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Domain
Name Basics
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Summary
One
of the most exciting activities associated with starting a web site
is picking the domain name. With online tools available to help
you search for and register available names, it has become a quick
and easy process to stake claim to a domain. But what exactly is
a domain name? What does it represent? This article digs deeper
into the origins and definitions of internet domain names.
Just
Like an Address
When
you visit a website using your browser, you enter the location of
the website which is usually denoted as "www.site-name.com",
where site-name could be Yahoo, Ebay, or Amazon. The entire tail
end of the name "site-name.com" is also called a domain
name. A domain name is simply a unique address that specifies the
location of a website. Just like every physical location has a street
address (e.g. 123 Apple St.) which idenitifes its location (street
number, city, zip code), a domain name specifies the address of
a website. However, unlike your home address, web site domains are
based on a different structure that underneath it all, helps your
internet browser search through the entire world wide web to locate
a specific web page.
TCP/IP
In
1971 a protocol was developed called TCP/IP. Although it was not
fully adopted until 1984, TCP/IP became (and still is) the primary
method for computers to communicate over telecommunications networks.
The entire backbone of the internet is based on the TCP/IP protocol.
Without getting under the hood of TCP/IP and how it operates, simply
understand that TCP/IP is a communications language that allows
two computers (which may be different) to communicate with one another.
As part of this protocol, an addressing scheme had to be developed
so that one computer could identify another computer over a network.
This TCP/IP address or "IP Address" uniquely identifies
every location on the internet. A TCP/IP address is composed of
4 numbers separated by a period. Each number can range from 0 to
255. For example, an IP address may look something like : 123.45.67.89.
Every network connected device in the entire internet must be assigned
a unique IP address so that communications can occur between it
and other computers.
Too
Many Numbers!
Unfortunately,
although the TCP/IP protocol provided for a simple and effective
way for computers to communicate across networks, it did create
problems as the size of the internet grew. If you can imagine, in
order for one computer to communicate with another, it had to have
knowledge of the IP address of the destination computer. Certainly,
you can see how hard it would be to maintain a list of 100 IP addresses
and remember which destination computer is associated with it. In
order to make the process of remembering the address of computers
on the internet, a system was developed in 1984 called the Domain
Name System. The domain name system established a way to recognize
host computers on the internet without having to remember their
numerical IP addresses. Using the domain name system, a computer
on the internet whose IP address is "54.123.44.11" could
call itself "www.amazon.com". Within the internet, there
are domain name servers which are computers that store the millions
of internet IP addresses and their associated domain name. So, when
you type in "www.amazon.com" in your browser, your computer
first goes to one of the many domain name servers on the internet,
finds (or resolves) the IP address associated with "www.amazon.com"
and, using that IP address, begins a communication session with
the amazon system.
Get
Them While They're Hot
Luckily,
acquiring a domain name is very simple. In order to stake a claim
to a domain name to call your own, you must first find an available
name and then register the name with a registrar. A domain name
registrar is a company who is responsible for distributing domain
names to people.
On
the home page, there is a list of registrars who can register your
domain name. Domain names are registered yearly, if you let the
registration lapse then somebody else can register the name.
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Choosing
A Good Domain Name
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Choosing
a domain name for your site is one of the most important steps
towards creating the perfect internet presence. If you run an
on-line business, picking a name that will be marketable and achieve
success in search engine placement is paramount. Many factors
must be considered when choosing a good domain name. This article
summarizes all the different things to consider before making
that final registration step!
Short
and Sweet
Domain
names can be really long or really short (1 - 67 characters).
In general, it is far better to choose a domain name that is short
in length. The shorter your domain name, the easier it will be
for people remember. Remembering a domain name is very important
from a marketability perspective. As visitors reach your site
and enjoy using it, they will likely tell people about it. And
those people may tell others, etc. As with any business, word
of mouth is the most powerful marketing tool to drive traffic
to your site (and it's free too!). If your site is long and difficult
to pronounce, people will not remember the name of the site and
unless they bookmark the link, they may never return.
Consider
Alternatives
Unless
a visitor reaches your site through a bookmark or a link from
another site, they have typed in your domain name. Most people
on the internet are terrible typists and misspell words constantly.
If your domain name is easy to misspell, you should think about
alternate domain names to purchase. For example, if your site
will be called "MikesTools.com", you should also consider
buying "MikeTools.com" and "MikeTool.com".
You should also secure the different top level domain names besides
the one you will use for marketing purposes ("MikesTools.net",
"MikesTools.org", etc.) You should also check to see
if there are existing sites based on the misspelled version of
the domain name you are considering. "MikesTools.com"
may be available, but "MikesTool.com" may be home to
a graphic pornography site. You would hate for a visitor to walk
away thinking you were hosting something they did not expect.
