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Domain Privacy Service – Too Risky For Registrars? 07/20/2009

Posted by stuengelman in Domain Law.
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This is becoming quite a hot topic on the internet, and sadly there is a dearth of relevant black letter law and regulation for clear guideance.

There are two opposing sides in this issue, and frankly both have some merit. The “practical” side is that domain registrars offering privacy services are simply acting as “ministerial middlemen” between the domain owner and applicable registration authority, and just offering access to a service that the latter is really providing. Under this theory, the substantive, though not legal, relationship is between the domain owner and the internet registry. Hence, the domain registrar should be held unaccountable for mischief on the part of the registrant.

The “legal” side, possibly based on common law, is based on the concept of “agency.” When the domain registrar acts as intermediary on the registrant’s behalf, it becomes the former’s legal agent. Add to this the fact that the domain is actually legally owned by the domain registrar, and you are left with a strong legal, if not entirely practical, end result that the domain registrar has taken on a due diligence responsibility under the law.

Speaking purely from a “common person’s” standpoint, as opposed to that of a lawyer, I tend to support the first (“practical”) argument more. The need to protect legitimate trademark holders needs to be weighed against the business friction and resultant potential loss of availability of valuable services if the strictly legal approach is taken. To settle the issue for good, an exception needs to made in federal statute to ensure that the concept of agency does not apply to this special situation. It’s simply a matter of recognizing that the unique aspects of internet related activity do not always fit neatly into the constructs of “offline” law.

I guess if worse comes to worse, the domain registrars can pay up for more comprehensive liability insurance, but this really is skirting the issue. It would be far better for the federal authories to issue a logical, definitive opinion than for the potential defendants to be left drifting in the wind deciding about whether or not to self insure. The primary thing is to get the law right, and not leave certain parties guessing about whether or not to keep or pass on financial risk.

Stewart Engelman – DNI Services

Internet Domain Registration Law 07/20/2009

Posted by stuengelman in Domain Law.
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Introduction

This article is to acquaint you with some of the factors affecting which domains you can register safely; i.e., without violating any statutes or risking unpaid confiscation by others desiring to own your domain. The discussion to follow is somewhat USA-centric, so if you are not a US citizen you’ll need to research the differences that may apply to your country of residence.

Trademark Law

In the US, this is a somewhat nebulous subject, impacted by a combination of federal intellectual property law in general, trademark law specifically, applicable case law, and ICANN practices. As a general rule, it is risky to register a second level domain name identical or “confusingly similar” to a phrase already trademarked. You can check for live, trademarked phrases at uspto.gov, which provides a powerful search feature to help you.

The mere fact that a phrase is trademarked does not automatically mean you are out of luck. For example, if the trademark is for a single real dictionary word, like “dog” or “cat,” you may be able to challenge the trademark on “public domain” grounds. The same applies to commonly used phrases, like “time will tell”. Unique phrases, like “Joe’s Pro Bike Shop” will certainly lead to problems on your end.

Sometimes, even a specific trademarked phrase, or something very similar to it, may be safe as long as there is little chance of confusion with the trademarked business, and a low probability that your domain will siphon internet traffic away from the trademark owner’s web site. An example might be a phrase that is used within a completely different business sector than that of the trademark owner, and there is no duplication of the trademark owner’s unique styling of the phrase in his/her corporate logo. These decisions can be complex, and may require the advice of a competent intellectual property lawyer.

The Clinton era Lanham Act provides some guidance on the general topic of internet domain trademark law. It is not an all-encompassing law, as common law and state regulation also impact the subject. Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)) disallows “false or misleading description of fact, or false or misleading representation of fact in commerce, which is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.” As you can see, this somewhat clarifies the issue of what can and cannot be considered a safe harbor for domain registration. The mere duplication (or semi-duplication) of a trademarked name does not automatically lead to risk of confiscation. The potential harm to the trademark owner is factored into the analysis.

Another aspect of the Lanham Act is that it protects, to an extent, the right of an individual to how his or her own name is used, even if his/her name is not trademarked. For example, if you create a domain like “daveletterman.com” and use the domain to falsely imply that Dave Letterman is endorsing a product you are selling on the associated web site, you would be in violation of the Lanham Act. You run a lower risk if the associated web site is non-commercial (say, an informational site about the individual), as long as the material you present is factual. Lanham Act aside, you need to be very careful in general when the individual’s name is trademarked (either as the name by itself, or as part of a phrase like “Dave Letterman Enterprises”). These cases have been litigated in the past, typically in favor of the plaintiff.

