Domain Names Are Big Again
By BOB TEDESCHI
New York Times
Published: March 1, 2004
THE dot-com gold rush may be over, but territorial claims can still be valuable. Dot-com domain names are fetching respectable prices again, after more than three years of attracting scant interest. Names like Truck.com, Beef.com and others have recently sold for more than $100,000, according to Domain Name Journal, a trade publication, while Web sites like Men.com, which offers a dating service, and sites selling pornography like Whitehouse.com are crossing the million-dollar threshold.
The rising prices are helping not only the sellers of domain names but also the industry that supports the use of domain names. Buyers, though paying higher prices, are optimistic that their investments will pay off in a brightening economy.
The improvement in domain name prices actually began last fall, said Ben Turner, vice president for naming and directory services for Verisign, the company that manages the database of domain names ending in .com and .net and assigns numerical addresses to those names. In the fourth quarter of 2003, the number of active domain names handled by Verisign increased by more than 1.7 million, to 30.4 million.
For each domain name in its database, Verisign charges the registrars - the companies that prospective owners pay to secure domain names - a few dollars a year to manage each name.
"The uptick seems to follow the economic turnaround that the U.S. and the rest of the world is starting to see," Mr. Turner said.
Prices on the resale market for Web addresses are more than double what they were in the fourth quarter of 2003, Mr. Turner said, with the average resale price reaching $24,000. "And names with good commercial value and significant traffic may not be selling for millions now," he said, but they are being sold for hundreds of thousands of dollars. "A year ago, they would've sold for maybe $20,000. Hardly anything at all was selling."
On GreatDomains.com, a Verisign sales site, Smoking.com was listed last week for $500,000, Mr.com for $350,000 and Americans .com for $150,000.
Owners of Web sites are also renewing their .com and .net domain names at record levels, Mr. Turner said, with 70 percent renewing in the fourth quarter of 2003, compared with a record low of 45 percent in the first quarter of 2003. "More people are actually using their domains," Mr. Turner said. "Used to be, less than half of the 60 million domains in the world had e-mail or a Web site associated with them. Now it's more than 60 percent."
An improving Internet economy is partly behind that trend. Online sales have increased steadily, with smaller businesses finding that advertising on Internet search engines like Google and Yahoo can be an inexpensive way of attracting customers. And smaller informational Web site publishers are generating more revenue by placing Google's small text ads on their site.
Google is also helping a growing number of domain name owners earn money on their Web sites without publishing any information at all. Through its DomainPark service, users who, for example, type in "airlinetickets.com," a Web address that has only a "placeholder" page, will see text ads provided by Google. The site's owners, who must gain 750,000 monthly visits to maintain a spot in the program, earn a share of the ad revenue.
"DomainPark represents a significant source of additional revenue for speculators," said Benjamin Edelman, an Internet researcher based in Cambridge, Mass. "I think this represents a large portion of why this market is coming back."
The biggest beneficiaries of the surge in domain name prices are sellers like Dan Parisi, owner of Whitehouse.com, a gateway page for the pornography site, WhitehouseSex.com. Mr. Parisi last month put the Whitehouse.com domain name up for sale, on the condition that the buyer not use the Web address for a pornography site, because he fears the new owners might try to feature news of the sexual indiscretions of politicians.
So far, he said, the bidding for the name has reached $2 million.
Mr. Parisi said the price was high because many users simply type in Whitehouse.com, without having to search for it on Google or Yahoo. That convenience translates into money. His other business, House.com, which connects prospective house shoppers with real estate agents, is a case in point. Mr. Parisi said he could count on 5,000 people a day typing the address directly, rather than going through a search engine.