Also
consider domain names that may not include the name of your company,
but rather what your company provides. For example, if the name
of your company is Mike's Tools, you may want to consider domain
names that target what you sell. For example: "buyhammers.com"
or "hammer-and-nail.com". Even though these example
alternative domain names do not include the name of your company,
it provides an avenue for visitors from your target markets. Remember
that you can own multiple domain names, all of which can point
to a single domain. For example, you could register "buyhammers.com",
"hammer-and-nail.com", and "mikestools.com"
and have "buyhammers.com" and "hammer-and-nail.com"
point to "mikestools.com".
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Choosing
A Good Domain Name
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Hyphens:
Your Friend and Enemy
Domain
name availability has become more and more scant over the years.
Many single word domain names have been scooped up which it makes
it more and more difficult to find a domain name that you like
and is available. When selecting a domain name, you have the option
of including hyphens as part of the name. Hyphens help because
it allows you to clearly separate multiple words in a domain name,
making it less likely that a person will accidentally misspell
the name. For example, people are more likely to misspell "imrankhalid.com"
than they are "imran-khalid-php.com". Having words
crunched together makes it hard on the eyes, increasing the likelihood
of a misspelling. On the other hand, hyphens make your domain
name longer. The longer the domain name, the easier it is for
people to forget it altogether. Also, if someone recommends a
site to someone else, they may forget to mention that each word
in the domain name is separated by a hyphen. If do you choose
to leverage hyphens, limit the number of words between the hyphens
to three. Another advantage to using hyphens is that search engines
are able to pick up each unique word in the domain name as key
words, thus helping to make your site more visible in search engine
results.
Dot
What?
There
are many top level domain names available today including .com,
.net, .org, and .biz. In most cases, the more unusual the top
level domain, the more available domain names are available. However,
the .com top level domain is far and away the most commonly used
domain on the internet, driven by the fact that it was the first
domain extension put to use commercially and has received incredible
media attention. If you cannot lay your hands on a .com domain
name, look for a .net domain name, which is the second most commercially
popular domain name extension.
Long
Arm of the Law
Be
very careful not to register domain names that include trademarked
names. Although internet domain name law disputes are tricky and
have few cases in existence, the risk of a legal battle is not
a risk worth taking. Even if you believe your domain name is untouchable
by a business that has trademarked a name, do not take the chance:
the cost of litigation is extremely high and unless you have deep
pockets you will not likely have the resources to defend yourself
in a court of law. Even stay away from domain names in which part
of the name is trademarked: the risks are the same.
Search
Engines and Directories
All
search engines and directories are different. Each has a unique
process for being part of the results or directory listing and
each has a different way of sorting and listing domain names.
Search engines and directories are the most important on-line
marketing channel, so consider how your domain name choice affects
site placement before you register the domain. Most directories
simply list links to home pages in alphabetical order. If possible,
choose a domain name with a letter of the alphabet near the beginning
("a" or "b"). For example, "aardvark-pest-control.com"
will come way above "joes-pest-control.com". However,
check the directories before you choose a domain name. You may
find that the directories you would like be in are already cluttered
with domain names beginning with the letter "a". Search
engines scan websites and sort results based on key words. Key
words are words that a person visiting a search engine actually
search on. Having key words as part of your domain name can help
you get better results.
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The
Domain Name Lifecycle
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Domain
names pass through a defined lifecycle. Many potential domain
names have never been registered, so are available should you
wish to register them.
When
you register a domain you can choose how long you wish to register
it for in multiples of years. The stages a domain passes through
are shown in the diagram above.
Stage1
- Registered
This is the state a domain is in when you have registered it in
your name. As the expiration date approaches you can reregister
it or if you choose not to, then it will move through stages before
it is available for others to register
Stage2
- Just On Hold
The domain has expired (passed it's expiration date). Your web
site tied to this domain will continue to work for a short period
of time, but the registrar can send the hold or delete command
at any time.
Stage3
- On Hold
The nameservers of your web hosting company associated with the
domain are no longer tied to the domain. This means the website
will now not be found and any email accounts associated with the
domain will stop working.
Stage4
- Expire Soon
The registrar will send the delete command to the registry and
the registry will delete the domain
Stage5
- Available
The domain is now available again to be registered by anybody
who wants to.
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Domain
Names And Trademark Law
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When
you plan to launch your web site, picking a domain name can seem like
the most simple and fun step in the entire process. Unfortunately,
the name you pick may already be in use, may conflict with another
legitimate business name, or maybe the name is taken by someone else
and is conflicting with your claim to the name! Before you register
a domain name, make sure you understand the potential risks associated
with trademark infringement. As always, this article does not attempt
in any way to provide legal advice. Consult your attorney before making
any business decisions regarding your domain name.
