Domaining to be a $4 Billion Industry by 2010 and Top Ten Most Expensive Domain Names of All time

With the recent sell of business.com for $350 million dollars, domaining has solidified itself as the new real estate of the 21st Century. Domaining is the business of buying and selling domains similar to real estate business people buying and selling property. Just recently, during a furious bid, partners Larry Fischer and Ari Goldberger purchased megayachts.com for $150,000.

Inside a midtown hotel, Larry Fischer is on his cell phone with a financial backer as his partner Ari Goldberger does quick research on a laptop computer and were ecstatic at the bargain and its potential value.

Currently, the domaining industry is at an estimated $2billion as people buy and sell domain names similar to stocks and property. When people type the generic names into their Web Browser's address field, many sites that generate pay per click advertising revenue appear. This direct navigation bypasses search engines.

Domainer Magazine's, managing partner, Jerry Nolte stated that the "industry is like the wild, wild West right now and people have no idea how fast it's growing."

Pundits and estimators believe that the industry's market will reach $4 Billion by 2010 as people and businesses continue to purchase about 90,000 domain names every day.

By April of 2007, more than 128 million domain names had been registered worldwide, which is a 31 percent increase over the previous year, according to VeriSign Inc., which runs some of the primary domain name directories for the Internet.

Top Ten Most Expensive Domain Names Ever

#10 CreditCards.com
Sold for: $2.75 million in July 2004
Bought by: Austin
Considering natural SEO and a strong link campaign can get a site listed for ‘credit cards’ $2.75 million might seem a bit steep, but as the revenue generated from the loans industry is so huge the high outlay on the domain has more than likely paid for itself.

#9 Wine.com
Sold for: $2.9 million in September 1999
For this sort of money you’d think they’d actually be trading globally, alas you’d be wrong. Wine.com sells only to the US market. Something of a missed opportunity there as I do believe some European countries are quite partial to a drop of wine.

#8 Shop.com
Sold for: $3.5 million
Sounds like a great domain name, but be honest, who’s ever bought from here? When you shop online you use sites like Amazon, eBay or Play. The domain names aren’t important when compared to the branding, link building and SEO.

#7 AsSeenOnTv.com
Sold for: $5.1 million in January 2000
At over $5 million I question the wisdom of this one. Bought at the height of the .com boom this was a lot of money for a very long domain name that is nothing more than a marketing slogan. If this comes up for sale again expect the owner to lose a considerable amount of his money.

#6 Beer.com
Sold for $7 million
Again this is a lot of money for a domain that won’t generate that much type in traffic. Primarily a lads’ site, beer.com is aimed at the Internet’s biggest user base.

#5 Diamonds.com
Sold for: $7.5 million
Guess what they sell? Not to be confused with a motor insurance company for women. Considering the high ticket price on their stock this is potentially a good price for such a prestigious domain name.

#4 Business.com
Sold For: $7.5 million in 1999
The former Guinness World Record holder for the most expensive domain name ever; business.com, sold back in the .com boom era of the late 90’s. After the crash in 2001 it was expected that no domain would sell for a greater amount. The predictions proved inaccurate.

#3 Porn.com
Sold for $9.5 million in 2007
Personally I’d have thought this one would have gone for more in a time of renewed Internet speculation. I don’t know what’s on this site, I’ve never looked ;)

#2 Sex.com
Sold for: $11 - $14 million (disputed reports) in January 19th 2006
Bought by: Escom LLC
The most expensive domain name until August 2, 2007 changed hands in January 2006 for an estimated $11 million, although some reports put that figure as high as $14 million. The type in traffic alone makes this domain worth the cash.

#1 Business.com, as of Thursday August 2, 2007
Sold for: $350 million
Bought by: R.H. Donnelley Corporation
R.H. is a publisher of Yellow Pages directories in print and online, said Thursday that it had signed an agreement to acquire Business.com, a business-oriented search engine, online directory, and pay-per-click ad network.

"It's not about words," said Monte Cahn, founder and CEO of Moniker.com, a company that specializes in domain asset management and held the Manhattan auction. "It's like real estate. This industry is only about a decade old. People looked at domain names as a commodity. It's a piece of real estate on the Web that can't be replaced. It's your stake in the ground, your stake in the Internet."

At the Manhattan auction, Fischer and Goldberger snatched up four names for more than $1.2 million and a fifth for a client, representing only a handful of the names sold for a total of $12.4 million during both the live and silent auction.

