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The Article below was first Published on Trendirama.com(http://www.trendirama.com/ » ), before publishing it here on
Blackworld. Trendirama is currently down and in the process of
moving servers, however I want to especially thank Jarvier
Marti, the founder of Trendirama for encouraging me to share
my views on the above subject matter "Why Domains Are The Best
Investment For Your Future" . Jarvier insisted that I should
write this article even though I was very reluctant in the
beginning. Afterall, the last time I ever wrote anything
worthwhile was at university, in History of Art which I quite
enjoyed, before dropping out to further my pursuits in
Investment Banking.
The response I have received from
readers has been extremely positive and encouraging to say the
least. I must say, I felt really flattered and appreciate all
the feed back I on Trendirama about this article. The feed
back has certainly inspired me to continue writing, to improve
on my writing and share whatever knowledge I can ...into the
future. One thing for sure is this...I definitely believe in
the future of Domains as a great investment!
Hope you
enjoy reading the following article and find it useful or
adaptable in some way. Oh by the way!...why not write
something as well yourself. Just click on "Post Ad" above on
the top left and navigate to the "Blog" sub-category under the
"Entertainment" category. Whatever you write will go live
instantly!
Enjoy!
Robert
Haastrup-Timmi
Founder
Blackworld.com
http://http://www.blackworld.com »
What is happening right
now?
We are reaching a stage where natural awareness on
Domain ownership is beginning to emerge. While the idea of
domain ownership is not ubiquitous, It actually is in terms of
the considerable number of companies, small businesses and
would be investors realizing the intrinsic value of owning a
domain name.
As a result, we have seen a steady increase in
domain value appreciation since the crash of the dot com
bubble. However, I posit the view that whilst the best words
have indeed been registered mostly by domain speculators,
investors and businesses, there still remains an immense
opportunity for the novice investor to participate in what I
perceive to be the biggest online Real Estate boom of all
time!
Imagine what it was like 100 to 150 years ago,
when pioneers scrambled for land ownership to build their
bricks and mortar in the Americas, parts of Africa, Australia
and Asia;well, descendants of those pioneers are still
benefiting from land acquisitions their forebears made decades
ago. For instance, the Duke of Westminister owns vast hectares
of land all over central london...how come? most of the bricks
and mortar built on this premium part of London pays a monthly
or annual lease to whoever owns that land and infact, some
properties may have their leases expiring in just a few years
from now, which means the bricks and mortar may end up in the
hands of the original land owner!! I'm assuming this practice
is similar anywhere mostly in the developed world.
Essentially, whoever gets there first buys the land
and earns an income one way or the other on anything that is
built on it, making them pioneers and the ultra
elite...forever! By the same token, pioneers to valuable
online Real Estate "Domain Names" are already or will be on
their way to becoming the next wave of ultra elites forever.
It is also fair to say we are within the threshold of
exponential growth in the domain industry. This exponential
growth partly stems from the gradual emergence of what I term
Domain Service Providers or DSP's in the last 3 years
particularly.
To begin with, we had Internet Service
Providers or ISP’s (entities who provide hosting services
fundamentally) as it were, and Domain Registrars (entities who
provide registration services of domain names to the public).
However, most recently we have seen DSP’s fueling the domain
marketplace.
These very clever entities provide domain
tools to help you find valuable domain names, monetization
services to help you extract an income from domain
names(Domain Sponsor, IMonetize), domain auctioneering
services to help you sell domains to the highest bidder(Sedo,
Afternic), domain media services to keep you
informed(DNjournal, DNForum) domain conferencing for
networking with investors and DSP's(T.R.A.F.F.I.C), domain
financial services providing loans to help you acquire
valuable domains or build a portfolio(Domain Capital,
DigiPawn) and most recently, the first domain leasing service
of its kind has just emerged(LeaseThis), which allows domain
owners to rent or lease domains to any conventional or online
business…small or corporate!
So what is a Domain Name?
Essentially, a domain name is an asset like land and
property that you own in cyberspace. In fact, a domain name is
very similar to commercial property and stocks because you can
develop them, lease them out or simply park them for income
with a DSP or do nothing and hold on to them for long term
appreciation value.
What has happened in the last 5
years in the field you are writing about?
