An Internet domain name is an online equivalent to a real estate property. You can make money with real estate, and you can also make money with online domain names. However, real estate investing and domain name trading are very different.
A domain name is used to host a website or service. Just like real estate, domain names have different values and different potential. The value of a domain name comes down to the potential branding of a website that is hosted on that domain name, the more memorable a domain name, the more value it commands.
Opportunities in making money with online domain names.
Economies of scale
Internet domain name Kings own hundreds of domains, even with the right portfolio one can expect sales of less than under 5% a year. This could be enough to make a profit and maintain their current domains. Such a model is possible in portfolios with hundreds of domains, which have value, less so in smaller portfolios.
Flipping
Investing in domain names is a competitive game, all the truly valuable domains have already been registered. Some Internet domain investors purchase these highly priced domains in order to flip them at a profit. The domain name itself has only so much potential it is the seller who unlocks the full potential of the domain. Through his marketing and sales skills.
Developing Domain names
An Internet domain name has more value if it is associated with a profitable business. A domain name can be grown into an online business, if such a business is profitable, then there will be more potential buyers. One can compare this to an unused property in a prime location (unused domain name) or a small business with good cash flow (not so good domain name, but has a thriving business behind it)
Becoming a domain name middleman
Domain name owners do not always find it easy to sell their domains, probably they welcome anyone who can bring their domain names and potential buyers together. Matching domain name owners with potential website developers is a business you can develop with little capital outlay. Such transactions will earn you financial profits and a network of contacts. Also, you can use these to tap into future transactions without risking your own money buying domain names.
Value
The domain name value lies in its ability to save marketing money to the website owner. The more catchy a brand name is, the smaller the marketing budget. Domain names associated with existing brands might be at a premium because they already have a level of connection with people. For example, Google bought the domain name Gmail. Gmail.com in itself has little intrinsic value, but given its association with Google, it’s value increased.
Ultimately the value of the domain name is established by the buyer.
Owning the domain name is only half the business. The next step is to identify buyers who have the resources that match your price. The domainer then needs to sell and market their domains to them. Being at the right time and in the right place, nad knowing where your potential buyer’s hangout.
New territories
Those who missed the Domain Gold Rush in the .com, have other opportunities for example with .ai and .io domains. New TLDs are released periodically, for instance in 2016 / io and .ai have become popular.
Future domain names
Critical technologies, personalities and events which might command a lot of attention in the future will need a website. If you can corner such domain names before they get on the radar screen of the general public, you might be the early bird that catches the worm.
Short domain names
Recently Chinese investors have been buying short domain names both to get out of the Yuan and to speculate on their future prices.
Risks in investing in domain names
Non-transparent market:
The transactions in the domain name space and the amounts exchanged are not easy to quantify because they are rarely made public, they are frequently hidden behind non-disclosure agreements. This lack of information can be discouraging to new domain name investors, as it makes it difficult to value domain names. It increases the risk that they dive head-first into unknown territory.
The changing landscape of a domain name investing
Misspellings are dead; now modern browsers autocorrect domain names in the URL bar. This has cut the traffic to misspellings domain names, and their advertising revenue dropped into the abyss.
Parked domain names revenue drop
Part of the profits from making money with online domain names comes from parked domains. However, the advertising giants such as Google have mega traffic sites (Youtube.com) to publish adverts. The scarcity of space to publish ads has diminished significantly.
Private blog networks
In the past, SEOs would create mini websites, which would link to other domains. Those links would help the target website achieve better rankings in Google. Search engine optimizers scaled this method to create massive private blog networks. This scheme has since become redundant as Google will vigorously penalise any website the try to game their ranking system.
Profit and loss
When domain name investors flip domains to each other, one of them will surely make a loss. Most of those making a loss are newcomers to this place. Before you start trading in a new market, you need to do thorough and careful research.
Domain Name trading tools:
Conclusion
Domain name trading requires hard work, wits, contacts and money can be made, but this is reserved to the few who are on top of the domain game. If you are armed with the right knowledge, contacts and most importantly foresight, you have the basic building blocks to start making money with online domains.
