What is Domain Investing? | DomainInvesting.com

What is Domain Investing?

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question markThis  seems like an easy enough question to handle on a Wednesday afternoon: What is domain investing? When I think about that question, the answer doesn’t appear to be as clear cut as it would seem.

At first glance I think most people would probably say that domain investing is something along the lines of “making money from domain names,” but if that’s the case, there would be millions of people who fall into this category, since domain names are important to most websites. I think the definition has evolved in the last few years, but I want to know what you think it is today.

I will chime in a little later to add my input, but for now, I am interested in seeing how you define domain investing.

Photo credit: http://www.flickr.com/photos/lwr/ / CC BY-NC-SA 2.0


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (14)

    whoknows

    I think domain investing is being an onwer of a name (aka a website) that can offer a service or product.

    Why do I think of it this way? It is owned by someone (some argue it can be a rental thing, but you can’t sell a rental). A good domain can fetch a high selling price.

    You can sell your website name, but you can still keep your business. In some situtations, when you sell your website, you do need to give away whatever product/service your website offers if it is a virtual product/service. If you own a great domain name, and your business has an office space in a building, you can keep running your business but just sold the URL to another person.

    December 9th, 2009 at 3:01 pm

    rob sequin

    Keep in mind there is a difference between investing and speculating.

    So, I would define domain investing as a long term business strategy.

    Investors may buy a domain for long term price appreciation or development or marketing but generally they have a longer term view.

    Speculators buy and sell with usually a very short term horizon. They may buy and hold but their main motivation is to invest very little time and really to just make a profit. They add liquidity to the market.

    A domain investment would be the ownership of a safe extension like .com.

    A domain speculation would be the ownership of a new and more risky extension like .me.

    Most of us invest and speculate to varying degrees based on finances, risk tolerance, goals etc.

    December 9th, 2009 at 4:49 pm

    Ed Muller

    Investing in domains is the acquisition of tangible property that already has marketplace value either through its keywords and their relationship to search, or through the brandability of the name.

    Speculative investing looks beyond a value that can be created today and seeks a rare commodity in the future that might become tangible property and thereby, a valuable domain investment. Over time, speculative domains have the highest rate of return, but also have a high rate of failure.

    Ultimately for me investing is a combination of both, getting good value for keyphrases that are overlooked, and buying great forward-looking names that could very well be industry price markers in the future.

    All intelligent investing in domains is good investing.

    December 9th, 2009 at 4:59 pm

    Sean

    My opinion is owning domains for reasons other than development. When compared to bricks and mortar businesses a real estate investor might purchase commercial property with the intention of selling or renting for profit or income, and not actually turning the space into a business for themselves.

    In the online world this would exclude the majority of website owners as domain investors as they have purchased names with specific business projects in mind. A domain investor however would be someone who is willing to buy a name with no business plan in mind. When a domain investor does develop names it’s more than likely their best names that dictate the business they get in to, as opposed to non-investors who buy names to supplement a prepared business plan.

    December 9th, 2009 at 5:03 pm

    Borat

    i take the domain investing i buy the many typo to make the money. i get the ladies of the playboy manson. YEa!

    December 9th, 2009 at 5:09 pm

    Dan

    I think you start from the point where domain investors consider a domain to be an asset and something that represents a store of value.

    Domain investors are individuals who see the value in this asset class. We understand the value a domain can bring to an internet business. We also take the view (rightly or wrongly) that these are assets that will appreciate in time, or through development.

    December 9th, 2009 at 5:45 pm

    Josh Albert

    Quite simply, I define domain investing as buying domains with the idea that you will make more money then you bought the domain for at some point in the future (whether you are monetizing them, flipping, etc.)

    Just as there are people that make bad investment decisions with stocks there are also people that make bad investment decisions with domains.

    December 10th, 2009 at 2:32 am

    Stephen Douglas

    Hi El-Silver,

    Domain Investing is purchasing domain names for the intent of building value into those domains for ongoing income and/or resale.

    It’s that simple.

    @ Rob – Investing and “speculation” are identical. Investments are “speculations”. They aren’t loans, you’ve put your money into the basket, hoping for lots of golden eggs.

    A domain investor smartly interprets the meaning of their domain name, and acts accordingly in the buildout, resale cold calls, limbo wait, or usage of the domain for ongoing income based on user conversions either by adlinks or affiliates, or even personal products as a fulfillment location online.

    A true “domainer” does nothing else for their income other than through buying/selling/building/parking their domain names.

