Why I’m a Domain Name Investor

[DNaddicts]

It all started when I tried registering a domain name for a business idea I had a while back. As hard as I looked, I couldn’t find a name that wasn’t already taken by someone else. One thing led to another, and now, I’m addicted.

Most of the domain investors that I have spoken to began investing the same way I did. We hear about stocks, bonds, and real estate on the news all the time. Internet domains? Not so much. In fact, whenever I bring up that I invest in domain names, I get a lot of “Huh?” As they say, you’re better off showing as opposed to telling. So, the first thing I do is ask them how much they think VacationRentals.com went for. The last person I asked said, “$50,000” when in reality the domain sold for $35.6 million!

Here are some other top sales:

Insurance.com — $35.6 million in 2010.
VacationRentals.com — $35 million in 2007.
PrivateJet.com — $30.18 million in 2012.
Internet.com — $18 million in 2009.
360.com — $17 million in 2015.
Insure.com — $16 million in 2009.
Fund.com 2008 — £9.99 million.

See the full list here — -> http://mostexpensivedomain.name/

I’m not alone in my thinking. Many believe domain names are the most undervalued asset class in the world, and unless you feel that the internet is not going to be sticking around for much longer, domain names will continue to remain relevant. With countries like India and China using the internet more, the demand for domain names will continue to rise.

The history of the value of domain names is fascinating.

For example, in 2015 domain investor Rick Schwartz sold Porno.com for $8,888,888 which he bought in August of 1997 for $42,000 “from a college student that bought it the week before for $5,000.”

Since owning the domain name, Rick told thedomains.com that Porno.com “has earned well in excess of over $10 million via parking and redirects without ever providing actual adult content.”

The article goes on to say:

So Rick’s $42,000 investment generated over $20 Million. By comparison, if you bought $1,000 worth of stock of Amazon at the IPO price in 1997 according to statista.com, the $1,000 would be worth about $239,000, so a $42K investment in Amazon at its IPO price would be worth about $10 Million today (February 2, 2015), or less than half of Rick’s return on the domain name Porno.com.

Now there are some that step back and say, “James don’t you think things look like they’re peaking? From $5,000 to $8,888,888 in 18 years! The gold rush is over, no?”

“No”… is right.

Domain names are virtual real estate. They have intrinsic value and follow traditional property (i.e., a home, apartment, and land) supply and demand laws. New extensions such as “.fund” are essentially new property developments, and new advancements in technology are an opportunity to speculate on the underlying keywords. Hey, you might not be able to pick up Porno.com, but if you believe that virtual reality is going to be heavily funded by venture capitalists then why not try to acquire VirtualReality.Fund (someone did just buy VRVC.com for $7,000 — an excellent ROI for a name that was probably acquired for $200).

Heck, the Dutch purchased Manhattan in 1626 for the equivalent of $951 which can’t even buy you a square foot nowadays!

Ya, it’s not the same as having a place to sleep, but how many businesses or personal brands exist/survive without a website domain. Plus, as virtual investment options such as cryptocurrencies become more popular, smart money will increasingly see domain names as a relatively safe place to park their money given their intrinsic usefulness as a “commodity-like” investment.

- Things are just starting to heat up

Follow me for more domain name news and insights:

Facebook: @dnaddicts
Blog: dnaddicts.com
Medium: @james.dorman
Meetups: SF/NYC Domain Name Investors

 

[frank-germany]

exactly.

Thanks for sharing

 

[Julio]

Years ago I use to tell my friends and family about what I was doing and like you they were like "Huh?" but when I told them about sex .com sold for they quickly changed their way of thinking about what I was doing.

 

[DNaddicts]

exactly.

Thanks for sharing

Thank you

 

[DNaddicts]

Years ago I use to tell my friends and family about what I was doing and like you they were like "Huh?" but when I told them about sex .com sold for they quickly changed their way of thinking about what I was doing.

