Dilanchian Lawyers & Consultants
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Free_lunch

Strategy makes domain name gold

Domain name sales continue to attract occasional remarkable prices. That's great news for a few, but for millions of other domain name holders a reminder is needed that there's no such thing as a free lunch.

As new domain spaces have opened up they've been gold fields for registration services. This is because companies and individuals have rushed to pay and secure valuable names or names perceived to be valuable at some time.

What's missed in the rush is an articulated strategy for name protection and registration. It is this strategy which for most can turn a name into gold.

 

shovel_1840Numbers can be exciting. In March 2008 Fund.com Inc paid US$9,999,950 to buy the domain name fund.com. It was the highest price ever reported for a domain name sale according to DN Journal.

The price topped the previous record in May 2007 of US$9.5 million for porn.com. Before that the record was for diamond.com. It was sold in 2006 for US$7.5 million.

Numbers can also be deceptive. Get rich quick stories about domain names mask a reality in which millions of domain name holders make nothing. There are exceptions. Some years ago Australian company, Dark Blue Sea Ltd, converted its holdings of hundreds of thousands of domain names into a business sold in December 2006 for A$54.5 million to the Australian company, Photon Group Ltd.

The numbers behind the numbers can tell the most remarkable stories. Take Melbourne IT. It has made money in spades from the ambitions or hopes of domain name owners. As domain spaces have proliferated, so too have the profits of Melbourne IT. It provides registrar services in the .com.au domain space, and more recently in additional spaces such as .com, .net and .org.

In the domain name gold rush, as a registrar Melbourne IT has struck gold by selling spades, picks and shovels to domain name gold diggers. Since 1996 it has achieved a great deal of shareholder value marketing the value of holding domain names.

By early 2008 Melbourne IT managed more than 4 million domain names. Many are for operating businesses or organisations. Yet in all likelihood most of its customers are hopefuls, people who have staked their claim on domains in the hope that someone, someday may buy them out.

For Melbourne IT the gold rush spade selling business has been wonderful. In recent years it has used its growing income in its domain names business to add revenue streams in online brand protection, website development and hosting, and search engine marketing services. It has transformed into an IT services company.

The occasional record domain name sale price masks a reality in which millions of domain names are kept in registration by gold diggers. The gold diggers and their hope of striking it rich stand in complete contrast to companies acting according to a business strategy in the domain name game, eg Dark Blue Sea Ltd and Melbourne IT.

Call if you want to discuss improvement of your name strategy. We provide legally-informed and strategic advice for registration and protection of domain names, company names, business names, trade marks and brands.


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