Domain Extensions

Each domain extension (like .com, .net, etc.) falls under the jurisdiction of the laws and customs of a particular country. The major generic extensions, like .com, .net, .org, and .info may be registered by anyone anywhere.

Many other extensions have what are called “nexus requirements.” These are conditions the applicable jurisdiction and registration authorities impose in determining whether or not you are entitled to own a particular domain name (for reasons apart from trademark infringement). For example, the .us extension is limited to US citizens, US residents, and those operating businesses or organizations in the US.

Nexus requirements vary by extension. Some relate to citizenship, others relate to residency, yet others relate to whether or not you are operating a web site related to the second level domain name, etc. Some extensions involve multiple nexus requirements (e.g., residency and relevance of the second level domain name to site content). Australia (.com.au) has one of the strictest nexus requirements; you have to actually be running physical business operations in Australia that are related
to the domain name.

Important country specific extensions that are safe for anyone to own, without any material nexus requirements, include .at (Austria), .be (Belgium), .ch (Switzerland), .co.nz (New Zealand), .co.uk (Great Britain), .de (Germany), .eu (European Community), .ph (Philippines), .ro (Romania), .ru (Russia), and .co.za (South Africa). By “material,” I am referring to the fact that a small number of the above extensions have the requirement that your domain be held by a registered agent with a physical presence in the applicable area (the .eu extension is an example) if you are not a local citizen. Major domain registrars sometimes provide registered agent services at no charge when you register a new domain using their system. The domain registrar simply owns the domain for you beneficially; you retain full rights to use or sell the domain as you wish, just as with any other domain.

In Closing

Domain registration law can be complex, and is an evolving topic, both in terms of formal “black letter” requirements, as well as applicable case law. There will be situations where you are obviously within a safe harbor, and other times where it is equally obvious that you are at material risk of uncompensated confiscation. In gray areas, a well trained intellectual property attorney may be required to help you make the correct call.

Stewart Engelman – DNI Services

Registering Domains For Profitable Resale 07/19/2009

Posted by stuengelman in Domain Buying Strategies.
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Introduction

In a world where most all real “one word” domains, in almost all major languages, having any possible commercial value are already parked or being used for a real web site, how do you speculate on potential resale profits without paying a fortune to someone who already owns the domain you have interest in? Making things tougher, how do you obtain such domains, without paying a king’s ransom, in a prestigious extension, such as .com, .net, .org, .eu, or .co.uk?

In this article I review some of my own real world experience in domain speculation, and offer advice that will hopefully save you some time, as well as help you avoid wasting your money. By no means am I suggesting that my approach is the only way to proceed successfully. Far from it, there are numerous approaches that have actual or potential merit. I merely posit one potential strategy among many that may prove useful to you.

Practical Considerations

In spite of the fact that virtually all one or two word, commercially valuable names in prestigious extensions are already registered, the domain market is not a “seller’s market.” Actually, it is not a “buyer’s market” either. This apparent paradox devolves from the fact that even though such a high percentage of really good domain names are already registered, sellers parking domains for resale in general are unrealistic in regard to their price expectations. Thus, what could be a seller’s market if domain owners were more reasonable in general is in reality a “stalled market.” The sad fact is that in order to obtain a really valuable domain that is already registered, there is a high probability that you will have to pay more than you can later sell it for.

To understand just how “stalled” the domain resale market is, if you registered say 100 fair, but not great quality domain names, and advertised them for sale, you might get one or two lowball offers per year. Assuming you were paying $10 per year for each domain to keep them inforce, you might break even. Not a lot of value for the time spent, to say the least.

The above considerations point to three critical factors you have to take into consideration if you wish to be successful as a domain reseller:

  1. You need to focus mainly on unregistered domains, as opposed to buying them in the secondary market.
  2. You need to be realistic in your asking price.
  3. You need to focus on a small to medium number of really good names, instead of a massive quantity of mediocre names.

The Big Conflict

A quick mental review of the above material presents an apparent conundrum. High current value commercial names are in general registered and too expensive to speculate on, and fair to low quality commercial names will get very little action. So how do you proceed with any hope of being successful?