The same thing happened to me. Everyone is "huh" until you start talking seven-figure sales. Nowadays, my father is on the bandwagon with 100 names in his portfolio... Awful buys, but I'm supportive if he "sees the future."

 

[TheWatcher]

The only problem is you can't convince them if you don't have something to show. Let's face it, many new domain investors hold new gTLDs hoping to sell high, but all came up short.

Invest wisely.

 

[DNaddicts]

The only problem is you can't convince them if you don't have something to show. Let's face it, many new domain investors hold new gTLDs hoping to sell high, but all came up short.

Invest wisely.

Absolutely.

 

[ison]

For example, in 2015 domain investor Rick Schwartz sold Porno.com for $8,888,888 which he bought in August of 1997 for $42,000 “from a college student that bought it the week before for $5,000.”

Since owning the domain name, Rick told thedomains.com that Porno.com “has earned well in excess of over $10 million via parking and redirects without ever providing actual adult content.”

I wonder what prompted Schwartz to sell considering the massive amount he earned from parking and redirects.

 

[TheWatcher]

Retirement.

 

[poweredbyme]

"Many believe domain names are the most undervalued asset class in the world, .."

Because future of domain names is not very clear as it's in rapidly evolving technology sector. Real estate is pretty more reliable to think long term. More risk brings more profit. The reason of undervaluation is this.

In the future internet might work in a way that doesn't use domains at all. Internet is one of the latest technologies compared to real estate. But new robotic technology is coming. Everyone may own a robot for personal/business use. Perhaps we will speak robots to surf on the internet instead of typing domain names. This is just a probability, not a certain thing. But such probabilities don't exist in real estate.

 

[TheWatcher]

Right when you speak to your robot, you will tell it to go to dot com. Therefore, you still need a domain name

 

[biggie]

https://www.namepros.com/search/5388412/?q=sold+porno.com&o=relevance&c[node]=5


imo....

 

[poweredbyme]

Right when you speak to your robot, you will tell it to go to dot com. Therefore, you still need a domain name

DNS resolution mechanism might evolve or end since the importance of domain names is not really big in terms of functionality. Domain names are needed by humans to reach a website. When you visit a website your device connect IP number of a webserver. If there were no domain people had to use long server IP numbers instead of domains. For humans it's impossible to use and remember long IP numbers, especially the new longer ipv6 numbers. But for machines, web browsers, it's not difficult and it's what already done in the background. For now using server IP numbers instead of domains is just not practical for humans as people don't talk to their browsers. Also people still have to type and look at a screen even though some devices are portable. Those things can change as technolgy rapidly evolving. Once it's done domain names will no longer needed. This is what I try to say.

Even now users don't memorize most domain names they visit, except the most popular couple of sites. People use google search or bookmark their favorite websites. They revisit most websites -especially informative type sites- rarely, once a life, once a year or so. When the needed info was found on a webpage, there is no need to know its URL. Content is more important than domains.

Popular brand names used in domain names (because of their brand value and legal things about trademarks) and widely memorized a few most popular domains might be exception. Those few domains might be used longer.

Do we continue to use telegraph, telex for communication? Domain names are in the same class as a communication technology. They will exist until a better alternative is found since the content is more important than its URL. We use phone instead of telegraph and we still use phone numbers but a phone number is not really important as long as it works correctly.

Who invest money in a phone number? Is there a marketplace to sell-buy phone numbers? Domain names and IP numbers are functioning like phone numbers. Who will invest money in a domain after 30 years?

I think domain names are undervalued because of these uncertainties.

 

[Apprich]

DNS resolution mechanism might evolve or end since the importance of domain names is not really big in terms of functionality. Domain names are needed by humans to reach a website. When you visit a website your device connect IP number of a webserver. If there were no domain people had to use long server IP numbers instead of domains. For humans it's impossible to use and remember long IP numbers, especially the new longer ipv6 numbers. But for machines, web browsers, it's not difficult and it's what already done in the background. For now using server IP numbers instead of domains is just not practical for humans as people don't talk to their browsers. Also people still have to type and look at a screen even though some devices are portable. Those things can change as technolgy rapidly evolving. Once it's done domain names will no longer needed. This is what I try to say.