Customer
Confusion
Unfortunately,
legal conflicts over domain names are few and far between compared
to other types of lawsuits. The legal fees associated with domain
name conflicts can be extremely high, so before you decide to duke
it out with someone over a domain name, make sure your pockets are
deep. Unless there is a clear winner (i.e. Coca-Cola probably has
a right to Coca-Cola.com), the primary concern over who should have
rights over a domain name is whether customer confusion will be
created in the market place. Let's look at an example.
Let's
say Joe Smith owns a chain of hardware stores called JoesTools.
One day, Joe decides to start selling his tools on-line, so he attempts
to register JoesTools.com. To his dismay, he discovers that someone
else has already registered JoesTools.com and intends to use the
site to sell hardware tools just like Joe. If you a customer and
are looking to purchase tools, you could be confused who you would
be buying tools from. In this example, only one of the parties will
likely end up owning JoesTools.com because their purposes are so
similar. However, if the web site JoesTools.com was to be used to
sell computer software utilities (i.e. different products, different
market), Joe Smith may not be able to get his JoesTools.com because
the owner does not intend to compete in the hardware business. The
example above could swing either way: there is no formulaic method
for determining ownership.
Domain
Names and Trademarks
If
you have a legitimate non-internet business, you may decide to trademark
the name of your business. For example, Joe Smith may decide to
attempt to trademark JoesTools so that other competitors cannot
decide to use the name in the future. Joe may decide, after he discovers
that JoesTools.com has already been registered, to sue the existing
owner claiming that the use of the domain name infringes on his
existing trademark for JoesTools.
However, just because you register your brand name with the United
States Patent and Trademark Office (PTO), it does not mean that
you automatically have the right to use the equivalent domain name.
So even though Joe Smith has registered JoesTools with the PTO as
his trademark, he does not necessarily have the right to use JoesTools.com.
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Domain
Names And Trademark Law
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Tips
Although
each situation is very unique, there are some tips to remember when
registering your domain name or before deciding to enter into a
legal conflict over a domain name. Please consult an attorney who
specializes in intellectual property before taking any action.
"
A name that clearly identifies a product or service in a particular
market usually qualifies as a trademark. For example, Coca-Cola.com
clearly identifies a specific product (Coke) in a specific market
(consumer beverages). If a dispute ever arose over the ownership
of Coca-Cola.com, there would be no case, Coca-Cola would have it
hands down.
"
Usually if your business name is very distinctive, you can also
lay claim to the associated domain name (if you have trademarked
the name of you business). For example, if Joe decided to name his
business Joe Smith Tools of Alabama, he would probably have no problem
staking claim to JoeSmithToolsofAlambama.com.
"
Usually, the first person who uses a name will get to keep ownership
of it in case of a conflict. So if Joe has been using JoesTools
for 20 years, he has a good chance of retaining ownership to the
trademark if someone else comes along claiming they would like to
start using it.
"
And as it was mentioned earlier, if the conflict over a name could
create customer confusion in the marketplace, some sort of infringement
probably exists and only person will be able to use that name.
Case
Examples
Here
are two example domain name disputes and their outcomes.
Dirty
Word
A fashion
retailer, French Connection, launched a huge marketing campaign
titled French Connection United Kingdom and in their creative ad
materials, shortened the campaign to FCUK. They also registered
FCUK as a trademark but did not register FCUK.com. Two months later,
an internet consultant did register the domain name. French Connection
brought suit against the consultant claiming that the consultant
was infringing on their trademark. They also cited example cases
where companies were being granted use of domain names registered
by others. However, the consultant argued that:
"
'FCUK' was a well known alternative to the swear word on the internet,
" It was a way of getting round censorship filters on certain
internet providers.
" It was well known the term meant a web site had pornography.
The
judge ruled in the consultant's favor claiming that French Connection
had not proven that any confusion would exist in their marketplace
as a result of not using the name, and had also not proven that
there were any remote similarities between French Connection's business
and the intended business of the internet consultant.
"Iran"
out of Ideas
Another
interesting case was between a company called the Britannia Building
Society and someone who had registered BritanniaBuildingSociety.com.
Britannia had the trademark for the name but not the domain name.
They sued and asked the judge for a summary ruling so that a long
drawn out legal battle could be avoided. Britannia's main argument
was that the individual who had registered the domain name was not
using it and clearly was "squatting" on the domain to
use it fraudulently to make money. The individual who had the domain
name argued that he intended to build a business supply British
building workers to employers in Iran. The judge was not impressed
with the defense and Britannia won the case.
Conclusion
Disputes
over trademarks and domain names are extremely tricky. Be prepared
to shell out big bucks if you wish to fight over a domain name.
Never take any chances without consulting an attorney who specializes
in intellectual property cases.
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Profiting
From Pre-owned Domain Names
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Each
day, domain names that were once registered by someone expire and
are deleted from the applicable domain registry database. Once a domain
expires, it is available to anyone else to pick up and own. You never
know when an incredible domain name may become available for registration.