Basically, the answer (or better put, one answer) is focus on the future. If you do some investigation, you’ll find out quickly how difficult it is to obtain an unregistered domain that is of high enough quality to turn around quickly at a big profit. This is because virtually all of the domains having high current commercial value are already taken.

A solution, but of course by no means the only solution, is to think in terms of what might become valuable a few years down the road. You will of course be wrong in a high percentage of these speculations, but even one or two winners can pay for a boatload of losers and leave you with a handsome profit.

So Now What?

There are numerous ways to approach future oriented domain speculation. One of the best, and most enjoyable, is to focus on a topic you already have an interest in. Instead of remaining a casual aficionado, become a real guru on the topic. Read books, study relevant web sites, and perform other kinds of research relative to material that focuses on emerging developments in your field of interest. This approach is especially effective in topics that are subject to rapid and frequent advances in underlying technology, such as medicine, computer hardware, communications and networking gear, environmental protection, and home electronics, just to name a few.

Another approach is to look at the question more broadly, and perform search engine queries on phrases like “emerging developments”, “best new product ideas”, “design award winners”, “future trends”, etc.

Regardless of which approach you use, it’s important to be careful not to register a domain name for a product that is already trademarked, as the trademark owner may be able to unilaterally confiscate your domain without compensation. The trademark database at uspto.gov can be of enormous help in this regard. If there is a “live” trademark for the name you are considering registering, you will be at obvious risk of potentially losing the domain without remuneration.

Getting Specific

None of us are smart enough to guess what acronyms might become important in the future, although if you keep very current in a particular field, you might be lucky enough to register an important one in a prestigious extension before someone else does. I view this scenario mainly as an occasional stroke of luck, as opposed to a strategy.

Another point is that even if a single real word domain is not commercially important now, there is still a very high chance that it is already registered anyway. Thus, the best approach is to focus on short, two “real word” domains, in prestigious extensions, having high potential future commercial value. Even domains in the quality extensions having two real words that are of high current commercial value are for the most part taken. This may surprise some people, thinking that only the great single real word domains are mostly registered, but it just isn’t true (if you don’t believe it, try and find a good current commercial quality two real word domain in a decent extension, and you’ll be unpleasantly surprised).

Examples

An article like this wouldn’t be complete without some examples to back it up. In this section, I highlight a sampling of domains from my own portfolio that I registered using the principles discussed above.

LaserDiagnosis.com – While hardly a brand new technology, it is growing in importance, and may be of value to a medical practice or device maker as a forwarding URL to their branded web site (i.e., capturing and redirecting type-in traffic). Note the use of two real words (one of them short), and the prestigious .com extension.

OpticalRam.com – This is a pure play on the future, which may or may not pan out. Technology to produce optical RAM already exists, but not on a basis that is commercially viable yet (i.e., inexpensive enough to compete with traditional flash memory). If technology to produce ultra-fast optical RAM advances to the point that it becomes competitive with flash memory, this could become another very valuable type-in redirection URL. Note again the use of two short real words, and the high value .com extension.

Oranjestad.tv and Roadtown.tv – Oranjestad is the capital and most important city in Aruba. Aruba is a hugely popular tourist destination, and Oranjestad attracts wealthy shoppers at its many malls, boutiques, and shops. Roadtown is the capital of the British Virgin Islands, an extremely popular vacation resort. Roadtown boasts restaurants, hotels, charter boats, cruise ships, shops, and more, all catering to wealthy visitors with money to spend. Both of these domains are bets on the convergence of TV and the internet. The .tv extension is not prestigious yet. This is because the morass of hardware and software required to implement internet enabled TV is so complex due to compatibility problems. Consumer demand will drive makers of the required equipment and software to adopt standards that make the components easier to integrate. At this point, internet enabled TV may become standard fare, just like the telephone or the radio. Domains like Oranjestad.tv and Roadtown.tv could then become very valuable, since these locations attract so many well heeled tourists. A site owner could place informational content on them like local news, restaurant guides, descriptions of and directions to main attractions, etc., and charge high fees for ad placements. Visitors staying at hotels in these locations, as well as people considering a vacation there, would naturally navigate to domains with these names on their internet enabled TV’s, as they are authoritative sounding and easy to type in. An especially attractive feature of both of these domains is they contain only a single word.

