Domain Name Market Analysis: What you Should Know

Buying and selling domain names is big business as companies finally tap into the marketing potential of the Internet. As companies turn to the World Wide Web, they conduct large transactions to correlate their own market power with the important URLs that are often held by smaller competitors who came to the internet first.

This year, 15 names used in Internet addresses have resold for at least six figures to companies and individuals hoping to tap into big audiences. On.com got $635,000. Macau.com fetched $550,000.

Sex.com went for a record $12 million in cash and stock to adult-entertainment company Escom in January, according to industry-trade reports and sources with knowledge of the deal, who declined to be named because of the private nature of the sale.

There are many reasons why these sales have reached such high dollar values, but high atop them all is the fact that old money is overcoming the ingenuity and speed of smaller operations. Transactions like these are the result of the way the Internet began to grow. Early in the life of the Internet, a small number of entrepreneurs took advantage of key domain names. These entrepreneurs were later followed by larger businessmen and women who logged on to find their trademarked phrases and titles already used by other users with different intentions. Under these pretenses, the market for domain names was born.

Today, a major aspect of the market is dominated by this foray between big, established, business and those who came to the Internet first. We see many transfers between companies as those who were able to get their names first, sell their URL’s to big companies who have been slower to join the World Wide Web.

Transactions of this nature represent very big business, and are creating a very important market of their own. Sales of 5,851 domain names generated $29 million in 2005, compared with the sale of 3,813 names for $15 million in 2004, says market researcher Zetetic. And the pace is quickening: In the first three months of this year, 1,949 names have generated $14.2 million, says Domain Name Journal magazine.

“The domain name is 21st century real estate,” says Warren Adelman, president of GoDaddy.com, the world’s largest domain name registrar, with 12.9 million. “The economy is being increasingly driven by the Internet sector.”

Enrico Schaefer is the founding attorney of Traverse Legal, PLC, a law firm specializing in web law. You can find out more about protecting your domain name, UDRP arbitrations and anti-cybersquatting laws at Traverse Legal?s domain name theft and trademark infringement domain dispute blog.

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