GOOD READS

How To Make Money With Domain Names

Domain names are hot commodities in today's tech-centric world. The $16 million sale of 'insure.com' to Quinstreet in 2009 may have set the world record, but even lengthier domain names are routinely sold for hundreds of dollars every day. The result is a unique opportunity for investors to invest in domain names that can be sold for a profit in the future.

Building a Solid Domain Portfolio
Building a high-quality domain portfolio can take months or years to accomplish. Often, the key is looking forward to what domains may become popular in the future and hedging through numbers by purchasing hundreds of domains. Others choose to purchase a few already high profile domains and sit on them hoping that they appreciate in value.

Generic Names
Words that describe a product or service, including new and emerging products, can be a great investment. But it's very important to avoid any copyright or trademark issues that could result in domain forfeiture.

Geographic Names
Names of cities or countries, including up-and-coming locations, can be great investments over time that can be sold to web developers looking to build out community portals or other businesses centered on those communities.

Business Names
Generic business names, such as dentist or chiropractor, can be great investments when combined with geographic names.

Timely Names
Timely names can be great investments when combined with events occurring in that year, such as 2022OlympicPlayers.com.

Buying and Selling Domain Names
There are many different ways to buy and sell domain names. Many standard domain registrars, such as GoDaddy.com, will facilitate sales via auction. Meanwhile, specialized websites, such as Sedo, are designed exclusively to buy and sell domain names. Finally, parking domains with a for sale page is a great way to draw targeted interest from potential buyers.

Set Price
Setting a specific price is the preferred method for domain sellers that have a large portfolio of domains and aren't in a rush to sell them.

Auction
Auctions are a great way to sell higher profile domain names where there is a lot of interest, since they typically result in the highest possible price.

Make an Offer
Make an offer sales are well-suited for niche domains that may not have a lot of interest and/or where the exact value of the domain isn't well known.

SEE: How To Master Online Auctions For Fast Cash

Risks of Investing in Domains
There are many risks that would-be domain investors should carefully consider before buying and selling. The three largest risks are liquidity, subjectivity and legality, but there are also many other ranging from misleading appraisals to faulty escrow payments. Would-be buyers should carefully consider these risks before investing in domain names.

Liquidity
Most stocks and bonds can be bought and sold with ease through a broker, but domain names can be much harder to sell. Finding the right buyer is often a matter of listing a sale for several months or even years, which means that investors should have a lengthy time horizon and the ability to stomach a loss.

Subjectivity
Stocks can be valued by the discounted value of future cash flows, while bonds can be valued by their coupon payments and interest rates. Domains are a much more subjective valuation that can be very difficult to pinpoint. And so-called domain appraisers are well known for issuing lofty valuations that can be hard to realize.

Legality
Domain names can be a sticky business from a legal standpoint. Choosing names that are too close to a trademarked name can result in a lawsuit and a court order to forfeit the domain name for free. In other cases, stolen domain names can be sold before the buyer has the ability to discover that they're not the true owner.

The Bottom Line
Like any investment, domain names come with their own set of risks. However, for diligent investors who consider the risks and returns thoroughly, domain names can become an investment that yields high returns, and a unique way to diversify his/her portfolio of investments.

SEE: 20 Tools For Building Up Your Portfolio Slide Show



More From Investopedia

Quiz: How well do you know India's economy?

Question 1

Which of these products is India the world's largest producer of?

Poll Choice Options
  • Wheat
  • Rice
  • Milk
1
2
3
4
5
6
7
8
9
10

Latest News

  • Strides surges as Bangalore plant remains U.S. FDA compliant

    Reuters Market Eye - Strides Arcolab surges 6.3 percent after the drugmaker said on Friday its oral drug manufacturing facility in Bangalore continues to maintain compliance with the manufacturing standards of the U.S. health regulator. "U.S. FDA recently inspected this facility as part of GMP compliance audit and raised Form 483 (inspection observations) during the Dec 2013 inspection (which has now been satisfactorily closed)," Macquarie said in a note to its clients. This is a key positive …