SexNoveller.mobi – This is another play on the future, although not as speculative as OpticalRam.com. “Sex Noveller” is Scandinavian for “Sex Novel.” While the .mobi extension is not yet of high prestige, it will become more so as portable computing becomes more powerful and commonplace. I’m placing a bet that some portable devices with internet connectivity will eventually have high contrast viewing screens for book reading (like the Sony Reader or Amazon Kindle). If this occurs, a web site with this name would be like a killer app if the content (paid eBook downloads) and functionality were up to par. Sex related domains are some of the busiest on the internet, and are especially easy to commercialize with a good domain name and high quality content. As usual, note the use of two real words (non English in this case), and an extension with high potential future prestige. As a side note, the domain Sexnoveller.se (.se is the extension for Swedish domains) sold at a Sedo.com auction about 18 months ago for $17,000 USD. Not bad.

I could go on with other examples, but I think you get the idea. The important principles to take away are:

  1. Speculate, but don’t speculate wildly. You should have a sound, logical basis for believing that your domain may have real future value.
  2. Keep things short. Your domain name should be easy to type in, and two word domains should contain at most one long word.
  3. Focus on extensions that are currently highly prized, or have reasonable expectations of having high future prestige.
  4. Find the right balance between focus and broadness. Your domain should be specific enough so it instantly communicates what the site is about (focus), but not be so topically narrow that it would attract few visitors (broadness). These are the kind of domains buyers will pay up for, especially if they can be easily monetized via e-commerce or paid ad placement.

In Closing

I hope this discussion has been of some help to you in focusing your strategy for domain acquisition and resale. As mentioned several times, this approach is hardly the last word on the subject, and there are other approaches that have equal merit. Whatever approach you ultimately settle on, it’s most important to look at the realities of the internet domain marketplace. You need to employ a strategy that permits acquisition at reasonable prices (mainly unregistered domains), focus on types of unregistered domains where you can actually build a portfolio over time (two word domains as opposed to one word), and hone in on short domain names that can easily be monetized (at least possibly in the future).

I wish you the best of luck in your endeavors.

Stewart Engelman – DNI Services

Choosing A Great Domain Name For Your Internet Business 07/19/2009

Posted by stuengelman in Domain Buying Strategies.
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In this age of seven figure prices for premium domain names, and companies pressing trademark lawsuits at the drop of a hat, how do you intelligently, and safely, select a great domain name for your online business? Alot has been written about this topic, some of it a bit forbidding if you are not at least somewhat well versed in SEO or web programming. But have no fear – the basic principles are simple and anyone can learn them.

There are four basic areas of inquiry you must approach to “get it right” in the domain selection process:

(1) Relevance
(2) Brandability
(3) Efficiency
(4) Legality

“Relevance” refers to how predictive the domain name is of the content at your web site. A domain name that is evocative of your site’s content will entice people to your site who have buying interest in your products and services. One word, generic “.com” names are sometimes the best, such as pets.com or insurance.com. These are very easy to remember and can be highly relevant, but they are rarely for sale, and when they are, they command sky-high premiums. But don’t despair. In many cases, short 2-3 word domain names can be even better, if they focus more accurately on your business mission, and they most certainly will cost you alot less. Although many good 2-3 word domain names have already been scooped up by domain speculators, you can often negotiate a reasonable price for one of them. The basic idea is: choose a domain name that is highly relevant to what you are selling.

I’m not sure whether “Brandability” is even a real word, but I like it and will use it here. Brandability refers to the ability to build an effective marketing strategy around your site’s domain name. There are basically two ways to accomplish this. One way, mentioned above, is to invest in a one word generic domain. This approach only makes sense if you can afford the high purchase price, and have a business model that is expected to benefit sufficiently from the premium domain name (i.e., generate very large incremental absolute dollar profits from the name). Such businesses are rare, and most often you will need to take a different tack. A good quality 2-3 word name, either completely generic (like bestdogfood.com) or partially generic (like jonesdogfood.com), will cost much less than it’s premium brethren, and in many cases may be even more relevant to your business. The basic idea: choose a catchy name that is short and easy to remember.

I’m pretty sure that “Efficiency” is a real word, so I use it here with no pangs of conscience. Efficiency refers to how effective your domain name will be with the search engines like Google and Yahoo. Domain names containing high traffic search keywords tend to get ranked higher in searches than those that don’t, all other things being equal. There are some great keyword research tools on the web, such as WordTracker.com. Use these tools to find popular search keywords that are relevant to your business, and try to incorporate one of these words or short phrases within your domain name.

