With an increasing number of businesses needing names for websites, owners of in-demand site names are becoming millionaires overnight.
For example, in March of 2006, the domain name Blue.com sold for $500,000. The site now includes links to adult sites and airfares. The seller, Amy Schrier, bought the site in 2002 for $65,000. In the United States, approximately one to two thousand people make their living buying and selling domain names.
Most of the vendors buy or register domain names, then develop the sites’ commercial value by adding content and links to increase marketability. It is an investment in virtual real estate.
Sales of 5,851 domain names generated 29 million dollars in 2005, almost twice as much as the year before. Investors seeing the potential for further increases are buying or investing in domain name companies. For example, in 2005 Highland Capital invested $20 million in YesDirect, a domain name company holding 600,000 names. YesDirect is developing content for the sites it holds.
There are even trade shows being hosted in Las Vegas to bring together domain name buyers and sellers. A recent Las Vegas trade fair attracted approximately 400 to 500 vendors and investors, twice the attendance compared to 2005. A large live auction at the fair generated $2.1 million in sales within three hours.
Online entrepreneur Gary Kreman earned $12 million in cash and stock in 2005 by selling Sex.com to Escom, an adult entertainment firm. The site Men.com was sold in 2003 for $1.3 million, a huge profit for its owner who paid $15,000 for the domain name in 1997.
Dozens of internet sites such as Afternic specialize in selling domain names for a commission, usually approximately 10% of the selling price. Some of the sites will list any domain name for whatever price the owner asks; others are more discriminating in the sites they will list, preferring single-word domain names rather than concatenated phrases.
The most valuable domain names are the .coms, followed by .net, .org and .biz. Single word websites are the most valuable, though not all single words will have the same high value. Concatenated phrases are slightly less valuable than single words, those with hyphens less than those without. Short words and phrases are also preferred. Not all words have the same commercial potential. For sellers unsure of the value of their site, most of the domain name resale sites have appraisal services available for between $15 to $30 per site examined.