For at Least Some Domains, There's Money in the Names

July 15, 1999

For at Least Some Domains, There's Money in the Names

By JENNIFER 8. LEE

an the unwieldy Internet domain name JewelersMallofAmerica.com really be worth the $2 million that its owner is asking for it on an Internet auction site? If so, the more straightforward ad.com would seem a bargain, with an asking price of only $500,000. And hispanics.com, which was bid up to only $5,100, is a gem.

The rush to register Internet addresses a few years ago produced a horde of speculators eager to cash in on the appreciated -- or busted -- values of their virtual real estate. Thousands of Internet addresses are being offered for sale daily at auction sites like Ebay, Amazon.com and Yahoo. The most popular themes for sale involve the 2000 election, assorted body parts and the stock market.

If auctions are the fairest way to assess market value, then most of the domains appear worthless -- attracting bids that fall short of the $70 initial registration fee required by Network Solutions, the Internet domain registration body that once had exclusive control over .com, .net and .org domains.

JewelersMallofAmerica.com and ad.com did not receive any bids in their first four days of being listed on Ebay. In fact, a search of current and completed auctions revealed that more than 90 percent of domain names offered for sale on the sites receive no bids. Many names have awkward 'e' and 'i' prefixes like eBillionaires.com and iWimbledon .com, or are strung together by unappealing hyphens like cowboys-r-us .com.

Popular domain names for sale involve the 2000 vote, body parts and the stock market.

To attract bidders, some sellers suggest uses for their addresses. The owner of hillary2OOO.org, a name that uses capital 'o's in place of zeros, proposes a parody site of the First Lady's senatorial campaign.

Some domain name sellers never intended to start Web businesses. Others had business plans that never got off the ground. In some cases, the Internet addresses became obsolete when the company's name changed. Todd Bernhard, the president of Internet Headquarters, registered memo.com in 1993 after he left Sun Microsystems to start a company called Memorandom. When the company changed its name to Internet Headquarters and its Internet address to hq.net, Bernhard found himself with a valuable piece of Internet real estate.

"Ebay seemed like a good way to market our domain to a high-tech audience," Bernhard said. The domain name was recently bid up to $50,000 on Ebay. But he sold it later for an undisclosed amount. A popular way for owners to test the value of domain names is to put them on sale with high reserve prices that are not disclosed. If the test run is encouraging, owners will frequently offer the item for auction again.

Rick Schwartz, a self-proclaimed virtual real estate developer who owns more than 3,000 names, browses auction sites daily, looking for good deals. In one day he bid on pennsylvania.com, dailystockpick.com, digitalnews.com and faithful.com.

Before domain name auctions took off a few months ago, Schwartz searched registration databases and made offers to owners through e-mail. Now, he says, the auctions have brought sellers out in the open.

Among Schwartz's most valuable properties are porno.com and men.com, for which he paid $42,000 and $15,000, respectively, in 1997. He estimates that they are worth far more now and does not plan to sell any of his names soon. Schwartz said he had several million in annual revenue from advertising on his sites and other Web-related business.

About 2,000 of his domain names have pornographic overtones. But he has a sentimental side, too. A few weeks ago, Schwartz bought hy.org on Ebay for $400 to set up a commemoration site for his late father, Hy, who died in 1997.

Straightforward names are the most valuable, Schwartz said. "It should be easy to spell, easy to remember and have a direct association with product you are trying to sell," said Schwartz, who decided to forgo marshmallow.com because there is little money to be made with the confection.

He said there was a definite premium for .com addresses, which are more popular. "If you buy a dot-net, it's almost spitting in the wind."

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