If you understand how the expiration process works, you could profit
from scooping up these expired domain names and selling them at a
premium. This article attempts to explain the expiration process and
how you could profit from registering and then selling domain names
using brokers, escrow services, transfer agents, and on-line auctions.
How
The Process Works
When
you register a domain name, it will only be active for the term
of the registration. For example, if you register a domain on 1/1/2003
for two years, the domain will expire on 3/1/2003. Unless you renew
your registration, the domain will deactivate on the expiration
date. Deactivate simply means that the domain is no longer available
for email, web access, etc. The domain will not be deleted from
the domain registry (yet). After the expiration date, a grace period
goes into effect. The grace period lasts for approximately 40 days
during which time you may renew the domain registration and incur
no additional fees. After the grace period, the domain enters a
redemption period for 30 days during which time you can renew the
domain, but it will have to be manually added back to the domain
registry and you will incur additional fees (typically for at least
$150). Five days after the redemption period, the domain will be
deleted from the registry and will be available to the public once
again. So when you register a domain name, you have approximately
70 days past the expiration date to renew your registration (and
possible incur additional fees).
Expiration
Reporting
If
you are interested in picking up expired domain names, you can leverage
numerous online reporting sites that will either let you perform
searches on expired domains or they will send you a report each
day (and even multiple times each day) listing the domain names
that have been deleted from the domain registry. Some of these services
will charge you a fee, usually on a monthly basis. Some expired
domain services provide information regarding the current search
engine placement of the domain in various search engines and directories
including Yahoo. This way, you can grab a domain that is already
has exposure in search engines. Some services also allow you to
automatically register a domain (backorder) when it expires. By
using an expiration service, you can grab a domain as soon as it
becomes available.
Brokers
If
you are interested in selling a domain name, you have the option
of using a broker service who can help sell your domain name and
broker the transaction information. A broker will not necessarily
make sure that the domain name is actually transferred from the
seller to the buyer, they will simply act as a sales agent for the
seller. Usually, a domain broker services will either charge a listing
fee for placing the seller's domain name in their database or a
commission based on the agreed upon the selling price. Commissions
will differ by broker but typically range between %5-%10. Brokers
that are paid based on commission will attempt to actively market
the domain being sold by giving it exposure in different areas of
their site. Some broker services will require an appraisal of a
domain name to ensure that the seller's asking price is reasonable.
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Profiting
From Pre-owned Domain Names
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Escrow
and Transfer Services
Brokers
are great marketing and sales channels for selling your domain name,
but they do not necessarily support the actual transaction of exchanging
the domain and payment. Unlike a physical good, a domain name is
an electronic record that must change to reflect the new ownership
information. Also, the buyer and seller may be in two different
countries and use different currencies. A number of escrow and transfer
agents are available to ensure the transaction goes smoothly for
both buyer and seller. Typically, the escrow provider will accept
payment from the buyer, and hold the money until the domain transfer
actually takes place. Once there is confirmation from the buyer
that the domain has been transferred, the escrow service will release
payment to the seller. Escrow services may also facilitate the actual
domain transfer itself, thus taking that step out of the buyer and
sellers hands.
Auctions
Many
sites offer an auction process for selling domain names. A seller
will list his domain and specify a minimum asking price. The seller
can also specify the duration of the auction, similar to auctions
on ebay.com. Some auction sites offer escrow and domain transfer
services while others do nothing more than manage the listings.
To list your domain name in an auction, you will be required to
either pay a flat listing fee, or a commission based on the final
selling price.
Trademark
Disputes
Whenever
you choose a domain name, you should always consider the implications
of facing a potential trademark dispute. Just because you own a
domain name does not mean that you have the right to use that domain
name. Before you buy a domain name with the intent to sell, be careful
not to buy a domain name that has a risk of infringing on a registered
trademark. Technically, if you purchase a domain name that infringes
on a trademark and then turn around and sell it before the trademark
owner files a lawsuit, you may not get in the middle of the dispute.
However, if you hold a domain name that infringes on a trademark
and ownership is transferred to the trademark owner or if a restraining
order is made so that the domain cannot be used by anyone else,
the domain name you hold becomes worthless.
Summary
A rich
market exists for buying and selling domain names. One of the best
ways to scoop up some great deals on domain names is by keeping
tabs on which ones have become available by being deleted from registry
databases. Domain names can be registered for as little as $10 for
an entire year. If you find a domain name that has market potential,
you could turn a significant profit by selling that domain on any
number of broker or auction sites available on the internet. Good
luck with fortune hunting for domain names!
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Choosing
Domain Names For Search Engines
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Search
engines are powerful avenues for capturing traffic to your website.
For many web-based businesses, search engines represent the most
important channel for generating new visitors to their sites. Attaining
a solid position in search engines is a very complex task that requires
both up front planning and on-going analysis and change. Choosing
your domain name can have an impact on your placement in search
engines, so choose your domain name with search engine optimization
in mind. This article provides some high-level tips for picking
a domain name that will give you an edge in search engine placement.
