I personally think that the domain these days isn't as important as the information or application on the site itself as it used to be.
Look at Facebook, MySpace, LinkedIn, Twitter.. none of them have keyword type domains, nor any relation to whatever it is they do.
I think the real money these days is in a well developed website that ranks highly and has great information and resources, the website itself is where the money is these days, not necessarily the domain.
So if you are talking about buying and selling established websites then yes, I agree it is similar to property.
With an established website, you can do the following;
- Generate Cash Flow
- Add Value
With just the domain, its like having a block of land without a house on it, and we all know that no income is made easily that way.
However we all know the importance of position. I view a quality domain as a well located block of land.
If you build a fantastic shop on a cheap block of land on the outskirts, you might end up overcapitalising and your customers may not find you.
If you build a great website on a 2nd-rate domain, again you risk overcapitalising and people may struggle to find you.
Eg. John Smith is a plumber in sydney. He decides to set up a website. He chooses jsppl.com.au because it's not been registered and stands for "John Smith Plumbing Pty Ltd".
He plasters it all over his van, on his business cards, flyer drops etc. How much cut-through would that domain name have? Bugger all. No one would remember it.
Instead, what he should do is buy SydneyPlumbing.com.au on the aftermarket for a few hundred dollars. Put that on his van (or anywhere) and it's instantly memorable and people immediately know exactly what he does and how to find him. Plus, having a 'keyword-rich' domain will mean he shows up much higher in the search results when people search for things like 'sydney plumbing' in Google.
Yes you most definitely can make money out of domains.
I have sold several at a very tidy profit, 10k for one particular domain name that I wasn't even advertising, I just got a cold call one afternoon after they had looked up the WHOIS. Not a great deal of money compared to property, but given the small price to purchase the domain and register a business name to comply with the previously applied .au restrictions, it was a very tidy profit.
I could have held onto it for longer and I'll probably kick myself in later years if I see it sell for a big increase, but that's the case with many assets. How many of us wish we'd hung onto some property or another.
Care to share the domain? Don't regret selling it - if you never never sell, you never never realise your profit. And a couple of hundred into $10K is a pretty good ROI.
Getting in early back in the early/mid 90's helped, when the names were going begging. Damn wish I'd bought beer.com haha. However in the ensuing years most good names have been taken so you need to be creative and predict what may be useful to someone and is not already taken. I can't think of any today and when I do they are surely taken so I don't bother anymore but if you had inside info on a product being developed or a subdivision name (to put a property theme to the reply), you could snap up the .com but may have a court case if you want to hang onto a .com.au brand name eg. the QANTAS case.
Oh and CGT takes some of the shine away given that the expenses you can claim are insignificant but hey a profit is a profit and for no more than a few dollars and dropping it into the drawer marked "Specs".
Cheers,
Beef.
<Returns to the peanut gallery>
It's never too late. I remember in 2002, I was cursing myself for not getting in earlier when I heard about how people had made heaps of money with domains. However I didn't do anything about it for another 4 years! Even starting in 2005/2006, I've still done OK out of it.
- When there were 10,000 domains registered, potential speculators thought it's too late all the good ones like cars.com.au and flowers.com.au are gone
- When there were 100,000 registered, people thought it's definitely too late now - even newcars.com.ay and freshflowers.com.au are gone
- Now there are more than 1,000,000 domains regsitered, people say it's definitely absolutely too late now. Even buynewcars.com.ay and freshflowersonline
.com.au are gone.
The point is, as long as the internet keeps growing, so will the value of a generic domain.
I'm sure at one stage people said land more than 10kms from the city would never be worth anything....
Lastly, related to this forum, I sold negativeequity.com.au last week for $600. Was registered for $28 about 2 years ago.