“Legality” refers to being free of the risk of challenge after you register or buy your new domain. Many businesses trademark their business name, so if your domain name is identical or “confusingly similar” to a trademarked name, you could be challenged in court. After choosing a few candidates based on the first three general principles (Relevance, Brandability, and Efficiency), check out the trademark database at the US Patent & Trademark Office web site (uspto.gov). You can find out immediately if you are on shaky ground with any of your candidates. After culling out any offending names, you should have one or two great names to build your business around.

Stewart Engelman – DNI Services

How To Value A Domain Name 07/19/2009

Posted by stuengelman in Domain Valuation.
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Introduction

You’ve decided on a domain name for your new business, and the domain is already registered and for sale. How much should you be willing to pay? This is becoming a common question, as so many quality domain names have already been taken. While there is no scientific method to determine a precise value for any domain name, there are some considerations that go into determining a reasonable ballpark value for that domain name you want. Please read on, and learn about some of the techniques professional domain appraisal companies utilize to ply their trade.

Valuation Factors

There are quite a few technical factors that go into determining what a domain name is worth, and there are differences of opinion as to the relative importance of the various factors. Here we will examine a number of commonly considered parameters in domain valuation. This collection is not necessarily meant to be all-inclusive, but is instead intended to give you a flavor of many of the fine points to consider.

One of the most important considerations in valuing a domain name is the “TLD,” or Top Level Domain. This is the extension that appears at the end of the domain name, such as .com, .net, .org, etc. All other things being equal, a .com name will generally sell for about four times the otherwise equivalent domain in one of the other common global extensions, such as .net, .org, and .info. The .mobi extension, utilized for content to be delivered to mobile devices, is rapidly gaining popularity and value, especially for domain names suitable for such devices. Some country specific domains, such as .co.uk and .de (Germany) are very prestigious, and can also command high prices in certain cases. The .tv extension, later to hopefully be used in connection with internet enabled TV, results only occasionally in high value sales at current (until hardware, distribution, and media companies resolve their mutual “cut of the pie” concerns, there is likely to be little content to drive this market).

An extremely important consideration in the value of a domain name is the number of words it contains. Single “real word” domains (no misspellings or abbreviations), especially in easily monetizable internet industries, can be enormously valuable, particularly in the .com extension. Two word domains, again without misspellings or abbreviations, can also be quite valuable, as long as the domain name can easily be monetized, and the TLD is of high quality. Values really plunge when you get to three words or more.

Domains containing misspellings, abbreviations, hyphens, characters not on a standard keyboard, and other oddities often have very little value. Also, domains containing phrases that are trademarked may be worth nothing, as the trademark owner may be able to summarily confiscate the domain.

The extent to which a domain can be monetized has a major impact on its value. Domains in the sex, financial, and health industries often top the list in terms of high value sales. Domains related to industries that cannot easily generate revenue on the web will usually have little value.

Generic domains tend to be more valuable than non-generic ones. A generic domain is one that contains only real words (ones you can find in a dictionary), and has no contribution from proper names (first or last). Generic .com domain names in highly monetizable industries can be immensely valuable, and are for the most part very hard to obtain (without spending a lot of money!).

The number of letters in a domain name also affects its value. Three letter .com names can be quite valuable, even if they mean nothing. Four letter .com names usually need to be pronounceable to have value, but they need not necessarily be real words in the dictionary (cool sounding four letter .com names can be very brandable, even if they are made up). When you get to five letters or more, value is driven by quality of the word or words (generic vs. non-generic, monetizable vs. non- monetizable, etc.). Once you start getting over 8-9 letters, value tends to decrease a lot, unless the name is highly monetizable.

The extent to which a domain can be branded may be very important in determining value. Domain names that are easy to say and remember, easy to type in, highly reflective of predictable monetizable content, and/or generate a lot of “type-in” traffic (people typing your domain name directly into the address box in their browser rather than finding your domain via a search engine) are highly sought after, and may transact for significant sums.

The size and profitability of the market to which the domain name applies is also important. This directly impacts how easily the domain name can be monetized. Needless to say, products and services that do not lend themselves to e-commerce (directly, or indirectly through selling ad space) will most often have little value.

We could go on almost forever listing factors that impact the value of a domain, but the above gives you a sense of what to consider.