This article focuses on alignment of your domain name with good
search engine results and not choosing a domain name from a marketing
and branding perspective. It is important to balance the needs of
both before you commit to a domain name.
Key
Phrases are Key
Search
engine results are driven by what visitors to a search engine type
in as their search phrase. Before you complete the design of your
website and choose the domain name, analyze which key words and
phrases you want to focus on. The more targeted your key phrases,
the more targeted your traffic will be. A good resource to consider
which key phrases may work for your site is Overture's search term
suggestion tool. Overture tracks search terms and related search
terms. The search term suggestion tool can be found at the following
link: http://inventory.overture.com/d/searchinventory/suggestion/
For
example, if you type in the word "travel", you will receive
the number of times people searched on the word "travel"
in the prior month and a list of 50 related search terms sorted
by the number of times the word was searched on. For example, a
search on "travel" will also return phrases such as "travel
to Mexico", "international travel", and "AAA
travel". Once you choose which key phrases best represent what
your site has to offer and what target audience are hoping to receive
traffic from, you can design your site and choose a domain name
that will best help position your site in search engines in the
future. Using the travel example, if your website provides travel
services to Mexico, you may choose "travel to Mexico"
as your primary key phrase.
Search
Engines vs. Directories
An
important point to remember is that search engines and directories
are two separate animals. Search engines use automated programs
called "bots" to scan or "spider" your site
for search terms and then establish a position for specific search
phrases. Different search engines use different searching algorithms
based on word density, location, and other page-related factors.
If you create a website, the major search engines will eventually
crawl your site and position it in their search results. An example
of a search engine is Google. Directories, on the other hand, are
organized lists of links to web sites. If you create a website,
you will not automatically be listed in a directory. In order to
be listed, you must submit your site to an editor, who then determines
whether your site belongs in the directory all together and if so,
which categories your website will be belong to. Your domain name
has different influences on search engines and directory placement.
Directories
Getting
your site into directories such as Yahoo or the Open Directory Project
(ODP) requires a submission to an editor who will decide if your
site is worth retaining in the directory. Many factors contribute
to the success of getting into a directory. The content richness
of your site is probably the most important criteria when a directory
editor reviews your site while the domain name itself has relatively
little impact on the editor's analysis. However, one key domain
name consideration is the alignment of your domain name to your
site's title and the rest of the content in the site. An editor
will likely reject your site if your domain name is misleading to
the casual surfer. For example, let's assume you intent to launch
a website which offer travel services to Mexico. If the title of
your site is "Travel to Mexico in Style" and your domain
name is "johnsmith.com" a directory editor may not choose
to list your site. Or if they do, they list your site as "johnsmith.com"
which will not help identify what your site offers.
Directories
usually list sites in alphabetical order. So choosing a domain name
that starts with the letter "A" will give you better placement.
Also, placing a character such as and exclamation point "!"
at the beginning will be listed before the "A"'s. However,
if you use an exclamation point in the beginning of your name, it
will look fairly strange to surfers. Using a letter at the beginning
of the alphabet as the first letter in the name is the best approach
to getting a solid position in directories.
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Choosing
Domain Names For Search Engines
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Search
Engines
Unlike
directories, search engines use automated programs to analyze your
web site to determine its placement in search results. Every search
engine uses a different method for site analysis, and in general,
the domain name itself has a relatively small impact to search engine
placement, but one of the most important domain name considerations
is the placement of keywords in the domain name itself and the similarity
of the domain name and page title. For example, if your site sells
travel services to Mexico, you may want to choose a domain name
such as "Travel-To-Mexico.com". Note that there are hyphens
between each keyword. Hyphens are powerful additions to your domain
name in that they are both easy to recognize, remember, and search
engines are able to distinguish the key words within the domain
name. If instead you chose the domain name "Traveltomexico.com",
the search engines would not be able to pick out the words "travel",
"to", and "mexico". It would simply see the
domain as a single jumble of words. However, keep in mind that using
many keywords separated by hyphens may make the name of your site
difficult for people to recall.
With
the advent of long domain names, you could choose a domain name
such as "www.Cheap-Discount-International-Travel-To-Mexico.com".
Plenty of keywords in this domain but see if your customers will
ever remember it and be able to pass on your site as a recommendation
to someone else (remember- word of mouth is a critical traffic channel
for you website).
Most
search engines also use link popularity as a factor in determining
a site's ranking in search results. Link popularity is usually determined
by both the quantity and quality of links from other people's sites
to your sites. Achieving a quantity of links is a matter of getting
more and more people to place links on their website pointing to
your website. Quality is partly determined by the text in the link
itself (called anchor text). Usually, the anchor text will be the
same as your domain name which should contain your ever important
key phrases. So the more links you receive to your site containing
"Travel-To-Mexico" in the anchor text, the higher your
ranking could be for words like "travel" and "Mexico"
on some search engines.
