The purpose of this domain investing FAQ is to provide an overview of common terms used in the practice of buying and selling domain names as a way to make money. Once you understand the basics, please ready my Complete Guide to Domain Investing, or give the podcast a listen for tips and tools to help domain investors achieve a better level of success with their domain names.
Each domain investor typically has their own set of standards, or practices, they follow. While there are many good domain investors, there aren’t any principles we all follow. Practices vary widely and are often the result of making mistakes. More, domain investors learn and refine their craft to fit their needs and skill set. As a result, there’s not one right or wrong way to invest in domain names.
In this domain Investing FAQ you’ll learn exactly what domain investing is (and isn’t) and what domain investors are (and aren’t). You’ll also learn about cybersquatters, as well as the four different types of domain investors.
What is Domain Investing?
Domain Investing is the practice of purchasing domain names with the purpose of making money from the investment. There are three primary ways to make money on a domain name you own:
- Resell it at a higher price.
- Pay-per-click advertising. Parking a domain is the practice of placing ads on a domain with minimal content in order to generate ad income.
- Build a website that can generate revenue via pay-per-click ads, affiliate marketing, or by selling your own products or services.
What are Domain Investors?
Domain Investors, sometimes called Domainers, above all are opportunists. Domain Investors register or buy a domain name as an investment. Each domain name is unique, for example, there is only one jasonofflorida.com. Since I own jasonofflorida.com, one way someone else can purchase the domain is to make me an offer for the domain. Another way is, if I fail to renew the domain name, to buy the domain name at an expired domain name auction.
Most domain investors buy domains with the hope of reselling the domain for more money than what they paid for it. Domain names have been registered for as low as one cent, while the most (verified) expensive domain name ever sold was CarInsurance.com for $49.7 million.
What is Cybersquatter?
A cybersquatter, sometimes called a domain squatter, is someone who buys domain names that are trademarked with the intention to profit from the sell of the the domain name at an inflated price. A cybersquatting is against the United States federal Anti-cybersquatting Consumer Protection Act, and can be enforced with a Uniform Domain Name Dispute Resolution Policy, or UDRP.
Cybersquatters often register common typos of trademarked brands. An example of this would be cooca-cola.com, which would be a typo domain of the popular coca-cola.com. A cybersquatter is a criminal – a domain investor is a Capitalist.
Who are domain investors?
The Accidental Investor
The first type of domain investor is the accidental investor. Perhaps years ago you purchased a domain name with the intent of using it for a business, but you never got around to launching the business or using the website. However, you continued to renew the domain name. Perhaps you were contacted out of the blue by someone interested in purchasing the domain name. Perhaps you made hundreds or thousands of dollars on this sale. There are many domain investing careers that began this way; after their initial sale, they realized they could buy and sell domain names as a way to make passive income.
The O.G. Investor
The second type of domain investor I’ll call the O.G. investor. These investors saw the opportunity in the early days of the internet. They were around when many large corporations didn’t have a web presence. In the early, wild-west days of the internet, it was legal to register a domain name that was a trademarked.
One infamous story was about 7up in the 1990s. Executives at 7Up decided to sponsor the college basketball’s march madness. They added “7up.com” to all the packaging and even had a half-time performance set up on the basketball court emblazoned with the domain name. However, they would realize (nearly too late) they didn’t own the domain name 7up.com. Fortunately, with days to spare, they flew down to Texas and purchased the domain name from a 17 year old boy. In exchange for cases of soda, they got the multi-million dollar domain name to avoid catastrophe. You can listen to this great story on Domain Name Wire Podcast #228 – 7Up and March Madness.
The third type of investor is the opportunist. The opportunist realizes that the future of retail, government, education (and just about anything else you can think of) is on the internet. They also realize there’s not an infinite supply of domain names, especially with the highly coveted dot com TLD. This investor has decided they will buy some good domain names that may become valuable in the future, when demand eclipses supply.
The fourth type of domain investor is the corporation. The corporation is a large entity that buys and sells domain names as one of their primary means earnings. Entities that have large domain portfolios include:
- Frank Schilling owns over 250,000 domain names
- over 100,000 domain names
- Kevin Ham owns over 300,000 domain names
- BuyDomains owns over 670,000 domain names
- DomCollect owns over 200,000 domain names
- Oversee owns over 800,000 domain names
In conclusion, I I’ve answered some of the most basic frequently asked questions associated with domain investing that I receive. While this was just a domain investing FAQ article, you can read more in my article The Complete Guide to Domain Name Investing. Moreover, by listening to my podcast you can get more timely tips and information on buying and selling domain names. If you received some added value from my post, please like and follow us on Facebook, Twitter, and LinkedIn, or subscribe to jasonofflorida.com.