Where’s The Beef?

You’ll notice the discussion thus far has presented no magic formulas for computing the right price to pay for your new domain name. I would love to give you a cool formula with lots of neat math symbols, but sadly things aren’t that simple or elegant. In order to understand what you are going to have to pay, you need to learn a few things about the domain aftermarket.

First, there is way more supply than demand. This at first may sound encouraging, but unfortunately it isn’t. Most domain resellers are very inexperienced, and tend to price their domains way too high, and as a result drive buyers away. Haggling often results in little movement in the price.

Second, the really great names, one or two real word .com domains in high traffic, high margin internet sectors are essentially all bought up. They do sometimes become available for sale, but always at extravagant prices.

Third, you have to be very careful when buying non-generic domain names (domains containing words that are not in the dictionary, or domains containing words that are in the dictionary but combine to form an unusual phrase that the courts will not consider “public domain”). These domains may be protected by a trademark. In such cases, the trademark owner can sue for ownership in court, and quite possibly be able to confiscate your domain without remuneration.

The Bottom Line

At this point you’re probably wondering how much to pay for that domain on the aftermarket. As stated above, I can’t give you a precise formula. I can, however, give you some advice based on the above principles, via reference to contemporary sales history. The basic idea is that I can provide you with anticipated price ranges (rather broad ones) that seem to be well in sync with recent domain auction closings.

At the very top of the spectrum, you have one word, and very high quality two word, generic domains in easily monetizable internet sectors. These may sell for $100,000 USD or more, and will usually have .com extensions, although occasionally some will be in other high value TLD’s (such as .net, ,org, .info, .mobi, .co.uk, and .de). The very best of these domains may approach $10,000,000.

Global (non-country specific) TLD’s other than .com’s rarely sell for more than $100,000. The best of these, again one word and very high quality two word generic domains in easily monetizable internet sectors, usually sell for between $10,000 and $100,000, but sometimes may go as high as about $250,000. The best country specific extensions, mainly .co.uk and .de, lend themselves to the same kind of pricing as the non-.com global TLD’s ($10,000 – $100,000). Some excellent domains in the .eu (Europe), .se (Sweden), .tv (Tuvalu), and .ch (Switzerland) extensions are starting to command these prices too.

Every week, there are several dozen sales of .com domains in the $10,000 to $100,000 range. These tend to be one to two word generics, but not as easily monetizable as the ones that sell for over $100,000.

There is an active aftermarket in two to three word .com names that are long (10 letters or more) and sell for $2,000 to $10,000. These tend to be generic, although some non-generics may be found here as well. These domains will in general be harder to monetize than the more premium names, either due to industry (not a high profit internet sector) or scope (serve only a subset of a larger sector).

There is also a market in global TLD’s other than .com’s in the $2,500 to $10,000 range. .net’s and .mobi’s tend to dominate this space, although you will also find .org’s and .info’s here. These are generally one to two word generics that are less monetizable than their otherwise equivalent brethren that sell for more.

Certain country specific domains tend to sell in the $1,000 to $10,000 range. These tend to be one word or short two word generics in the most attractive country extensions (especially .co.uk, .de, .eu, and .tv). Needless to say, these are not as monetizable as their more premium brethren.

If the domain you want does not fall into one of the above categories, you should think long and hard before spending more than $2,000 or so. Admittedly, there will be times when purchasing a particular non-generic name may be unavoidable (e.g., you already have an offline business name which is not trademarked, and need the corresponding domain for your online presence). The key point here is that absent proof of pre-existing heavy traffic, and/or profits from an already deployed web site at the domain, these names are just not that valuable.

In Closing

My hope is that this article has helped you to become a more educated domain buyer. The main takeaway should be that unless you have a truly urgent need to obtain a specific domain, you should use common sense principles and not overpay. Remember, in spite of the fact that so many good names are taken, most domains just sit and wait at aftermarkets like Sedo and Afternic because of the vast supply overhang. If the owner of the domain you want will not sell for a reasonable price, try to be creative and find alternatives, like using a different TLD, pluralizing, reordering the phrase words, etc.

The internet domain market will never lend itself to discounted cash flow pricing like financial securities, and the value of a domain is really nothing more than what the market will bear. Ultimately, values are determined by sale prices of similar domains. This article has hopefully armed you with that knowledge so you can negotiate with confidence.

Stewart Engelman – DNI Services