Avoid
Freebies
Be
careful not to register a site with a free hosting service. For
example, instead of choosing "www.Travel-To-Mexico.com",
you end up with "www.freewebhosting.com/travel-to-mexico".
Some search engines will not even spider websites that are hosted
by free hosting services and your site would not show up at all.
Additionally, when a search engine determines the placement of a
website in its search results, it almost always places emphasis
on the home page of the domain. Therefore, if you are hosting through
someone else's domain name, the importance of your site to search
engines will be watered down since it's the home page of your free
hosting company that will receive more attention.
Summary
Achieving
good results in search engines and directories is extremely challenging.
Every search engine has a different method for determining rankings
in search results and their methods change on a regular basis! Before
you even design and launch your site, give yourself an edge by choosing
a domain name that will work well in search engines and directories.
This article has attempted to provide you some domain name tips
to help you with search engine optimization. But remember to balance
the needs of being well placed in search engines and directories
with the importance of having a site that is memorable and aligns
with your marketing, branding, and advertising plans.
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Valuing
Domain Names - How Much Is A Domain Name Worth?
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In
August of 1998, the domain AltaVista.com was sold to Compaq for
a cool $3.5 million dollars. Other domain names have sold for
millions as well: Business.com ($7.5M), Autos.com ($2.2M), AsSeenOnTV.com
($5M). Maybe you have registered some domain names in the past
and wonder if you're sitting on a goldmine? Keep dreaming! During
the dot-com craze, domain names were a hot commodity. Although
a strong market exists for purchasing and selling domain names,
the days of the multi-million dollar transactions are over. Hundreds
of sites offer appraisal services for domain names. If you are
interested in either investing in a domain name with the hopes
of turning a profit or if you are considering selling a domain
name that you own, take the time to determine the value of your
domain and whether an appraisal makes sense.
Second
Opinions
The
appraisal process for domain names is very subjective and is different
depending on who conducts the appraisal. As an experiment, a writer
once submitted a domain name for an appraisal to over five appraisal
services and received values ranging from $200 to $160,000. If
you are interested in paying someone to determine the value of
your domain, you may want to consider getting a second opinion.
Because there are no standards for valuating domain names, anyone
can offer to valuate your domain name using whatever methods they
choose. And because there are no types of domain name valuation
certifications, you can never be sure whether the person you choose
to valuate your domain name has any experience.
Market
Rules
One
of the reasons people paid huge sums of money to purchase domain
names like "drugs.com" (which eventually went under
along with many other internet businesses) was because the market
was completely immature. People assumed that if they owned a memorable
address, they would automatically be inundated with visitors and
retain a majority of the online marketplace. Their assumptions
were wrong, and as a result, paid a premium for their domain names.
Ultimately, it is the marketability of the domain determines its
value, not whether the name is simply catchy (although being catchy
does help). So the real question to ask is: what can be done commercially
with the domain? You may have your hands on "eggs.com"
with aspirations to sell eggs and egg-related products over the
internet. However, there may not be any market for purchasing
eggs over the internet (i.e. buyers and sellers who could benefit
from exchanging goods electronically). "eggs.com" may
be extremely simple and catchy, but if there is no market, it
really has little value.
Although
it may be difficult to assess, calculating the actual estimated
revenues that could be generated by a site can help assess the
value of the site. This could require some complex research of
the market (competitors, buyers, trends, etc.) but could yield
the best determinants of the domain's value.
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Valuing
Domain Names - How Much Is A Domain Name Worth?
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Length
Does Matter
The
fact of the matter is that length is a determinate in domain valuation.
Generally, the shorter the domain name, the higher the value.
The idea is that people are more likely to recall domain names
that are shorter in length. The ultimate goal of any business
(whether on-line or not) is to create a strong brand that people
will remember even after they leave your site. Simply put, short
names are easier to remember than long ones.
Dot
Com Rules
Because
of the popularity of the ".com" top level domain, domains
ending in ".com" typically command higher values. As
new top level domains gain in popularity, the top level domain
will play a lesser role in determining the domain's value and
the second-level domain name ("drugs" in "drugs.com")
will be the primary driver in determining the value.
Meet
the Competition
There
are two competition-related elements when considering the value
of a domain name. First, is there another registered domain name
that is exactly the same, except the top level domain name is
different (i.e. "eggs.com" and "eggs.net").
Does the competing name offer similar services and is their name
also a registered trademark? If so, the domain that is being valued
may face the risk of a trademark infringement lawsuit is the domain
is registered and a site is created. Naturally, this lowers the
potential value of a domain. On the other hand, if there are a
number of competitors that offer similar services but have sufficiently
different names, an existing on-line market could already be established.
