Domain trade: making money from domains?
When done right, the domain trade is an enterprise that lends itself to particularly lucrative deals. The tactic is simple: domain names are purchased with the prospect of reselling them for a wide profit margin. But the trick of this trade lies in securing domains that may later be valuable to well-endowed buyers, such as a large company. We have laid out all the important facts and terms on the topic, including some of the highest sale prices on record for a publicly traded .com domain.
- Selling a domain
- What determines the value of a domain?
- What do domain traders do?
- How are domains sold?
- Most expensive domain names
- Can you make money in the domain business?
Selling a domain
Domains are nonmaterial goods. When sold, the only transaction taking place is transfer of domain rights from one user to another. Barring any form of copyright or trademark violation, virtually any domain name can be bought or sold. Generic domain names, such as car.com or computer.com, are not legally protected and can therefore theoretically be reserved by anyone.
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What determines the value of a domain?
Domains that are indexed on Google and highly ranked are particularly attractive to traders. Other SEO aspects, such as backlink profiles or the search volume of the keywords in domain names, also play a significant role in calculating thevalue. Design can also positively affect the price of a domain. Short and succinct names that are easy to remember are especially advantageous. Endings are further factors that should be taken into account. Top-level domains (TLDs) such as .com or .org are by far the most sought-after endings.
A short BBC documentary explains how domain traders, also referred to as “domainers”, can make hundreds, thousands, or even millions of pounds from buying and selling domains. In this video, find out how some of these entrepreneurs got involved in this big moneymaking business.
The most important criteria for determining a domain’s value:
- structure of the domain name
- relevance for the search engine
- market potential and usability
- bargaining power and legal situation
The market-driven principles of the domain trade mean that a domain is only worth as much as the buyer is willing to pay. It is for this reason that criteria such as market potential and usability play such central roles in determining prices. Values can change immediatly and without any warning. The price of a domain that was once of little interest to anyone in years past can skyrocket once, for example, a newly founded company takes interest in that same name.
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What do domain traders do?
Those trading domains for commercial purposes are generally on the prowl for lucrative domain endings. There are essentially two different ways traders go about making money off of domain names. One method entails purchasing already established names for a low price and selling them for a profit later once their value has increased. Another strategy involves buying and registering a domain that is thought to possess a high sales potential. Many domain traders use backorder services. These services automatically register a domain when one becomes available or is deleted (what are known as expired domains).
How are domains sold?
Domain trades transpire through a variety of different means. Domain name registrants are generally not anonymous and therefore are normally easy to get in touch with. Domain holders are also able to act as sellers and offer their virtual stock to prospective buyers. Here is an overview of the three most popular ways of selling domains:
The buyer directly approaches the holder
Prospective buyers can contact domain holders directly in cases where the desired domain is no longer available. Most registries openly publish the names and contact data of domain holders. Once this information is gained, buyers can get in touch with domain holders and make them an offer for the name. Sales are also known to occur even when the original domain owner may necessarily have never had any prior commercial ambitions
The holder directly offers to sell the domain
Domain traders often inform website visitors that the page they are on is for sale by providing their contact data on the page. Another approach that some domain owners opt for is to actively seek out potential buyers.
Market platforms for domain trade
Official marketplaces offer a third possibility for domain traders to peddle their product. Domain marketplaces, such as Sedo, GoDaddy.com, or BuyDomains.com, connect potential buyers with domain holders hoping to sell their valuable virtual property. These platforms function as a kind of domain real estate agency and are known to sometimes demand high prices for their services.
The most lucrative domain sales
With over 25 million .com domains registered with Google alone, this top-level domain is by far the most popular choice worldwide. According to the domain marketplace Sedo, in 2015 the average sales price for a .com domain name was over £3000. The most expensive publicly traded domain names have been known to fetch eight-figures sums. But don’t quit your day job just yet: such sales are the exception rather than the rule.
Most expensive domain names
It is not unheard of for domain names to be sold for similarly eye-watering prices of as things like beach-front properties or private jets. Below is a list of ten domains that, due to their unique names, have gone for particularly handsome sums:
- VacationRentals.com for US $35,000,000
- PrivateJets.com for US $30,180,000
- Insure.com for US $16,000,000
- Internet.com for US $18,000,000
- Fund.com for US $9,000,000
- FB.com bought by Facebook for US $8,500,000
- Diamond.com for US $7,500,000
- Beer.com for US $7,000,000
- Cloths.com bought by zappos.com for US $4,900,000
- Icloud.com bought by Apple for US $4,500,000
Can you make money in the domain business?
While numbers like those above are impressive, most domains sell for significantly less extravagant prices and are generally in the two or three-digit range. Not long ago, those who were able to secure general terms (like icecream.com or pizza.com) not protected by trademark rights often found themselves sitting on virtual gold mines. The glory days of this boom have long since passed, and those looking for a profit in today’s market needto have a keen sense for coming trends.
The DNS (Domain Name System) is one of the central services for IP-based networks. Simply put, the DNS connects the domain name of a website to its corresponding IP address and ensures that the URL is routed to the correct computer.
Domain name registries or network information centers (NIC) maintain one or multiple top-level domains in the DNS. Through these systems, name servers and Whois servers are managed along with the contact data of the holder.
Domain name registrars are companies or organisations (but for the most part companies, like 1&1) that are responsible for domain registration. Depending on which top-level domain is needed, an accreditation from the Internet Corporation for Assigned Names and Numbers (ICANN) or a Domain Name Registry may be needed.