Wednesday, March 12

Invest in Domain Names?

Alternative Investments - Domain Names


Buying and selling domain names is big business. How big? Well, last week Whisky.com sold for $3.1 million dollars (just the name - there was no site included with the name).

In February, 100.com (the number 100) sold for $950,000 - for a full list  of this year's biggest domain name sales see DNJournal - http://www.dnjournal.com/ytd-sales-charts.htm.



Another number - 37.com - recently sold for just under $2 million, but it is interesting to bear in mind that the stock price of the company that owns 37wan.com and which is listed on the Shanghai stock exchange rose by 10% on the day they announced the purchase, the maximum allowed by the Shanghai exchange, and so essentially although they spent $2 million dollars, the domain name actually cost them nothing!


This shows the power and potential worth of domain names.


Another interesting story is that of Beep.com.au (an Australian site that offers loans to buy cars) - when they decided to splash out and buy the domain name CarLoans.com.au, their turnover increased by 66% in just five months!


If you feel like investing in domain names there are a number of ways you can get involved - you can register a name for $10 at a registrar such as Godaddy and hope for the best (a high risk strategy that is highly unlikely to be very profitable - but at least you only spend $10) - or you can buy a good domain name from someone else at a price you agree between each other and then try and sell it on or wait for someone who really wants it, or even set up a website using the name and make money that way.

You can also buy a name from a domain name auction. Just recently the auction house Heritage Auctions has decided to get involved in the business of selling domain names and it is now currently organising its second domain name auction which will close on April 9 - more details here - http://domains.ha.com/c/search-results.zx?N=3369+793+794+792+2088+4294943468 .

What makes good domain name? Basically one-word dot coms are the best, followed by two-word dot coms - Tablets.com is on auction with a starting price of $375,000 (tablets is an excellent name for both the computing industry but also the pharmaceutical industry) - http://domains.ha.com/c/item.zx?saleNo=1119&lotNo=24

Another way to get involved in domain investing is via the new gtlds that are coming on to the market - such as .guru, .tips etc... - these cost more to register than dot coms and are highly speculative and may never catch on in any serious way.

Finally a more conventional and possibly more lucrative way would be to simply buy shares in a company that is involved in the wholesale side of the new gtlds i.e. they have bought the right to sell domain names using the new extensions. One such company is Top Level Domain Holdings (ticker TLDH) - one of the extensions they own for example is .London - which will become available for the public to buy e.g. you could buy MyBusiness.london or CheapTickets.london etc... and TLDH makes money on each such domain name bought.


The current price for TLDH is around 15p butit may well go much higher over time and may even end up being bought out by one of the big players - Google and Amazon for example are also getting involved in the business of new gtlds.

TLDH - 5 Year Chart


TLDH - 3 month chart