Naturally, if the market is saturated with other competing sites,
the market may have an overabundance of suppliers. Remember that
the richness of the market for using the domain drives the value
of the domain name itself. So having competitors (but not too
many) can increase the value of the domain.
Summary
Assigning
a value to a domain name is a complex and fairly subjective process.
Standard practices do not exist and hundreds of companies offer
appraisal services so buyer beware! If you are serious about appraising
the value of your domain name, consider getting a second opinion.
If possible, do as much of your own research to determine the
value of your domain. Visit domain auction websites to review
the value of other domain names and take your time before you
buy or sell your domain!
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Domain
Names Glossary
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Administrative
Contact
When registering a domain name, the administrative
contact must be provided to the registrar when completing the
registration form. The administrative contact is individual who
is responsible for acting as the primary contact with the registrar.
The administrative contact does not necessarily need to be able
to manage the technical aspects of the domain.
Billing
Contact
When registering a domain name, the billing contact
must be provided to the registrar when completing the registration
form. The name of the individual who is responsible for receiving
the bills from the registrar. The billing contact is the person
who is responsible for paying the registrar any fees.
ccTLD
country code Top Level Domain. Each country has
a unique ccTLD which is appended at the end of the domain name
(e.g. "www.yahoo.co.uk"). For a list of ccTLDs, visit
IANA's web site at the following address: http://www.iana.org/cctld/cctld-whois.htm.
DNS
(Domain Name System)
A system which maintains a relationship between
Internet Protocol (IP) addresses and domain names. Computers use
the DNS system to electronically transmit data with other computers
through the internet. DNS is actually comprised of a set of database
servers which maintain the relationship between IP addresses and
domain names and facilitate the lookup between the two.
Domain
Name
Every computer connected to the internet has a
unique numeric internet protocol (IP) address. In order for two
computers to transmit information through the internet, they must
use each other's IP address. Because it is difficult for people
to recall long strings of numbers, the concept of a domain name
was created to introduce a layer of abstraction between us and
the numerical IP address. For example, instead of having to remember
"203.202.201.200", we can use the domain name "imrankhalid.5u.com".
FTP
File Transfer Protocol. A communications method
for transferring data between computers on the internet. FTP "servers"
store files that can be accessed from other computers (FTP "clients").
FTP also provides security services so only authorized access
is allowed.
gTLD
generic Top Level Domain. A Top Level Domain represents
the last part of a domain name. For example, the domain name "imrankhalid.5u.com",
the TLD is ".com". The gTLD represents a category or
organization. Some gTLDs are restricted while others are available
to the public.The following gTLDs are currently used:
.aero
- Restricted to members in aviation communities (aerospace agencies,
pilots, etc.)
.biz - Restricted to businesses
.com - Unrestricted
.coop - Restricted to cooperatives
.museum - restricted to museums, museum organizations and individual
members of the museum profession
.name - Restricted to individuals
.net - Unrestricted
.org - Unrestricted
.pro - Restricted to members of the medical, legal and accounting
professions licensed in the U.S.
HTML
Hypertext Markup Language . Web sites on the internet
are stored or presented as documents which web browsers can interpret.
These document files are designed using a specific tagging language
in which the documents are "marked up" so that both
text and graphics can be included in the web page. For example
a word in a web page may be contained within tags to make the
text appear in bold through a browser.
HTTP
HyperText Transfer Protocol. The method by which
internet documents such as HTML files can be exchanged between
computers. Web browsers use the HTTP protocol to interpret web
pages. One computer acts as a client (for example, your web browser)
and another computer acts as a server (for example, the web server
you are surfing).
Hypertext
A term used to describe text that contains links
to other text to make the overall document more readable. Web
pages contain hypertext in that they include links either to other
web pages or to other sections of the same web page.
IANA
Internet Assigned Numbers Authority. An organization
located at the Information Sciences Institute at the University
of Southern California in Marina del Rey, CA who oversees core
internet infrastructure management parameters including port assignments.
ICANN
Internet Corporation for Assigned Names and Numbers.
A non-profit organization who is responsible for managing the
internets domain name system including Internet Protocol (IP)
address space allocation.
InterNIC
The InterNIC was originally started as a joint
effort between Network Solutions, Inc. and AT&T. to perform
many of the functions of ICANN. The InterNIC is now non-functional
and only hosts an informational site regarding domain name registration.
IP
Address
IP stands for Internet Protocol. All computers
across the internet are assigned a unique identifier called an
IP address. IP addresses are used like street addresses so other
computers can locate them. IP addresses are numerical numbers
between 0 and 255, separated by periods. For example, an IP Address
may look something like: 203.202.201.200.
ISP
(Internet Service Provider)
Internet Service Provider. A business that provides
an individual or business telecommunications access to the internet.
Depending upon the telecommunication capabilities of the ISP,
access may be provided by a dial-up telephone line or a high-speed
DSL circuit.