  • French companies to continue investing around $1 bn in India

    New Delhi, April 25 (IANS) Expressing confidence in the Indian economy, French companies that are engaged in India will continue to annually invest nearly $1 billion here as they see long-term future in the country's growth potential, a top diplomat has said. "I expect the investment trend of nearly a billion dollars to continue as the French companies are here for the long-term and are setting up their base here and expanding production," French Ambassador François Richier told IANS in an …

  • `India needs over 26,000 independent directors'

    Kochi, April 25 (IANS) India needs over 26,000 independent directors and around 2,500 women directors to fill the boards of companies across the country, an official said here Friday. Lt. Gen (Retd) J.S. Ahluwalia, president of the Institute of Directors, said that despite a handful of high profile female Indian entrepreneurs, the proportion of female directors is a meagre 5.2 percent, which is even below the developing world percentage of 7.2 percent. Ahluwalia's statement comes at a time …

  • India's growth prospects dim regardless of election outcome - Reuters  …

    Prospects for a strong economic rebound in India are dim as industry remains weak, and although a business-friendly opposition party looks likely to form a new government, its ability to pass sweeping reforms is in doubt, a Reuters poll showed. An anticipated victory for the Bharatiya Janata Party's (BJP) at the conclusion next month of an ongoing election in the world's largest democracy has pushed India's stock market to a record high. Anubhuti Sahay, senior economist at Standard Chartered …

  • World shares, dollar struggle on Ukraine anxiety

    Heightened tension in Ukraine pushed world shares lower and lifted safe-haven European bonds on Friday, taking the shine off what looked set to be an earnings and M&A-driven week of gains for European and U.S. stocks. Trouble in Ukraine escalated after Ukrainian forces killed up to five pro-Russia separatists on Thursday and Russia conducted military drills near the border, raising fears it was gearing up to invade. European shares tumbled 0.5 percent in early trading as concerns also rose …

IN-DEPTH ANALYSIS & INTERVIEWS

  • Too good to be true?

    Developers are offering lucrative buyback schemes. But such promises may not be always kept. …

  • Leaderspeak with Vikram Limaye

    Vikram Limaye MD & CEO, IDFC Ltd shares many firsts from his life. …

  • The Greening of the House of Tatas

    How a dedicated team converted a 90-year-old heritage structure into a benchmark for environment-friendly buildings. …

  • Appy Voting

    Mobile and online apps, seeking to inform or influence voters, have been more active than ever before in this election. …

  • In the crosshairs

    Why the future of FDI in multi-brand retail looks bleak after the polls. …

  • Deserving the honour

    How do the winners of the two new banking licences - microfinance lender Bandhan Financial Services and infra institution IDFC Ltd - measure up to the challenges of operating as full-fledged banks? …

  • A Samurai from Chandigarh

    Advertising veteran Sandeep Goyal is disarmingly frank as he recounts his years with Dentsu. …

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    23.45-0.40-1.68%
    ASHOKLEY.BO
    16.49-0.03-0.18%
    UNITECH.BO
    129.70+9.30+7.72%
    FRL.BO
    75.75+3.45+4.77%
    HDIL.BO
    116.700.000.00%
    IDFCSL.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    12.51+2.00+19.03%
    BIBCL.BO
    553.05+87.05+18.68%
    STRIDES.BO
    261.45+31.40+13.65%
    VIVIMEDLABS.BO
    163.20+19.50+13.57%
    AGARIND.BO
    31.55+3.70+13.29%
    STOREONE.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    -10.95-100.00%
    4THGEN.BO
    -17.30-100.00%
    ALFAICA.BO
    -17.65-100.00%
    AMAL.BO
    -12.31-100.00%
    BORAX.BO
    -29.95-100.00%
    BRADYM.BO
  •  
    Recent Quotes
    Symbol Price Change % ChgChart 
    Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
    You need to enable your browser cookies to view your most recent quotes.
  • Recent Quotes News

    •  
      Sign-in to view quotes in your portfolios.