Prices

One name -- creditcheck.com -- went for $3 million but paled in comparison to the sale of sex.com, which sold for $12 million last year and $350 million for business.com, according to Cahn, who knew the site's buyer and seller.

Fischer, 44, of Brooklyn, New York, and Goldberger, 46, of Cherry Hill, New Jersey, figured there was money to be made early.

Goldberger's entry into the business was unorthodox to say the least. In 1996, the Hearst Corp. sued him, alleging trademark infringement after Goldberger registered esqwire.com, which resembles one of the company's magazines.

The two sides eventually settled and Goldberger, a lawyer, was allowed to keep the name. Word got out that Goldberger knew something about the thorny legal issues involving Internet domain names and people began approaching him for advice.

Goldberger's fascination with the burgeoning industry was sealed.

"I was an entrepreneur strapped into this suit-and-tie job," Goldberger said. "Kind of a square peg in a round whole and this lawsuit just kind of changed everything for me."

The Beginning

He eventually left the respected Philadelphia law firm where he worked in 1997 and joined a small startup in Manhattan called mail.com, which was buying up domain names.

Goldberger began collaborating with Fischer in 2001, building their portfolio of domain names. Together, they became a formidable yet quirky team.

Two years later, they created a company called smartname.com, which they sold earlier this year. The company took names and provided content and links for owners, getting a cut of the advertising revenue. At one point, smartname.com represented 150 owners with about 150,000 domain names, generating 50 million unique visitors a month.

Most the sites are lucrative for their advertising dollars. For example, megayachts.com isn't an actual yachting site, but it contains numerous ads and links for real yacht companies, boats and cruises. The owners of the site get paid each time a viewer clicks on one of those links.

Goldberger and Fischer declined to say how much money they make from pay-per-click advertising.

GoDaddy

Bob Parsons, CEO and founder of domain registration company GoDaddy.com, says this type of business is fairly straightforward.

"They make their money in two ways," Parsons said. "One way is through the traffic they get and the other is the appreciation of the name."

Parson didn't think there was anything wrong with the practice as long as those involved weren't using names trademarked by others.

"Domain names are becoming 21st century real estate," Parsons said. "Just owning a domain name as an investment, I don't see a problem with that."

Anthony Malutta, a lawyer who specializes in trademark law at a San Francisco law firm, sees fewer trademark infringement cases thanks to improved laws.

"Trademark law involving domain laws is much clearer and much easier to understand," he said. "It's pretty clear that registering a domain name that corresponds to somebody's trademark is actionable. As to generics, they're just hoping to capture traffic. You're just counting on people typing in generic names instead of using a search engine like Google."

Malutta said domainers like Goldberger and Fischer are not "gaming the system" which in his opinion would mean registering domain names and then cybersquatting -- driving revenue off somebody else's trademarked name like Coca-Cola.

Over the years, Goldberger and Fischer have sharpened their formula for acquiring domain names and developing the sites using a fairly simple template, relying on research, savvy and plenty of instinct.

"You either know it or don't by hearing the name," Fischer says.

They look for names that hit the "sweet spot" -- short words that describe a high-value product or services related to it. Words that allow them to own a category such as bald.com and cardiology.com, two of the domain names they bought at the auction.

To help figure out a word's potential value, they see how many hits it will produce using Google. They also troll lists of names with domain registrations set to expire, enabling them to get a jump on buying it.

They don't bother with dot-nets or the others.

"Dot-com is king," Goldberger said. "Dot-net is worthless."

But there's a big divide between thinking of a good name and getting it. There's usually a chase, with Fischer trying to persuade owners to sell the names after he locates the owners unless it's up for auction.

"He's kind of like a rhinoceros," Goldberger says about Fischer. "He chases them up a tree and waits them out. He has patience and determination. You got to be aggressive. It's a tough game now. It's like the gold rush. The first guys did really well then it became more difficult."

Expensive

And expensive. Five years ago, the duo could get a good name for $10,000. Now the minimum is more like $100,000 -- as the auction proved. The cheapest name they bought at the auction was blogging.com for $135,000. Other names sold for considerably less like irishwhiskey.com ($8,000) and Jewishdeli.com ($9,000).

At the moment, Fischer, Goldberger and Eli are sitting on their names. They've recently turned down million-dollar offers for stocks.com and home.com.

But as white-hot as this business has been, it might not continue to mint millionaires.

"How long will this model last?" Malutta asked. "It's definitely a temporal piece of real estate. As technology evolves, maybe direct navigation will fall off the charts and there goes your property."

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