chaotic tuxedo-es.org: A brief look over the crazy domain names business

Seems like this "virtual real-state" business is getting some publicity this month, after some news and interesting overviews appeared around on blogs and news sites. One of them is written by Dennis Forbes, with title "Interesting Facts About Domain Names". He checked thousands of domain names, with different number and word combinations, and surpisingly finding that most if not all, have been taken already. Do they have developed content? Seems like they don't. People starting a web-based business can have a tough time for finding a really good brand they can market and use for word-of-mouth advertisement, as they need to look for more complicated names, hyphen-based ones, using not so nice TLDs (ex. no .com, no .net, no .org).

Dennis did a certainly nice job for creating charts to show the statistics, one of them on the different possible length letter sequences:

Registered letter sequences domain names

Most companies go for a domain name broker or speculator to do the job for them, find a potentially brandable name and then starting the negotiations with the owner and finally doing the proper transaction via a escrow agent. The point is, How much do these brokers get out of each operation? The usual commission is around 10-5% of the final value.

How much does the owner get? Well, here we go with the interesting stuff.

Magazines and blogs that track and report domain name sales exist, one of the most known is DNJournal. Normally these sales are done via brokers or specific sites like Sedo which is recommended by most people working on the business. Let's see some of the sales:

Nasty.com for US $200,000 at Sedo

Tonight.de for US $14,464 at Sedo

Mapper.com for US $13,500 at Sedo

MadisonAvenue.com for US $23,500 on private sale

Everyone wants a six figure income, but you may think it's difficult as hell to get a brand-able domain name, and then sell it somewhere else. Well, you just need to be creative, expect to spend an initial budget of a couple of bucks and have patience. You're pretty much done. Just a couple of bucks? Nowadays, you can register a domain name for really low prices, for example at GoDaddy.com with offers of US $1 for each domain name, and discounts for bulk registering which is the most used facility by the annoying domain name business guys.

The next step would be opening an account on Sedo and starting promoting them, listing for sale, or just manage your way to find potential buyers and contact them. An usual recommendation is to stay out of the bad guys, or brokers and individuals which look to be alone but actually work for a company that "snipes" domain names.

There are tools out there that create permutations of words, take keywords and word lists and work upon such data for automatically checking WHOIS information and availability, then reporting each available domain name ready for speculation ;).

Although, as the Stylegala article says, it's the brand that matters, not just the keyword. Find something easy to pronounce, easy to write and remember, and most important: something that plays well with marketing. Could people spread the word on your site easily? "Hey mate, google for this stuff!". So, that's it.

Keyword-based domain names may help for SEO, but in the end people won't buy MyBrand cars. They'll buy just cars... dot com.

For a well brandable domain name, an individual could get more than US $1,000 always, but it all depends on the buyer and the patience of the seller. Like in real-state business, time matters. The benefit is evident, buy for one or few bucks, sell for thousands.