Domain names are hot commodities in today’s tech-centric world. The $16 million sale of ‘insure.com’ to Quinstreet in 2009 may have set the world record, but even lengthier domain names are routinely sold for hundreds of dollars every day. The result is a unique opportunity for investors to invest in domain names that can be sold for a profit in the future.
Building a Solid Domain Portfolio
Names of cities or countries, including up-and-coming locations, can be great investments over time that can be sold to web developers looking to build out community portals or other businesses centered on those communities.
Generic business names, such as dentist or chiropractor, can be great investments when combined with geographic names.
Timely names can be great investments when combined with events occurring in that year, such as 2022OlympicPlayers.com.Buying and Selling Domain Names
Make an Offer
Make an offer sales are well-suited for niche domains that may not have a lot of interest and/or where the exact value of the domain isn’t well known.
Risks of Investing in Domains
Most stocks and bonds can be bought and sold with ease through a broker, but domain names can be much harder to sell. Finding the right buyer is often a matter of listing a sale for several months or even years, which means that investors should have a lengthy time horizon and the ability to stomach a loss.
Stocks can be valued by the discounted value of future cash flows, while bonds can be valued by their coupon payments and interest rates. Domains are a much more subjective valuation that can be very difficult to pinpoint. And so-called domain appraisers are well known for issuing lofty valuations that can be hard to realize.
Domain names can be a sticky business from a legal standpoint. Choosing names that are too close to a trademarked name can result in a lawsuit and a court order to forfeit the domain name for free. In other cases, stolen domain names can be sold before the buyer has the ability to discover that they’re not the true owner.
The Bottom Line