Here's an honest question from a blog subscriber....
Question: I’ve heard about people making money buying and selling domain names. I know this market was hot during the dot com boom. But does it still present a viable “side income” opportunity today?
Answer Marc Charles:
Yes. Buying and selling domain names can be a viable side business.
The domain market was extremely hot from 1999-2002, and my “domain portfolio” performed nicely during this period.
But the domain market is far from over.
Just to clarify…a domain name is the official name of a computer (host) which is connected to the Internet, like www.BlahBlahBlah.com
Domain names are alphabetic Internet addresses which end with a period and three or four letters like .com, .net, .biz, .edu, and .info, etc.
There are more than 80,000,000 “dot com” domains active on the Internet according to DomainTools.com.
In order to function on the Internet, a host needs an alphabetic domain name which has an associated numerical Internet Protocol (IP) address record.
For example, the IP address for BlahBlahBlah.com could be 126.96.36.199
Every business goes through cycles or waves; buying and selling domain names is no different.
But domain names are still a vital part of doing business on the Internet.
Therefore, the market for domain names is extremely active, which means millions of people (and companies) buy and sell domain names on a regular basis.
So, how do you make money with these things?
It’s easier than buying a book on Amazon.com!
Here are eight high-traffic domain marketplaces and auction sites on the Internet:
The objective is to buy a domain name at a relatively low cost and sell it at a higher price.
I say “relatively” lower cost because this doesn’t always mean buying domain names dirt cheap.
In some cases it might require buying a domain name for $500, and selling it for $1000 or more.
However, I purchased a domain name with the precious metal gold in it for $15 in 2001. I recently sold this domain (and a corresponding website) for $5000. This is more than a 30,000% return on my investment!
Granted, this domain name sale included website programming, image files, membership list and a database. But these elements cost me less than $1000 - so my actual return on investment was still pretty good.
Here’s an insider’s secret for buying profitable domain names.
Look to the future!
In other words, things, people and events that are popular today, may not be popular in 2 weeks, 2 months or 2 years.
When I purchased the domain name with the precious metal gold in it I suspected precious metals might be a hot commodity in the future (after a stock market crash), and I was right.
So, when you’re purchasing domain names look for topics, events, people, music and technology which should be popular down the road.
For example, most of the domain names associated with “American Idol” (the popular TV show) have already been purchased and in some cases are overvalued.
But that doesn’t mean you can’t make money on domain names with the phrase “American Idol” or something related to the show.
The idea is to look to the future when purchasing domain names.
This might mean contestant names in Season 8 of American Idol, special reunion concert tickets like the Simon and Garfunkel Tour (SimonGarfunkelReunion09 is available as of this writing), or special events like the 2010 Olympics (2010-Olympic-Tickets.com is still available as of this writing)…your domain names should be profitable.
Think of domain names like real estate.
Four years ago property in South Beach Miami FL was hot and sold at a huge premium. The same property today is selling at a huge discount.
The same is true in the “domain portfolio” business.
Companies like GoDaddy.com have millions of domain names in their portfolio. GoDaddy.com is domain name registrar – meaning they are authorized by ICANN to sell and register domain names.
GoDaddy.com also buys domain names at a low cost and sells them for a profit. GoDaddy.com also aggressively purchases domain names when expire!
You can purchase domain names at relatively low costs at these four registrars:
More Profitable Domain Ideas
You can also grab domain names with “built in” popularity. These domain names were recently offered for sale in the SitePoint Marketplace:
The combinations for domain names are almost endless.
Buying and selling domain names can be a viable side business and the start up costs are minimal.