Domain Name Investing: How To and Why

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how to invest in domain namesA single word can be worth millions of dollars on the Internet, and I mean just simple and everyday words. For example, the words sex, diamond, and brown have collectively sold for almost $20 million. Twenty million dollars just for knowing basic English and being tech-savvy enough to purchase a domain. It sounds almost too good to be true, but it isn’t.

Traditionally, real estate investments were the ticket to big money. Investors, on pure speculation, could buy a piece of property, wait for the appreciation, and then turn around and sell it at huge profit margins. The problem with investing in real property is that it is very expensive, and the market fluctuates. Today, the housing market is falling again. In fact, according to the Associated Press, the housing market is at its “lowest” since 2004, and there is “further evidence of a sharp slowdown in the once-booming housing market, sales of existing homes fell for a sixth straight month in September and the median sales price dropped by a record amount” (MSNBC, 2006). So, investments in property cannot be trusted right now. The solution for this? Invest in domain names instead. Domain names are the new virtual real estate.

If you’re into real estate for profit, the real estate of today, can be found on the World Wide Web. According to SnapNames.com, domain names “…are steadily increasing in value as the most desirable locations become more scarce. As the strategic importance of an online presence rises for business the world over, the price for a good domain will continue to rise in kind” (SnapNames 2007). Unlike the housing market, investing in a domain is only about $6 dollars a year, $6 dollars, with a potential earning of $20 million.

Purpose, Scope, and Limitations

The purpose of this article is to demonstrate to you that buying Internet domains can be a profitable investment from either buying and selling a domain, or buying and parking a domain. Parking is the new Internet term that simply means that the site is being used as an advertising medium. In addition, this article will give you step by step instructions for buying, parking, and selling Internet domains for financial gain.

Naturally, with any investment, there are minor risks, so this article will not only address this aspect, but in turn, will alleviate the problem by showing the solution. What this article will not show are statistics of profit, because my research turned up no such data, nor, will it tell you exactly what your domain should be called.

Buying a domain

The process for buying a domain is a simple one, so simple that there are several companies online that are in the business of offering you the opportunity. The basic, do-it-yourself steps are as follows:

1. Think of a witty word or catch phrase
2. Search an online database to make sure no one else owns it
3. Pay the registration fee

Witty Word

Witty words and catch phrases can be somewhat tricky. When considering a domain name, you should be conscious of the fact that not all names will sell. In fact, igoldrush.com said that “… for investment purposes, 99% of domain names registered to date are worthless” (Domain Name Guide, 2007). Apparently, the smaller the name, the better. According to Emily Pickrell of newsday.com, Jeremiah Johnston, the chief operating officer of Sedo.com said, ‘Two-letter domains are very, very valuable’ (Newsday.com 2007). Sedo.com, the website for buying and selling domains, bragged that it’s “…the leading marketplace for buying and selling domain names and websites” (Sedo.com 2007). Furthermore, Pickrell wrote, “…domain names that are short and easy to remember tend to draw the highest prices” (Newsday.com). Definitely something to keep in mind when thinking up a witty word or catch phrase. The next step is to look it up.

Look it up

Online search databases come a dime a dozen and a quick search on Google.com turned up over 29 million hits. The most popular to appear were Godaddy.com, Register.com, and NetworkSoluions.com. These sites allow you to search for your witty word or catch phrase just to make sure that it is original. An instant search will tell you if someone has bought it all ready. Any one of these allow you to purchase and register a domain for little cost. Incidentally, Godaddy.com charges about seven dollars and Register.com will charge $35 annually, and these fees include your email. The companies are endless, and their prices vary for registration, which is the final step.

Register your domain

The final step in the process is to pay the registration fee and fill out all of your pertinent information. This can be accomplished on the very site that you purchase the domain. An internal database is kept so that law enforcement agencies can track the buyers of illegal websites that contain illegal information. The pertinent information needed to register are: domain owner name, physical address, phone number, and billing information.

For an additional yearly fee, your information can be kept private from the public. If this is not purchased, a simple Whois.net search will disclose your name, address, and phone number to anyone who searches. It is at your discretion if you utilize the private account. The main reason for obtaining a private account is so that your inbox won’t be inundated with spam from various solicitors. If you’re looking to sell your domain, it’s best to leave your inbox open. Naturally, with a private account, your registrar would be happy to assist you in negotiating the sell price of your domain, and this service can be yours for an extra fee.

With the accomplishment of these three simple steps, you have registered a domain and your initial investment has been completed. You’ll now need to decide if you’d like to wait for a potential buyer, or park your domain.

Parking a Domain

Parking a domain is probably the best way for you to expose your domain to potential buyers and make money while you’re waiting to sell. The premise behind parking, like all of this concept, is very simple and absolutely free. The phrase, “park a domain,” simply means to share your domain name with advertisers. According to J. Steven Pope, author of “How To Really Profit from Domain Names, “There are companies that will allow you to park your domain on their servers, advertise that your name is for sale, and split advertising revenue with you” (SelfSeo.com). Inactive domains are used as advertising pages for companies of the same genre as the domain name. For instance, and I’m sure the catch phrase is already taken because it’s mine, is “creaminmycoffee.com.” The advertisers for that particular name would naturally be coffee and all of its compliments. Please look to for an example of a parked domain. The basic steps for parking according to Sedo.com are as follows:

1. Create an account with one of the parking sites
2. Enter the domain names that you own
3. If you are using a different site from which you originally bought, then forward your site to the parking site
4. Use the template to design your advertising page
5. Frequently check your account and watch your profits come in

Create an account

Creating an account with one of the parking sites is simply just that. You must submit your name, address, phone number, billing information, and establish a log in and password. Once you’ve accomplished that, you’re free to access your information at any time.