In the last
five years, we have seen domains acquired for considerable
amounts of money. For instance, Diamonds.com was acquired
within this period for $7Million. Business.com went for a
$1million and some of the most generic everyday terms are
constantly being bought and sold for an average amount of two
thousand dollars to a hundred thousand dollars. What this
suggests, is that domains potentially provide the highest
return in comparison to other asset classes on your initial
investment. Think about it!...you register a domain name for
$10 and flip it for $100 to $2000 on average within 3 years
making it the highest return on investment in percentage terms
historically in a short time frame, more than any other asset
e.g. property or stocks. If you take a closer look at what I’m
suggesting here, unlike property you don’t carry any leverage
debt on owning a domain in general, therefore your risk is
minimal or zero and unlike stocks you don’t end up loosing
your shirt! So what if you loose ten bucks! I will demonstrate
later on why your ten bucks registration fee is intact as long
as you register a name that makes sense.
What will
happen in the next 5 years?
As the individual realizes
that his future of work and making a living is on the internet
and not in the workplace as it is today, there will be a
massive rush to own domain names, in all extensions. Who
knows, maybe Dot Name may all of a sudden take off! The domain
industry will become a common sense industry like stocks or
shares, but what is sure to happen in my view, is that
everyone will want to own at least one domain name, under
which to market his or her services. Due to this scramble and
increased demand we shall see more liquidity, which is
currently absent in the domain market place today. Thus,
domain owners (domainers) with big portfolios will realize
more sustainable sales. At the same time, we shall see further
appreciation of premium domain names and more realistic prices
for domain assets. At this point, domains become more
enterprising for everyone.
At what point does Ubiquity
or Singularity occur in the Domain Industry?
At the
moment, the domain industry is still a very illiquid market
place making it difficult for most of domainers to sell
domains easily in the aftermarket. However, because of the
emergence of sophisticated DSP’s and recent articles in
tabloids such as the Wall Street Journal regarding domains,
things are changing fast! Most importantly a paradigm shift is
occurring unknowingly to most people as companies abandon
conventional bricks and mortar operations permanently or
outsource in order to operate efficiently online using
technology and call centers. Because these entities must
position themselves on the internet to compete effectively for
market share, they are increasingly realizing the importance
of acquiring the right domain name to leverage their brands
and exploit online market penetration. Put simply, in order
for your business to exist on the internet, you have to have a
domain name, period.
Having said all this, ubiquity or
singularity for a better word will occur in the domain
industry, when your mom says: “ hey son! I just bought a
domain name to start my new business online today”, or when
your local taxi drivers starts to tell you how much income or
money he makes from flipping domains on the side and feels its
better than speculating in bricks and mortar or stocks…. Then
indeed ubiquity has occurred.
So why would we reach
this form of ubiquity? …Simply because the internet has
seriously disrupted the way we traditionally did things say 20
years ago and in conventional terms as a whole. Today,
companies are downsizing at alarming rates and outsourcing to
offshore call centers because technology allows that to
happen, save costs and reach a bigger market online. Soon
everyone and their dog will participate in the internet in one
form or the other in a Web 2.0 & 3.0 environment. Think
Ebay.com, Myspace.com, Linkedin.com, Digg.com and all kinds of
socialization networks. We naturally make friends online now,
meet our future partners and perform all kinds of online
transactions. At some point the average individual will
realize he has no future or security in conventional terms and
will naturally seek opportunities for work, business or
consulting online through all these emerging environments….at
that point Singularity in domain terms occurs.
What
will happen between 5 to 25 years from now?
In my view,
in the next few years we’ll see domains emerge as “de facto”
real estate online without the stress and risk of traditional
bricks and mortar. I suspect domainers with modest to very
large portfolios already envisage this fact. Think about it
for a minute, say you invest $1000 in buying a variety of
domains at $10 each, now take a look at www.Afternic.com and
you will notice even the most stupid domain names sell for
$100 on average in what I perceive to be an illiquid domain
market environment as we speak. That’s a return of 1000
percent!!! on each of your domains assuming you stick around
to flip them at $100 a pop on Afternic or Sedo. Bear in mind
the average sales price if you take a close look at the weekly
reports on DNJournal.com ranges from $600 to $4,000 with top
names selling way above the average.
Suppose you take
another route and monetize them cleverly just by parking or
using SEO (search engine optimization) to make a net income of
$0.10 cents a day on each of your names in a growing market
year in and year out, do the math yourself and you will see
why a lot of domainers are more keen to hold on to their
investments rather than sell. You will basically be making a
tidy income with long term appreciation value without gearing
yourself to the tune of thousands of dollars like commercial
or residential mortgages. One of my domains makes about $10.00
to $40 a day for doing nothing..just parking!
