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Domain Name Investing: More Feasible than Real Estate?

Dare I quote Shakespeare, “What’s in a name?”

I answer to thee, “A lotta!”

You wouldn’t want to name your son Stupid Jr., would you? Or call your business ISASDY Inc. (I Suck And So Do You Inc.) – pardon my language… but did you catch my drift?

In domaining world, domain names are a precious investment – even some considered as more precious than gold and oil.

Domaining is the business of buying, selling, developing, and monetizing Internet domain name – Wikipedia.org

A person doing domaining business is called a domainer.

Your domain names are your valuable assets considering that they are all TLDs (Top Level Domains – those .com, .net, .org, .info, .us, and others domain name ending) – more valuable than most of you think!

Domaining is a business that is not being talked much on the news – especially considering oil and gold soaring price. But here’s some facts of domain name investing:

The most valuable domain names

According to SoldNames.com, the top 5 all-time most valuable domain names are:

  1. Sex.com (sold in 2006 for US$ 14,000,000.00)
  2. Porn.com (sold in 2007 for US$ 9,500,000.00)
  3. Business.com (sold in 2005 for US$ 7,500,000.00)
  4. Diamond.com (sold in 2006 for US$ 7,500,000.00)
  5. Beer.com (sold in 2004 for US% 7,000,000.00)
  6. To add, the 100th place is MyBlog.com (sold in 2004 for US$ 400,000.00).

Domaining is open for both individuals and businesses

Domaining is for the big boys? Think again. 2 from the top 5 are individual owners (like ol’ you and me in our home office), 1 LLC, 1 Inc., and 1 protected identity owner. A US$ 10.00 domain name registration is considered as a very low investment. But, of course, you can buy a US$ 50,000.00 domain name as a premium domain name investment. The low domain prices relate to high risk of investment failure, while high domain prices relate to low risk of investment failure. Just like our ol’ business world. The market is still open – the question, do you want to learn through trials and errors to get there?

Are domain names more valuable than real estates, gold and oil?

Domain names are unique investments: You can register them as low as US$ 6.00 but I have seen ‘normal’ domain names are being sold for tens thousand of dollar. Ho-hum.

What the main things that make domain investing is better than real estate investing? EACH domain name is unique, whereas a real estate in a complex can share similar attribute and value, regarding the street address. For example, www.mydomain.com and www.mydomains.com are way, way much different in value.

To me, domain names are more valuable than gold, diamond and oil – why? Those valuable commodities are scarce, all right – but domain names are even scarcer. For example, www.domain.com is usually much more expensive than www.domain.net. www.domain.info is less valuable that those two. More example, www.domain.com is considered to be more valuable than www.mydomain.com, because the former is one word domain name and the latter is two word domain name. THIS is what I called ‘scarce’

So, surely we can’t compete with those guys raking many valuable domain names, such as business.com, computer.com, travel.com, etc. – wrong! You and I still can enter this unique, lucrative business – I tell you why; Please follow me:

The general rule of thumbs for valuing a domain name are:

  1. The number of characters and the number of words
  2. The TLD value (the dot value) – .com is more valuable than .net, and so on
  3. Domain names containing numerics / hyphens will alter the domain name value
  4. Brand recognition and commercial use
  5. Market trends and qualitative / abstract industry factor

I highlight number 4 and 5 for a reason – This is where you and I can compete with the big boys. This is the ‘grayest’ area of all – only experienced expert can predict the domain name value, but can’t tell the exact value of it.

For example, nike.com is super-valuable domain name, but you can use sportshoes.com (of course, this is already taken – including most of those words you can find in an English Dictionary, but ‘most’ is not ‘all’ – got it?). eBay.com is a valuable domain name, even more valuable than marketplace.com – Why? Because brand name carries intangible value – brand recognition and commercial use. Marketplace.com doesn’t have the intangible value eBay has. You can create a domain name, visioning a future great company name. Who knows, noobpreneur.com name will receive an offer due to its catchy name? :D

Likewise, if you are one of those trend setter (or, at least, savvy trend watcher), you can ‘predict’ what the good domain names are.

You would say, “Well that’s all interesting, but the .com good names are gone – That’s it, then. No more chance.” I’d say, “Yes the good ones are gone mostly, but (unaware) people will drop their actually good domain names, for any of us to take, and sell it in the future for an unpredictably high price tag. Moreover, there will be new TLDs to be introduced – new TLDs, new investment opportunities.”

What? There are new TLDs?

Domain names today has many TLDs (endings) – .us ,.ca, .name, .biz, .info, .mobi, .eu and many more – the latest, .asia. Like an IPO (Initial Public Offering) of an company going public, a domain name landrush operates just the same. The official, non-profit, domain name system and IP addres space allocation regulatory board, ICANN, will inform the availability of new TLDs – for us to grab. Then, we battle each other neck to neck to bid for the new domain name, if someone else also want the name, too. The highest bidder take control the domain name.

In conclusion, domaining looks like a complicated business – but it’s actually simpler than those conventional investment vehicles – commodities, stocks and shares, and real estates. The challenge is not in the domaining business system itself – domaining is just like arts – If the community think that www.xyz.com is hot, then it is high in value. If people think www.xyz.com is garbage, then it is a garbage with 0 dollar value.

Domaining is a business where barrier to entry is very low (cheap and easy to get a domain names, except for premium domain names – those that has high domain value) and exit is very easy (your domain name is no good? Just forget it and don’t renew it’s registration – simple). Therefore, you can easily make or break in domaining business. Experience and knowledge will determine your success in domaining. I’m a noobpreneur in domaining, and plan to learn and experience more through trials and errors.

Interested in joining me to be a domainer?

If you like, please view my domain name portfolio

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About author

Ivan Widjaya
Ivan Widjaya 2650 posts

Ivan Widjaya is the Owner/Editor of Noobpreneur.com, as well as several other blogs. He is a business blogger, web publisher and content marketer for SMEs.

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  • admin

    Hi there – Thanks for commenting :)
    It’s just the same ol’ game in new area – one thing that’s tough to beat – domaining is virtually recession-proof business.

  • Well the Domian name investing is better than Real Estate But Domain names are unique investors but in Real Estate group will also be there ,partner ships also there.