Burn Down Value of .com Domain Names
I’ve seen this written in the past and I’ve said it as well, but I want to reiterate another reason for why I have been developing strictly .com domain names so far. There is significant burn down value to .com domain names – more so than other extensions, in my opinion. By burn-down value, I am referring to the domain name’s value if I tear down the website that is built on it. “Burn down value” is more of a physical real estate term quantifying the value of a lot of the home was to be destroyed – or burned down.
I’d like to use Torah.com and Burbank.com as examples. Before building websites on these domain names, I received offers that were significantly higher than I paid. This solidified my decision to move forward with development, because it gave me confidence to know that I could sell them if development failed, as there is significant burn down value. In reality, I don’t have to worry about doing something that would be detrimental to these brands (because I wouldn’t), but there isn’t much that can be done to impact the value of the domain names, as other companies would love to own them as well.
The name value in .com means something, and the value is great because a significant amount of people type in these domain names every single day, whether they know exactly what they want before they get there or are just hoping to find what I am offering. Type-in traffic may not be the be all, end all, but its something that has been significant before Google and will continue to be significant, despite what people might say, as type in visitors are potential customers that have no acquisition cost (aside from the cost of the domain name/websites). This could be a whole post, but it’s been said, and offhand I can’t even think of a major business that operates on a keyword domain name that isn’t .com.
If I spent $25,000 building a website on a vanity URL, it is likely that I will lose money if my venture fails or if I decided I want to do other things and attempt to sell it. What is a name like Burbank.notcom or Torah.notcom worth? I have no idea, but I would bet I couldn’t recoup my investment if I built either of those into expensive websites – unless it was self-sustaining businesses that made significant revenue with low ongoing expenses.
Does it make sense to build a multi-million dollar mansion on a low value piece of land in the middle of nowhere? Perhaps it does, but if that land is in the middle of Antarctica, and nobody is buying mansions in Antarctica when I try to sell it, I am going to lose a lot of money on the back-end. Sure, I might enjoy this luxury home while I live there, but it will be expensive to heat and furnish, and at the end of the day, it will be tough to find a buyer whose interests are exactly the same as mine.
With .com, people are coming because they recognize the keyword + .com as a brand. They are coming to the site and returning because of the brand – not necessarily what I put on the site. With many vanity extensions, people are coming more for the content (which isn’t bad), but there will be significantly less burn down value in the domain name if you scrap the website. The website owner relies heavily on the whim of search engines for traffic, and heavens forbid a website redesign or error where back-links are lost.
As a domain investor, you must be aware of this because if you put your heart, your soul, and thousands of dollars (or tens of thousands) into a project that doesn’t work, at least the underlying domain name would have significant value if you build it on a category defining .com.
BTW, don’t tell me that you can’t buy one because you recently started out in domain investing because I am no genius and have been buying them for a few years – and there are some good deals to be had now.
PS: I do own a few domain names in other extensions, but those are purely speculative investments. I wouldn’t build websites on them right now, and that’s the point of this post. I have had several emails in the last couple of weeks asking for advice on which names to develop, and if you are trying to build a business – not just a mini-site or fun project – you should use the keyword .com.
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