Hence,
domain names will be perceived like commercial real estate
with better annual yields and so on as people lease them out
naturally. In fact, at this point, domains have become the “de
facto” commercial real estate on the internet. Thus, I
envisage the emergence of a domain share exchange that
operates just like the stock market (I have pertinent ideas in
this area myself) that adds impetus towards providing
liquidity and broader common sense awareness overall.
Because domains are now recognized as financial
instruments in real terms with tangible appreciation value,
Banks will now treat it as such, “ASSETS”. Two interesting
things are likely to happen when banks start to understand
these new financial instruments: (1) Domain Investment
products will be designed and offered to customers like mutual
funds. (2) Domains will naturally be accepted as valuable
collateral against all sorts of business loans and eventually,
personal loans.
Furthermore domain leasing will have
matured to such an extent, allowing online and conventional
businesses to seamlessly lease domains of any kind, in order
to exploit the tremendous opportunity that the internet
provides and build greater enterprises online.
What
are the social implications of these changes?
I’ll give
you a picture of what I suspect the social changes and its
implications are. Suppose you are about 22 to 30yrs old, you
start a family and pop a few kids within the next year or so.
Ask yourself a simple question, are my kids likely to spend
more time online in terms of work and play or are they more
likely to spend more time offline in terms of work and play.
If you are convinced that they will spend a bulk of their time
on My Space like you probably already do today and perhaps
work virtually or remotely using effective technology, then
imagine the massive paradigm and disruptive shift from the
impeding conventional forms of socialization, work and
business enterprise today.
If you are reading this
article and aged between 18 to 60 yrs old, the chances are you
will definitely witness this huge shift and cannibalization of
conventional forms already taking place slowly but surely. I’m
certain most people nowadays wonder every time they go to work
whether this will be my last day…because my job just got
outsourced to china or perhaps some effective techno gadget
has just been implemented and can do my work faster, more
efficiently without any lunch breaks.
Have you been to
a modernized grocery store lately? like Sainsbury’s in the UK,
you will notice how they sneaked in a few auto check out
machines. I haven’t used one myself but I’d be very worried if
I worked at Sainsbury’s because I’d realize my job is about to
be replaced by machines sooner or later. Infact I'm pretty
sure future grocery stores will allow you access to buy
groceries 24/7 simply by swiping a smart card to enter the
store, select your groceries all RFID enabled and simply check
them out yourself on one of those self checkout machines. All
that will be necessary is some guy who hangs around all night
just to make sure the self serve machine works ok! This sort
of thing is happening everywhere as technology gets smarter,
even doctors will be affected. The only forms of conventional
business that I see left untouched are restaurants and
clothing boutiques…that’s it!
Nowhere in this article
have I mention the impact of AI (Artificial Intelligence)
which is another derivative of exponential technological
changes…think Second Life.com or I hear Google is working on
AI tools for future services for instance. I mean, on Second
Life companies such as IBM own virtual real estate
already…why?
So the bottom line is this, everything is set
to change and move online gradually whether you like this form
of disruptive technology called the internet or not, therefore
Buy! Buy! Buy!.. Domains now and participate online one way or
the other!! Go to DNjournal.com and you will notice the
average price on domains selling in the aftermarket across all
kinds of business categories is $2500.00 to $4,000.00 every
week.
Remember most of these domain names were
initially registered for only $10.00 on average sometime
between 1995 and today, so what is the average ROI in these
cases?...did I hear an obscene percentage return? This is not
magic or luck, it’s happening for those who are participating
in the new world slowly evolving before our very eyes. Just
try to be clever and thoughtful on what domains you purchase
at registration or in the aftermarket for your portfolio and
you should do ok for the future.
What are the business
implications and opportunities you see in these
changes?