Even now users don't memorize most domain names they visit, except the most popular couple of sites. People use google search or bookmark their favorite websites. They revisit most websites -especially informative type sites- rarely, once a life, once a year or so. When the needed info was found on a webpage, there is no need to know its URL. Content is more important than domains.

Popular brand names used in domain names (because of their brand value and legal things about trademarks) and widely memorized a few most popular domains might be exception. Those few domains might be used longer.

Do we continue to use telegraph, telex for communication? Domain names are in the same class as a communication technology. They will exist until a better alternative is found since the content is more important than its URL. We use phone instead of telegraph and we still use phone numbers but a phone number is not really important as long as it works correctly.

Who invest money in a phone number? Is there a marketplace to sell-buy phone numbers? Domain names and IP numbers are functioning like phone numbers. Who will invest money in a domain after 30 years?

I think domain names are undervalued because of these uncertainties.

True thing, however you are only looking from technical perspective.. This would be true if domain names would be only for identifier website names instead of memorizing ip address. I think domain names are more than just simple terms to replace ip address.
it has some uniqueness, it has some brandable aspect, it includes name of your business or your product, it has rareness so it serves as first come first serve..
if a machine would search on google and find the necessary information without identifier, we also would not need google advertisement and search result priority. Sounds like you consider whole internet as a free source just for finding info when you need it. Technically this true but real world doesn't function like that. Things on Internet is not free, internet is a business for many, every info on internet has some value and not given freely publicly to users. So, Google charges to companies, companies charge to end users and website owners charges to google etc etc. This is a big eco-system out there to make business, just replacing google search with robot can not change whole eco system. Thus in the eco-system needs a domains like brands to identify your valuable info and that will become valuable asset or product to buy/sell or trade with others. Or would you like to call your products as some digit like xxx.xxx.xxx.xxx ?

 

[poweredbyme]

True thing, however you are only looking from technical perspective.. This would be true if domain names would be only for identifier website names instead of memorizing ip address. I think domain names are more than just simple terms to replace ip address.
it has some uniqueness, it has some brandable aspect, it includes name of your business or your product, it has rareness so it serves as first come first serve..
if a machine would search on google and find the necessary information without identifier, we also would not need google advertisement and search result priority. Sounds like you consider whole internet as a free source just for finding info when you need it. Technically this true but real world doesn't function like that. Things on Internet is not free, internet is a business for many, every info on internet has some value and not given freely publicly to users. So, Google charges to companies, companies charge to end users and website owners charges to google etc etc. This is a big eco-system out there to make business, just replacing google search with robot can not change whole eco system. Thus in the eco-system needs a domains like brands to identify your valuable info and that will become valuable asset or product to buy/sell or trade with others. Or would you like to call your products as some digit like xxx.xxx.xxx.xxx ?

Websites are consist of webpages. A http header or a meta tag or a page element, even a small picture like a .ico file can be developed to show "ownership" the content. It's currently done by google webmaster meta tag to prove ownership. In addition to this Google lowered the importance of exact match domains. The trend shows me that importance and functionality of domains getting poor. Maybe that's why the average and low quality domain prices are in a down trend, compared to the last 10-15 years. Mostly short and old premium domains are traded. Millions of domains are listed for sale then dropped as there is almost no buyer even if the price is near to reg fee. I agree with you about brand names and mentioned it in my post which you replied. One of the functions of domains is to prove uniqueness but uniqueness can be showed by meta tags and content. These are just my idea on my own. I see a decrease trend in the need of domains in general. Also renewal fees are too high for low quality domains. If you connect some content with such low quality domains and then if you don't want to renew it, the content with it is lost when the domain drops. Renewal fees are another issue about majority of registered domains. That's why too many domains drop everyday. You may think $10 a year is too much if the domain+content doesn't bring $10. If domains didn't exist there would be no domain parking and renewal fees. Only webpages with content would exist and those content would live forever as long as hosting is paid or if free hosting is used like blogspot.com blogs.

