The Value in Domain Names
There are a lot of times that I am asked, "What do you do?" And while my answer usually is just that I am currently attending college I will oftentimes include some information about websites that I am running and domain names that I have purchased for investment. Most everyone knows what I mean by stating that I develop websites, but not everyone understands what it means to invest in domain names. Not everyone understands how to go about purchasing domain names and then, once a domain is owned, reselling that domain name for profit. Not everyone knows the value in a domain name.
This article will most likely be the first of a series of articles detailing information that is good to know regarding the purchase and sale of domain names. The information in this article and those articles to come will be an invaluable resource for anyone that is interested in investing in domain names. It will also be a great resource for any business or person searching for their own Internet identity. Use the information in the article(s) to decide on the domain name that is best for you.
Starting with the basics, a numeric IP address (192.0.34.166) identifies a computer or computers on the Internet. Domain names are an easier way to represent these numeric IP addresses. Instead of having to memorize a sequence of numbers and periods to get to a certain website, users can simply go to a memorable domain name in order to arrive at that website. For example: Currently the IP address for the Information Technology Club website is 64.202.163.5. This IP address may change and it would be cumbersome to update and remember this sequence of numbers every time it changed. So instead, the computers that host the Information Technology Club website can be found using the domain name "codinghaven.com". This is a much easier method to use than having to remember hundreds, if not thousands, of numeric IP addresses.
Now that the basics are out of the way, it is time to talk about the "value" in owning a domain name. We understand that using a domain name to find a website is much easier than using an IP address. Using the logic that easier is better as far as domain names are concerned, then a shorter, more memorable domain name is going to be better than a long, cumbersome domain name. For example: The domain name "cnn.com" is much easier to type into your browser than "cablenewsnetwork.com".
Besides being a shorter and more memorable method for representing a website, some domains encompass an entire genre or industry. These domain names are referred to as "generic" domain names. These "generic" domain names are those that generate the highest amount of traffic by those users of the Internet that are searching for more information about that particular term. Some examples of "generic" domain names would be cars.com, business.com, and computers.com. These "generic" domain names are those names with the highest value because they represent such a large marketbase.
There are other factors that will bring "value" to a domain name. These factors include: brandability, revenue, traffic, tld extension, and others. The most important factors for domain name valuation are name length and how generic the domain name is. These two factors are followed closely by traffic, but to be honest, short, generic domain names will always have significant traffic.
The reason that a short, generic domain name will have the most value is because when users are searching the Internet for information on a certain subject they will oftentimes "type in" that short, generic phrase or word into their browser, add a .com to the end of it and hit enter. This is called "type-in" traffic. If a user wants to know about business, they would type in business.com. Cars? Time to type in cars.com. You can see where I am going here.
To close out this first article on domain names and domain name valuation think about this question: When users are looking for you on the Internet, what do you think they will type in to find you? What if your name is Rick Dees? Look who owns rick.com. Sell gold jewelry? Kay Jewelers owns gold.com. Seeking to educate the masses? Sylvan Learning Center owns educate.com. These are just a few examples of large businesses owning generic domains for their worth as short, generic, and memorable ways to describe their market or industry.
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