The main business implication of these changes
is that enterprises now have access to a much larger market to
exploit and penetrate, with limited boundaries such as border
control or high conventional cost to market. At the same time,
we shall see a small un-recognized business using domain names
to potentially become influential online instantly and become
a recognized brand using correlative domains. For example, a
previously unknown real estate agency called “Robert Spanish
Real Estate”, by simply leasing the domain name
“SpainRealEstateAgency.com”, could immediately become one of
the key industry player for that region overnight. Notice that
the new correlative keywords pertaining to that business
category (in this case Spain Real Estate Agency) is what
online users are more likely to search for in the search
engines. I’m suggesting you are more likely to search for
“Spain Real Estate Agency” on Google than “Robert Spanish Real
Estate” . Therefore Spain Real Estate Agency is likely to get
more natural clicks and sell real estate more efficiently or
can be leased out to any real estate agency operating in this
market…actually I think I own that domain…I’ll just
check!
It is also my belief that for all of this to
become commonplace, the idea of a Domain Exchange makes sense,
because it would provide more liquidity to the market, thereby
giving the opportunity to everyone to buy, trade and sell
domain names as well as websites more
efficiently.
Search engines will become more niche
environments and vertical in nature as opposed to one size
fits all like Google or Yahoo today. Examples could be law
search engines, car search engines, health, travel etc…up to
the point of regional localization.
Generic domain names
will increasingly become more valuable. By owning the relative
search term (keywords), you are more likely to do better as a
domainer and realize a higher ROI (return on investment) e.g.
if you search for Lawyer in Las Vegas and lawyerinlasvegas.com
comes up in the search results, that domain will get more
clicks thereby making the domain more valuable. In fact some
browsers such as Opera will direct you to whatever is the dot
com of the keywords you enter into your URL browser without
the “http” or “www” included. Natural search without using
search engines is becoming more popular
everyday.
Advertising
I see advertising becoming
more of a cross platform where businesses will narrowcast
their advertising budget in relation to domain hubs. For
instance, if you are a mobile phone provider and you want to
advertise mobile phones, you may decide to buy advertising on
“mobilephone.com” or “mobilephones.co.uk” for more precise
targeting.
Your comments on these trends
Why is
a domain important as an investment?
A huge paradigm shift
is occurring before our very eyes. And for those of us who get
involved now will benefit tremendously over the coming years,
simply because, almost everything is gravitating to the
internet, in terms of how we work, how we live and how we
socialize. (play)
Because the internet itself as a
medium is the most disruptive event in human history since the
printing press, it is important to realize that is why domains
are a valuable investment..pure and simple!
How to
Monetize your Domain?
The best way to monetize a domain
name is to develop it, making it relevant to its target sector
and to extract some revenue through pay per click advertising
systems such as Google’s Adsense.
How to Register and
Develop a Domain?
Find a good hosting service that can give
you all the widgets that you could possibly need to develop
your platform. e.g. DomainGirl.org
Rights, Ownership
and Trademarks
Stay away from trademarks when you are
investing in domains, as it is likely to get you into
trouble.
Are all extensions equally
valuable?
Potentially and ultimately, over the long term.
Simply because local communities worldwide will begin to use
the internet to find domestic services, therefore local
extensions will become more valuable. Dot Mobi is a new
extension for Mobile Internet. There are four mobile phones
for every computer on earth! More people have mobile phones in
developing nations in Africa, Asia and other parts of Europe.
A new consortium including Nokia, Microsoft Google, Siemens,
Telefonica and a few others recently got together to launch
the new dot mobi extension….what do you think? If those guys
are investing to promote dot mobi, shouldn’t you consider it
an investment as well? Flowers.mobi sold for $200,000 in
October last year just one month after some bugger registered
it for only fifteen to thirty bucks! I’ve collected a few good
ones recently myself.
Parking Industry
This is
essentially a quick way to start making some money from your
domain portfolio. It basically requires that you have a
portfolio of 50 names and upwards to park with some of the
most respected parking companies such as Domain Sponsor or
Fabulous. However Companies such as Sedo will park one name or
more.
The Lease Industry
This is the most exciting
aspect for the domain industry in my view and is only now
emerging with LeaseThis.com rolling out what seems to be a
potentially effective model going forward. Leasing means that
I could probably get $1000.00 a month for
SpainRealEstateAgency.com for instance or maybe fifty bucks a
month..who knows. Prices will find themselves due to supply
and demand going forward.
Domain Auction
Industry
This side is already established but has a nascent
rise in my opinion. As mentioned before, Moniker, Sedo and
Afternic are the leaders and they sell thousands of names
every month from $100.00 to many thousands of dollars. Just
visit DNjournal.com, click on domain sales to view a report of
the top selling names each week. Bear in mind these are only
the top selling names usually four to six figure selling
domains that are reported to DNjournal by a few DSP’s.
