What's In a Name.com? Money

By: Steve Outing

In the world of the World Wide Web, brand names are not just the name or title of a Web site, but also encompass the important element of the domain name that a site holds. In a Web with hundreds of thousands of sites, having a domain name that makes it easy for a consumer to find you is an important element to success online.

Looking for the Washington Post online? Not knowing the URL, most Web users will try the obvious: http://www.washingtonpost.com -- and that will be the right choice. Had the Post chosen something less obvious, say http://www.wpost.com, it might be missing out on a lot of traffic.

Alas, it's not that simple any more. With so many Web sites in cyberspace, the odds are that if you want a particular new domain name, it's already taken. This situation is particularly accute for ".com" domain names (that is, companyx.com); there are some 550,000 registered .com's. And if you want a generic name -- email.com, publishing.com, store.com, etc. -- well, you have better odds of hitting it big with a lottery ticket.

What's beginning to happen in this environment is that holders of "good" domain names that other companies might want are selling them, in some cases for large sums of money. According to David Milligan, vice president at New York-based BestDomains, which serves as a broker for domain name transactions, some domain name sales have gone into the $100,000 to $200,000 range, though that's the exception.

A new business opportunity

BestDomains, a unit of Globecomm Inc., specialists in Internet addressing, is one of the first companies to set up shop in the domain name re-selling business. Milligan says that his company serves as a "trusted third party" to broker the deal. Companies with a domain name to sell pay BestDomains 20% of the first $10,000 selling price, 15% of the next $10,000, and 10% of any amount above $20,000.

The average domain name sold through BestDomains is currently going for about $7,500, though Milligan says he's got several deals coming up all in the $10,000 range. While not a huge amount of money, this price range will give the seller enough cash to deal with the transition of its business to a new domain name.

A few of the better domain names bring prices in the $25,000 to $50,000 range, says Milligan. Most sellers and buyers won't publicly discuss these deals, but Milligan says he does know that the owner of "tv.com" turned down an offer for $50,000 for that domain; the holder of "sweden.com" turned down a $25,000 bid. And another holder of a generic .com domain name recently closed a deal for $40,000; the buyer was a large communications company. (That last example was done privately, sans a broker.)

Any domain name seller who convinces a buyer to pay in the $50,000 range is doing quite well; higher than that, well, you must be a really good salesperson! The business of selling domain names is quite new -- BestDomains has been in business less than three months -- so the market is evolving and pricing is an unscientific thing.

The seller of that $40,000 domain name mentioned above says he set an asking price of $50,000 based primarily on gut instinct and looking at what the few other known domain names had sold for. "This is not like selling a Land Rover. You can't look in the Blue Book for pricing clues," he says. This seller, who no longer needed this particular domain name but recognized that because of its generic nature it had great value to someone else, says he found his buyer by putting the word out to his personal contact network that the name was for sale. He received two other bids in the $20,000 range, and one other that was close to his final selling price.

Milligan says that selling a domain name is a tricky process. "This is intellectual property. You can't stand on a street corner hawking your domain name," but must wait for a potential buyer to recognize the value of the name you're offering.

Diarrhea.com?

Milligan says the names that are most valuable and most wanted are the generic ones. Proctor & Gamble, for instance, has registered some 300 product domain names -- one of the more unusual being diarrhea.com. He points out that multiple domain names can all be directed to a single server, so those 300 names might all call up P&G Web pages.

Other wanted names are company.com domains, where another party holds the registration for a domain that logically belongs to the company -- an individual who might hold apple.com, for instance. Trademark law generally prevails in a case like that and the company wins the right to the name; Milligan says his company will not get involved in a domain sale involving trademark disputes.

One interesting domain name sale took place recently. The Professional Golfers Association just paid about $26,000 (U.S.) to the Potato Growers of Alberta (Canada) for the rights to pga.com. As reported in the Toronto Star, golfers who access http://www.pga.com as of December 1 will pick up golf tips and not learn how to cook french fries.

With a shortage of "good" .com domain names available, solutions are being created to expand the options for companies looking for a suitable name. Within 6 to 12 months, we can expect to see new Internet Top Level Domains (ITLDs) become available, so that businesses and publishers will not be limited to .com addresses. Under this system, a business might choose "companyx.inc" or "companyx.ltd" if "companyx.com" is already taken by someone else.

Still, Milligan contends that the .com addresses will for some time to come be perceived as much more valuable than .inc, .ltd or other ITLDs. The Internet-using public has been conditioned to look for .com addresses, he says, so .com names will continue to be sought by companies willing to pay for them. ".com has an awful lot of legs right now," he says. "It won't be abandoned." And more companies will be bidding on the best .com domain names in this latest twist of doing business on the Internet.

Contact: David Milligan, info@bestdomains.com

Cyber-education

It's a sign of the times. Temple University (Pennsylvania) telecommunications professor Ben Compaine is teaching his "Introduction to Cybermedia" course entirely online beginning next semester. The course deals with the technology of the Internet, and in particular with the implications of the Internet for traditional mass media institutions. Compaine is also chairman of the Center for Information Industry Research at Temple.

There is to be one required physical gathering of all those who sign up for the otherwise entirely online course -- and live within 150 miles of Temple -- on January 25, 1997. Compaine says those who live farther away can participate by audio conference. At that meeting, all students will receive an orientation about the course and get digital photos taken. Timeframe for completion of course assignments will be at students' option.

A course syllabus is available on the Web.

Contact: Benjamin Compaine, bcompaine@usa.net

Steve

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This column is written by Steve Outing exclusively for Editor & Publisher Interactive three days a week. News, tips, and other communications may be sent to Mr. Outing at steve@planetarynews.com

The views expressed in the above column do not necessarily represent the views of the Editor & Publisher company.