Are Domain Names Overvalued?

If you have ever tried to purchase a domain name, you have probably been frustrated by the seeming lack of available domain names. The domain name market seems like the perfect storm of limited supply and high demand. There is only one “YourBusinessName.com.” You can’t get a smaller supply than that. You almost have to have the “.com” if you want to be seen as an important online business. In other words, the demand is extremely high. It would seem that good domain names must be worth a fortune! The result of these economics is countless domain name “pirates” holding domain names hostage. Almost any domain name you look for will be registered by someone hoping to strike it rich by selling it to you.

How many times have you heard somebody say “I wish I would have registered more domain names five or ten years ago? I would be rich!” The problem is that tons of people had that same idea and they registered any domain with half a chance of getting used. An interesting side-effect of the apparent domain name shortage might be that the market is flooded with pirates! Many of the pirates have been holding their domain names for years without getting any nibbles. The ones that went a little overboard and registered hundreds of domains are wondering if it was really such a good idea. They will still hold onto the best names, but they are looking for opportunities to cash out on the mediocre ones. It seems that maybe the market is settling down and there may be a more realistic price structure on the horizon. If the birth of a bunch of online auctions is any indication, the bubble may be on the verge of bursting.

So what are you supposed to do right now if you are trying to get a good domain name? Good news: it is not as hard as it may seem to secure a good domain name. If you are frustrated by trying to find a domain name, here are some options that hopefully give you some ideas…

1. Change your company’s name.
If you are a relatively new business or are launching a new product or branch you can base your name on a domain that is available or cheap. This makes more sense than using a name that you can’t secure a domain name for. The names Google, Ebay, and Yahoo sounded pretty silly before they were household words. Don’t be afraid to invent a word that might sound silly at first.

2. Be creative.
If the .com you want is taken you me be able to get creative with the extension. For example if you had a name like “Music Pages” you could try to use Spain’s country code and register musicpag.es. Maybe that isn’t the best example, but you get the idea. For a full list of country extensions click here. A creative extension can add memorability to your domain name if you do it right.

3. Watch the auctions.
There are a number of domain name auction sites, (like Sedo). It is very educational to watch the domain auctions to get an idea of what domains are worth. You might even find a bargain.

4. Use more than one word in your name.
You may not be able to get Anderson.com, but you might be able to get AndersonArts.com. By combinging words you increase your chances of finding a .com domain. If you look at my domains (Found Photography, Adrian3, Holy Gears, etc) you can see that this has worked well for me.

5. Make an offer with a backup plan in place.
Depending on the size of your business you will have to evaluate how much the domain name you want is worth. If you contact the domain owner directly you can get an idea of what it will cost to buy the domain name. Everybody has there price, but I wouldn’t spend more than $5,000 on a domain unless you are really a big time player. Have a backup plan so that you can walk away if the cost is too high.

There are also some things to avoid when you are looking at .com domains. Here are some things that could cause problems if you aren’t careful:

1. Avoid acronyms unless people use it a bunch.
It makes sense to have a domain name of “NASA” if you are NASA, but if your company is C&S Concrete Cutting Company it doesn’t make sense to register csccco.com because nobody will possibly remember it.

2. Don’t confuse your domain name with the competition’s.
If you sell whistles and your competition has whistles.com it doesn’t make sense for you to use whistles.net as your primary web address. If you promote that domain name people will undoubtedly go to whistles.com by mistake and you are sending traffic to your competion. With that said, it is a great idea to register whistles.net and have it redirect to your domain.

3. Avoid dashes.
People don’t remember dashes. If you have a dash in your name then register it with and without dashes and have the dash address redirect to your non-dash domain.

4. Use redirects, not multiple sites.
It is a good idea to only use one domain name for your site because you don’t want the same info mirrored in more than one place. There are exceptions to this rule, but generally you want to have one domain name that is getting promoted. It avoids confusion and keeps your domain name’s equity in one place. Have the other domain names redirect to your primary address.

5. Watch out for unintended phrases.
For example, it would make sense for Experts Exchange to register expertsexchange.com. Well, without the space between the words the domain gets read as ExpertSexChange. There are a bunch of funny examples of companies who didn’t think there domain name all the way through.

I hope that these suggestions are helpful. Good luck in your domain search!

This entry was posted on Saturday, January 5th, 2008 at 4:28 pm and is filed under Technology. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.