Thousands go un-reported every week all over the
world.
...And Finally
As far as I know, all assets
appreciate in value over time, be they stocks, art, wine or
classic cars. Domains have demonstrated their ability to
return the highest ROI(retun on investment) in such a short
period of time, than any other asset class known to mankind.
Sounds rich dosen't it?...well it isn't!
Good luck, get
in and start your own domain portfolio today!
ABOUT
THE AUTHOR
Robert Haastrup-Timmi
http://http://www.blackworld.com/aboutus.htm
»
BIBLIOGRAPHIC
REFERENCES
RicksBlog.com - Rick Schwartz is regarded as
the "Web Father" and one of the pioneers of Domain Investing
and founder of T.R.A.F.F.I.C. , the large Domain Conference
held about 3 times a year. His provocative blog not only
ruffles a few feathers as he points out. Tt makes very
interesting reading for all domainers or novices to this
exciting medium.
http://www.ricksblog.com/my_weblog/ »
DNjournal.com – Reports the
top sales every week and provides information to what’s going
on in the Domain Industry.
http://www.dnjournal.com/ »
DomainsMagazine.com – This
website is very good for the novice who wants to understand
the basics of Domain Investing.
http://www.domainsmagazine.com/ »
DomainNameWire.com –
Excellent site that also reports up to the minute events for
the Domain Industry.
http://www.domainnamewire.com/ »
PremiumDomains.com – This
new site has a very interesting domain scoring model to help
determine whether your domain name is a premium name. Don't
panic if your domain is not considered premium, it still has a
lot of value, as long as its not junk. Bottom line is what a
buyer is willing to pay for it, or how much income you can
extract from your domain.
http://www.premiumdomains.com/ »
Moniker.com – These guys
provide the best in terms of offline Auctioning of Domain
names to large audiences of buyers in Las Vegas, New York and
Florida. This exciting event now takes place about 5 times a
year and should continue to grow.
http://www.moniker.com/index.jsp »
Sedo.com – Probably the
best online Domain Auction out fit according to some pundits.
They are also good for parking. Sedo is a German company that
appears to have grown very quickly to dominate domain auctions
online. Germans are also aggressive domain investors.
http://www.sedo.com/ »
Afternic.com/Buy
Domains.com – They were the first to offer an online Domain
Auction market place. Afternic are particularly interesting
because the prices are usually more realistic in terms of
sales. Usually $100 to $5000.00 on average.
http://www.afternic.com/ »
DomainSponsor.com – These
guys are great! I had the opportunity of meeting them at the
Barcelona Domain Conference they put up in July of 2006.
Domain Sponsor is the leading Domain Parking Company. Their
pay per click revenue share I understand is one of the highest
in the industry.
http://www.domainsponsor.com/ »
Imonetize.com – Reported to
be the second best for parking according to a parking review
website. Imonetize have a fantastic model to help domainers
optimize small to large portfolios by showing your domain to
the highest parking company and thereby maximizing your ppc
parking revenue.
http://www.imonetize.com/ »
LeaseThis.com – I’m very
excited about these guys, because this is an example of how I
feel domainers will ultimately make a killing for their
portfolios…by leasing domains.
http://www.leasethis.com/ »
DomainCapital.com - The
leader in providing loans against you Domain/s as Collateral.
For those who are in doubt about domains being "ASSETS" this
company has been backed to the tune of millions of dollars
from the investment Banking sector. I spoke to the founder
& CEO Robert Alfano myself, very approachable guy and a
decent company to deal with.
http://www.domaincapital.com/ »
DomainGirl.org – This
Domain Registration company is an affiliate of the largest
domain registrar in the business. I personally decided to
launch Domain Girl with my business partner Barbara Hayles.
Our aim is to encourage more women to get involved by offering
excellent rates for domain registration and a wide range of
hosting services. Domain Conferences I attended seemed to
suggest this lucrative industry is overwhelmingly dominated by
men. Anyone can use DomainGirl.org however to register domains
and start a portfolio.
http://www.domaingirl.org/ »
DomainConsultancy.org – I
plan to use this domain to provide Domain Management &
Monetization Consulting services to anyone interested in
starting a domain portfolio large or small.
http://www.domainconsultancy.org/ »
Keywords: domain
registration, domain, leasing, monetization, parking,
development, design, consulting, auction, investment,
portfolio, management.
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