Nameserver
A nameserver or sometimes called a domain name
server is a computer with software that maintains a cross-reference
between domain names and IP addresses. For example, the IP address
45.123.1.234 may resolve to "espn.com". Nameservers
are used so people do not have to remember the numerical IP addresses
of web sites.
NIC
fee
The NIC fee is the fee you pay for registering
a domain name. The fee is specified by the domain registrar and
varies by registrar. The NIC fee will vary based on the number
of years you wish to register the domain name. Typically, the
NIC fee declines as you increase the term of the domain registration.
Once the registration period expires (for example, one year),
you may re-register the domain name and paying another NIC fee.
NIC
handle
A NIC handle is an alias of nickname for domain
name. A NIC handle is established when registering a domain name
through a registrar. A NIC handle is assigned by the registrar.
The NIC handle provides a unique identifier for a given domain
name. The NIC handle can be used to search for information about
a domain name.
Parking
A term used to describe for temporarily placing
a record in a nameserver for later use. Many registrars and hosting
companies will "park" your domain for free until you
launch your website. Some registrars charge a parking fee. Usually,
the registrar or hosting company hopes that once you complete
your website, you will end up hosting your site with them. This
is usually why they park your domain for free.
Registrant
The person or business that registers a domain
name. When registering a domain name, the name of the registrant
is the entity who is ultimately accountable for the fees and any
terms and conditions that the registrar specifies.
Registrar
A registrar is a business that has the ability
to register domain names on the behalf of anyone interested in
obtaining a domain name. Registrars must accredited by Internet
Corporation for Assigned Names and Numbers(ICANN) and may only
be allowed to register certain top level domain names. The registrar
must maintain domain name record information about each domain
name and manage registration, expiration, re-registration, and
NIC fee collection processes.
Registry
A domain registry is a database that contains information
about every registered domain name. When you register a domain
name, all of the information about that domain is stored in a
registry database (registrant name, NIC handle, domain name, etc.)
Different registries exist for different top level domains. For
example, the .com top level domain registry is managed by Verisign
Global Registry Services.
Root
The domain name system is designed as a hierarchy.
The root is the highest level of the domain name system hierarchy
and is represented by the "." in domain names. The root
is higher in the domain name system than the top level domain.
For example, for the domain "espn.com", "espn"
is the second-level domain, "com" is the top level domain,
and the "." is the root.
Second-Level
Domain
The domain name system is designed as a hierarchy.
The root is the highest level of the hierarchy, followed by the
top level domain, then followed by the second-level domain. For
example, for the domain "espn.com", "espn"
is the second-level domain, "com" is the top level domain,
and the "." is the root.
Technical
Contact
When you register a domain name, you must specify
a technical contact in the domain name record. The technical contact
does not have to be different than the registrant, but should
be the person who is able to address any technical issues regarding
the domain name being registered.
TLD
Top Level Domain. A Top Level Domain represents
the last part of a domain name. For example, the domain name "imrankhalid.5u.com",
the TLD is ".com". The domain name system is designed
as a hierarchy. The root is the highest level of the hierarchy,
followed by the top level domain, then followed by the second-level
domain. For example, for the domain "espn.com", "espn"
is the second-level domain, "com" is the top level domain,
and the "." is the root.
URL
Uniform Resource Locator. An identifier for locating
objects on the internet. Usually, in a web browser, a URL will
begin with the type of protocol used to access the object. For
example, a the URL "http://www.espn.com" begins with
"http:" which specified that the HTTP protocol will
be used to access the object. The next part of the URL includes
a domain name "espn.com". A nameserver then routes your
URL request to the IP address for espn.com, which is likely to
have web server running (to serve HTTP client requests) and send
back web page information. Instead of http, the URL may contain
ftp, which signifies the file transfer protocol will be used to
access the internet object.
Web
Page
A web page, is a document that contains text and
graphical information that can be accessed through the internet
through a web browser. Usually, web pages are stored as HTML documents
on a web server. Alternatively, web pages may be generated dynamically
as they are accessed through the use of scripting language such
as Active Server Pages (ASP).
Web Server
A web server is a computer that provides HTTP services to HTTP
clients. A web server stores web pages that are accessible to
other computers that may access the web pages using a web browser.
A web server offers security services to prevent unauthorized
access to some or all of the web pages on the server.
Web
Site
A web site is a collection of web pages that reside
on a web server for the purposes of servicing http or ftp requests.
For example, "espn.com" is a website that likely contains
hundreds of web pages that provide different information about
sports.
WhoIs
WhoIs is both a database a protocol. A WhoIs database
is maintained by a domain registry which contains all pertinent
information about domain names (registrant, technical contacts,
etc.). WhoIs is also a tool and protocol used for accessing these
various domain registry databases. All domain registrars offer
a WhoIs tool that allows you to search various registry databases
to find out information about domain name and which ones are currently
available.
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