wanted it badly.
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Ginny Crandall, 6 Jan 2011 @ 3:17pm

On the whole, I'm not a fan of the "short selling" aspect of business. If you want something then you should hold on to it, not sell it in the hopes of making a quick buck off of it. I'm also not a fan of domain squatters...if you aren't going to use it, then don't buy it and let someone who will have it. It's worse than the people that buy home exercises systems and expect to be thin the next day.
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