    Dang~! I answered so succinctly I am losing ground to AtomBomb’s Verbosity Contest… crap! I’ll try to drag out my next comment longer to keep my “Verbosity King” title.

    cheers

    December 10th, 2009 at 9:33 am

    Elliot

    @ Stephen

    Shortest post from you ever… are you okay? :-)

    December 10th, 2009 at 9:34 am

    bruce J tedeschi

    I domain for a living and have been it since 1998. Domaining is just like real estate selling and buying. Before domaining, I used to buy fixers, give them a facelift and sell for a profit. I do the same thing with domain names. The difference here is that most domainers never even build the house on their electronic land. If customers are looking to be land, great. THe value is buying the domain name (i.e., land) and building a functioning blog or website on it (i.e., the house) and then building traffic to it (i.e, location, location, location — serp pr). Quick flips are fine, but most people want a move-in ready house, not a fixer.

    December 10th, 2009 at 9:47 am

    stewart

    what is domain investing? Okay I’ll take a run at that one.
    Thats where you get in to some kind of new age situation where a bunch of people claim to own something no one really owned till they came along and said it was erealestate, they build nothing, they create nothing, there is no tangible product they produce, they are like glass jars with brains in them with wires atteched like that Star Trek episode, as they are stimulated by bidding on things?
    The, when you win? Some other brains that are wired to the network come along and they steal the domain and then? You can complain to an org that every body pays to keep things out of the gornements control so every one an keep claiming they own intellectual propoerty they say they are the owners of?
    Now if you are still with me, along comes the rest of the dregs who see this easy money get rich scheme of do nothing for the money and steal back what was tolen and rigged shil bid and stolen off?
    Thats domain investing so far as I can see?
    Tell me where I have it worng?

    December 10th, 2009 at 1:01 pm

    Adam

    “shortest post from you ever”
    No doubt. must be sick :)

    well said : Investing and “speculation” are identical. Investments are “speculations”.

    Bruce, what domains have you built ? Most domains I’ve ever seen built out are still fixers.

    December 10th, 2009 at 4:15 pm

    bruce J tedeschi

    The first site I helped build but did not fully build was http://www.ultimatebet.com back in 1999 and 2000. I was at a little independent company that programmed the back-end for it and then eventually the graphics and they were acquired by the UltimateBet.com which was owned by iElogic.com at the time and they went public so I retired off of the stock. Since then, I have developed domains that I sold after development. I regged http://www.seniorcitizens.org in 2000 I think, somewhere around there and only started to develop it this year. It is ranked int he top 1-5 in all major searched for “senior citizens help”. I have been negotiating with a company to acquire the name and blog from me but we are still in talks. Can’t tell you the company but it begins with an “A” and ends with a “P”.

    There a re bunch of names/sites I sold after developing them but they have since improved the sites. I would sya the names but I am not sure if the client would want me sharing info. I will ask and if they say it is okay, I will come back and post.

    IMHO opinion, wordpress is the easiest and fastest way for any domainer to install, post and build. MY claim to fame is that I have had great success in SERP. If you put generic cctlds term into bing.com, yahoo.com or google.com, I think I am 1,2 or 3… Not sure, it changes from day to day.

    I have been in this industry for 12-years and I still wake up every single day excited about it.

    My biggest regret was that I owned worldseriespoker.com, .net and .org back then and turned them over to the company and they let them expire.

    December 10th, 2009 at 4:49 pm

    Johnny

    Stewart-I think you’ve missed the boat my friend. Domain investing is finding those little golden nuggets that will sustain themselves until they’re sold. Sometimes this requires the “domainer” to park those domains to generate enough revenue to pay renewal fees, or develop them deeply enough to add value to them. Ideally you’ve “invested” in a name that gets good type in traffic. I’d say a name that gets say a 100 or so type-ins a month is pretty good. Depending on the niche you’re in, that traffic is valuable. Let’s say you had a store front domain and wanted to drive a 100 users to that site through advertising. Again, depending on the niche you’re in, you’d pay for that advertising, right? Let’s say each click cost $1.00; that’s a $100 bucks. Now, lets say your domain gets 5000 type ins a month. That’s $60K a year kiddo. This is the power of a great name. Ok, now sometimes you don’t get that type-in traffic. You put some optimized content to carve out the niche, and get great search rankings partly because of the name you’ve bought. Elliot did this with TropicalBirds.com and is doing pretty well in the search rankings. The trick is to do a good job estimating the value of the domain, and not over pay for it. I don’t think there’s a scientific way to do it and consider it more of an art. It’s hard to know if they type-ins of today will be there tomorrow, so you have to be a little careful.

    Take care buddy,

    Johnny~ Mogul Domains

    December 12th, 2009 at 11:47 pm

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