 

[Elon Swift]

That is a very useful piece of information thanku for sharing it. Also yes domaining new to many people and so what i say while telling them that i am a domainer is that i am an internet real estator. This goes them like.. wow !

 

[toughdomains]

I love any story about the domain king! TM

I feel like if you ask the average person what the most a domain sold for they will say thousands or tens of thousands.

 

[korganian]

DNS resolution mechanism might evolve or end since the importance of domain names is not really big in terms of functionality. Domain names are needed by humans to reach a website. When you visit a website your device connect IP number of a webserver. If there were no domain people had to use long server IP numbers instead of domains. For humans it's impossible to use and remember long IP numbers, especially the new longer ipv6 numbers. But for machines, web browsers, it's not difficult and it's what already done in the background. For now using server IP numbers instead of domains is just not practical for humans as people don't talk to their browsers. Also people still have to type and look at a screen even though some devices are portable. Those things can change as technolgy rapidly evolving. Once it's done domain names will no longer needed. This is what I try to say.

Even now users don't memorize most domain names they visit, except the most popular couple of sites. People use google search or bookmark their favorite websites. They revisit most websites -especially informative type sites- rarely, once a life, once a year or so. When the needed info was found on a webpage, there is no need to know its URL. Content is more important than domains.

Popular brand names used in domain names (because of their brand value and legal things about trademarks) and widely memorized a few most popular domains might be exception. Those few domains might be used longer.

Do we continue to use telegraph, telex for communication? Domain names are in the same class as a communication technology. They will exist until a better alternative is found since the content is more important than its URL. We use phone instead of telegraph and we still use phone numbers but a phone number is not really important as long as it works correctly.

Who invest money in a phone number? Is there a marketplace to sell-buy phone numbers? Domain names and IP numbers are functioning like phone numbers. Who will invest money in a domain after 30 years?

I think domain names are undervalued because of these uncertainties.

Actually, there is a re-seller market for phone numbers, just like there is for domain names.

 

[deez007]

Hey @DNaddicts

Welcome to NP. Hope you njoy ur stay and all the best with ur domaining adventures.

 

[dordomai]

Do we continue to use telegraph, telex for communication? Domain names are in the same class as a communication technology. They will exist until a better alternative is found since the content is more important than its URL.

content was always more important than domains. It's not a question of being more important, if they were we would see sales of hundreds of millions for a single name but a question of having some importance.Which they do.

A domain name is a unique identifier that no one else can own. A unique identifier is needed also for technical reasons.

No one can remember IP adresses nor can you advertise them on TV or the radio.

Voice input will not change this since voice input is just another way of typing letters with your mouth instead of your fingers.

AI will not change this either because:

People will still decide whether or not they want to visit a website. If you want to visit a website you still need to tell the computer what web property you want to visit.

Telling the bot you want "Namepros" is no different from typing Namepros and seeing it autocompleted to Namepros.com in Chrome

Websites will always be advertised to humans not computer programs. If you want to brand you need a domain.

A domain is no longer a simple identifier it is a brand. Of course you can sell a product with a crappy brand if the product is good enough and there is little competition. That doesn't mean it is a good idea to have a crappy brand.

if you have an ad with brand.gdn vs brand.com which one of these two will look more professional?

Who invest money in a phone number? Is there a marketplace to sell-buy phone numbers? Domain names and IP numbers are functioning like phone numbers. Who will invest money in a domain after 30 years?

There are people selling rare phone numbers and vanity phone numbers and there are brokers and marketplaces. There are investors.

https://www.ringboost.com/

There are still a lot of companies that pay a lot of money just to have a prestigious physical address.

I think domain names are undervalued because of these uncertainties.

I think they are undervalued because the public does not understand the importance of a domain and because domain investing is not mainstream yet.