Like all types of investing – in commodities, the stock market, art, real estate and so on – domain investing involves buying something, with the goal of eventually selling it for a profit.
But let’s take a step back for a few seconds. To understand domain investing, you must first be clear about what a domain name is and isn’t.
A domain name is not a website or an email account. It is the name that gives every web destination a memorable address. For example, google.com or wikipedia.org.
Domains are the Internet’s Real Estate
There are good locations, and not so good locations. A shop of Fifth Avenue in New York City is more valuable than in Jackson, Wyoming, right?
Determining the market value of a domain name is a complex process, similar to determining the market value of a piece of real estate.
In general, short, memorable, easy-to-spell names that end in .com tend to be the most valuable.
This is where domain investing comes in.
When domain names are not in use, their owners have the option of selling them in what is called the “domain aftermarket.”
Domain investors purchase them with the hope that they will gain value over time.
Some domain investors also search for entirely new domains, for example for a new technology that didn’t exist yesterday.
When they find an available name they think will gain in value, they register it and hold on to it until they feel they can sell it for a profit.
The Value of Domains
Prices of domains can be very high, like Insure.com that sold for $16m USD, or hotels.com that sold for $11m.
Or they can be more affordable, like toprun.com that sold last week for $1,551. Domains like that are sold everyday in the thousands.
The challenge is to identify domains that have the potential to raise in value. It’s very difficult to find these domains. Most people who buy domains and call themselves domain investors never realize any sale. They put crazy values to the names they own and have completely unrealistic expectations.
We are in the domain business for over 10 years and have bought thousands of domains. We have developed systems to identify undervalued domains based on many factors, for example website visitors, comparable sales or keyword popularity. In fact, we have developed our own DomainIndex, where we track millions of domains and hundreds of thousands of sales.
Challenges in Domain Investing
The other problem with holding many domains is that it’s complex to manage. Many country code domains can be at only at specific registrars, and you have to keep track across many websites. Amateur investors may lose track of domains, potentially missing out on very valuable sales.
You also have to have a large enough portfolio. We see sell through rates of 1-5% in professionally managed portfolios. The more domains we have under management, the longer we can wait for the right offer to come along. In the past, this has allowed to complete chart breaking sales like cars.net for $170,000 or HowAreYou.com for $50,000.
So basically, if you want to be a domain investor, you can go out today and find and buy a few hundreds domains yourself that might, if you are doing a job in your research, raise in value at some point in time,
Or you can invest in a fund and profit from a passive investment.
Domains are more valuable today than ever and this is a unique opportunity to profit from this asset class. If you would like to participate from this with us, we invite to join our token sale!