Submit your domain names

The next step is to enter the name of your domain, or multiple domains, to establish them as parked. This straightforward task will lead you to the next more technical task of forwarding your domains from your register to the parking site. This step is only needed if you choose to park at a site that is not your registrar’s. For example, if you purchase a domain at Register.com, but choose the parking services of Sedo.com. This is a common occurrence.

Forward your domain

To forward your domain you must log into your domain management account. Once there, you’ll need to find the option to forward your name and change the Domain Name Settings, commonly referred to as DNS. In the background of things, this means that your domain had been established with a numerical address, and the DNS is what translates it into words instead of numbers. Webopedia provided an excellent explanation of this, they wrote, “Every time you use a domain name, therefore, a DNS service must translate the name into the corresponding IP address. For example, the domain name www.example.com might translate to 198.105.232.4” (Webopedia 2007). Once you’ve changed your setting you can use the host’s template to create the page.

Create your page

A template will be provided so that you may construct your advertising page. Sedo.com refers to it as a “parking optimizer.” With the “optimization,” you can choose a keyword and a page layout. Sedo.com wrote, “Choosing the right keyword is one of the most important factors to maximise [sic] your click balance. In order to target the advertising content on your parked domain you will need to choose keywords related to the subject matter your domain name is associated with – the more relevant the keyword, the higher the earning potential.” Furthermore, Sedo.com wrote, “Add individual flare to your parked domains by choosing one of seven different parking layouts” (Sedo.com 2007). Once your page is set up, you’re ready for the last step in parking a domain.

Check your account frequently

After your account is established, your DNS changed, and your layout designed, your basically finished and you can check back with your account to see the revenue. The main principle with parking a domain is sharing revenue with advertisers, so remember to check your account frequently. After you’ve made some money and your site has gotten lots of traffic, you very well may decide to sell your domain.

Selling a domain

Naturally, selling a domain is the ultimate goal for all domain investors. If you’re witty and wise, you stand to make a fortune. There are two different ways to sell a domain and they are as follows:

1. List the domain for sale
2. Auction the domain

List it for sale

To list your domain for sale, simply sign up and list the asking price. According to Sedo.com, it is very important to list the asking price rather than stating the usual, “make offer.” This will ensure that you obtain the highest possible price, rather than having to submit to false or flimsy amounts. (Sedo.com 2007). Once there is an offer made for your domain, you’ll be emailed with the offer, and a record of it will be kept in your account.

Auction a domain

The other option for selling your domain, is to auction it off. This can be accomplished through your account and the process is reminiscent of eBay, as far as having a reserve price met before the item will be sold. After you have listed your domain for sell and an offer is received, you can choose to have an auction started to guarantee that you’ll receive the best possible worth for your domain. Sedo.com recommended that an”…auction process is designed to ensure a sale at a price which matches your domain’s true market value. An auction may be started when you have received an offer through the Sedo marketplace, which you then choose to accept as the reserve price” (Sedo.com 2007). This auction will ensure that other’s have the opportunity to bid appropriately, but if your domain neglects to receive alternative bids, the original offer will then become valid and, and your domain will be sold at that price.

Minor Risk

After the exhilaration of an online auction, the reality is that every money making idea has risks. This minor risk is what is known as “phishing” for your renewal money. What happens is that when it’s time to renew your name, sometimes a fraudulent company will contact you for that renewal. If you’re not paying attention, or you don’t remember which register you purchased from, chances are that you could be turning your renewal money over without ever being renewed. Therefore, your domain will expire and you’ll lose it to the next person who thinks of your idea.

Fortunately, you can avoid this minor risk easily, pay attention to where you’re buying your domain, and who is sending you that renewal notice. According to Larry Seltzer, opinion writer and author of “Beware Fake Domain Renewal Services,” “… you need to be alert and know enough to protect yourself” (Seltzer 2007).

Conclusions and Recommendation

The concept of domain speculation is not new, but it is profitable. It can be compared to investing in real estate, but the major difference is that this type of property is virtual, and it’s not as expensive. Everyone can reap the benefits of this money making opportunity.

The major premise to investing in domain names is to build a domain portfolio. A domain portfolio is accomplished with three easy steps: buy a domain, park a domain, and sell a domain. To purchase a domain you need to come up with a word or catch phrase, look it up to make sure no one else has it, and then register it. To park a domain, the owner must: create an account, submit the names to park, forward the domain if need be, create the page, and then check back with the account often. Finally, when an owner decides to sell the domain they can simply: list it for sell, or auction it off. This is simple, basic, and virtually risk free.

One minor risk involves your renewal. There are dishonest individuals who want to take your renewal money, the small amount that it is. If your receive an emailed renewal notice, pay close attention to where it came from. If it didn’t come from your registrar, don’t pay it.

There is easy money to be made in domain portfolios. I’ve started one, and I recommend that you think of a word or catch phrase today, because it could be worth millions online.



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