When domains were first introduced with the birth of the internet, many people did not give them much thought. After all, they were just an internet address, mainly used by online businesses and corporations. With the growth of the internet, domains became more scarce, and hence their value would sharply rise. Since they are just like real estate, there are a limited amount of premium names and so the competition to have such a name is fierce. Take the case of the most expensive domain ever sold “Sex.com” The owner first acquired this domain for free when the internet was at it’s infancy. In 2006, this domain would sell for $14 Million USD plus stock options. Why on earth would it sell for such a high amount? Well, think of all the people that search for this topic on the internet. Many people may type “sex” into a search engine like Google.com or Yahoo.com. But more people would type “sex” directly into their web browser, hence what is referred to as “type in” traffic. Still, so what you may ask. Why is it so valuable? When you have so many people landing on a particular homepage, the answer is simple: REVENUE. You can develop the site and sell memberships, products, anything you like, to target that market. Or, you can park the domain with a domain parking company and earn massive revenue when a person clicks on the sponsored links. At the highest point, the domain “Sex.com” was earning an astounding $750,000 USD in sponsored ads. High website traffic= a larger number of interested buyers= more revenue. A very simple equation.
Look at any industry from real estate, the stock market, etc. and you will likely see fluctuations. Prices fluctuate and people are bound to make or lose money at any given time. For a time, many people saw the internet bubble burst. Corporations were pumping millions of dollars in websites like “Pets.com” only to lose everything. These failures were failures in marketing and business, nothing having to do with actual domain names. Imagine you have a domain name, lets say a great generic term worth $20,000. Now, let’s say you pump 20 millions dollars of advertising into it are are set up with a weak infrastructure. Chances are, you will lose your investment. Now look at domain names. This is the one industry that the values have constantly been on the rise over the past twenty years! Providing you purchase a domain at a reasonable market value, you practically cannot lose because in as little as 6 months to 2-3 years, it will be worth significantly more. In many cases, finding the right end user can yield in upwards of a 10,000 percent markup! Try that in real estate or the stock market!
People always say, “I wish I had know about domains even 5 years ago, I would be so set right now!” Good point, but given that domains have generally not gone down in value, and given that we are in point where the internet is exponentially growing as it never has, what will you be saying 5 years from now? Domains that are currently worth $10-50 can easily be worth a few thousand or more a piece, in less than five years.
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