When to Pay a Premium for Your Company Domain Name

When to Pay a Premium for Your Company Domain Name
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I'm sure you have all been frustrated at least once at not being able to get the Internet domain name you want for your company. Who owns all of these names, and should you ever buy one for a premium? The simple answer is that if you want to be found and remembered on the Web, the perfect domain name can easily be worth several thousand dollars.

Snagging an unclaimed great one is almost impossible these days because domain "squatters" gobbled up a lot of the catchy real estate several years ago. Kevin Ham was the most powerful dotcom mogul you've never heard of in 2007, reports Business 2.0 Magazine. Here's how the master of Web domains built a $300 million empire of over 300,000 domain names.

Early on, he wrote software to snag expiring names on the cheap. He was one of the first to realize that people can register a name and return it without cost after a free trial. He grabbed hundreds of thousands of names, and returned many. He's also the man behind the domain world's latest scheme: profiting from millions of people who mistakenly type ".cm" instead of ".com" at the end of a domain name.

He also capitalized on the trend to try "direct navigation," and millions do it. Need wedding shoes? Type in "weddingshoes.com" -- a site that Ham happens to own -- and you'll land on what looks like a shoe-shopping portal, filled with links from dozens of retailers. Today there is big money in this aftermarket, where these valuable names are driving prices to new heights.

The difference is that hardly any .cm names are registered, and the letters are just one keyboard slip away from .com, the mother lode of all domains. Ham established a relationship with the Cameroon government and did the work to route the traffic his way. He is now on a campaign to win Colombia (.co), Oman (.om), Niger (.ne), and Ethiopia (.et) as well.

Frank Schilling, who recently moved into the number one spot in this arena, had the guts and foresight to sweep up names shed during the dotcom bust, and is now the landlord of some of the most valuable real estate on the Web, estimated to be in the $500 million range.

But that's all history, and you have to live with it. So as an entrepreneur, here are the steps to get the name you need for your business:

  1. Pick the right name. This is actually the hard part, and is easier said than done. Review my previous article on this challenge -- "Ten Keys to a Killer Name For Your Company."

  • Register the name if available. Domains cost between $7 and $15 per year at GoDaddy.com or Register.com, if nobody already owns it. It's a good idea to also buy between three and 20 names that are close to your primary address or that could be confused with it.
  • Otherwise, find the owner. But with 105 million names already in use, chances are someone else already snagged it. First you have to find the current owner, using Domain Tools, or other lookup functions available on the net.
  • Negotiate for the name. The median price is now $5,000 for an average name, to $16 million paid for Insure.com a couple of years ago. For these prices, you should consider an intermediary like Moniker.com or Escrow.com -- for a $250 to $500 fee -- to help ensure that sellers truly transfer title to the address. If the name is perfect, pay the price.
  • Whether by crafting a great new name or wresting one from a previous owner, every new business needs to master the domain game. With the current explosion of sites, it's usually better to leverage search engines than to build a new mountain on your own through advertising.

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