Make Money Buying Domains

Buying the rights to an internet domain name that someone else wants allows you to charge them either for licensing or purchase. Even sites that others don't want right away can be an opportunity for advertisement. This can be a risky business, but the right domain name can create a substantial return on investment.

Steps

Buying Profitable Domain Names

  1. Look for valuable domain names. You want to find the best names to purchase, which can give you a better chance of making money. While every site is different, there are several basic principles you can follow to maximize the value of sites you find and purchase.
    • The best names tend to be generic words for products and services, geographic names, generic business names, names that relate to upcoming events (with references to years and dates), and various combinations of those words.[1]
    • Your domain names should be short. People are more likely to come across a website with a shorter, easier-to-remember name, even if by accident.[2] Just one word may even be the most valuable of all. Common words are very popular for businesses because they are easy to remember and provide opportunities for creative marketing.[3]
    • For the best results, it is a good idea to stick Top-Level Domain (TLD) names, such as .com, .org, and .net. There are other domain names out there, such as .biz, .tv, or .me, but these are far less common for people to search. This can make them cheaper to buy, and but getting value from them requires extra marketing effort on your part.[4]
    • There are several types of domain names to avoid. One is intentional misspellings, as these make it less likely someone will search for them. You also want to avoid names with extra symbols like hyphens, or with added prefixes and suffixes like "e" or "my." Outside of a few notable exceptions with very strong brands (like eBay), those additions can only hurt the value.[5]
  2. Join various domain auction sites. Some of the largest are Sedo.com and GoDaddy.com, though there are many smaller sites. These domain auction sites will give you an idea of what is on sale and available for your market. The kind of sites available may also drive how you want to make money with your domains.
  3. Look for existing domains. Many names have already been purchased, but it's possible their owner is undervaluing them. Don't be afraid to purchase other people's names, or at least ask to see what the price is. If you think they have undervalued what they have, make an offer.
  4. Browse through the list of expiring domains. Many websites allow their domain registrations to lapse, allowing opportunistic purchasers to move in and take the domain. Websites like ExpiredDomains.net have searchable databases of these domains.
    • If you are looking at expiring domains, be sure to check out their history. A site like Archive.org will show you content that used to be at that site. If the site has been associated with copyright infringement, or other illegal or unethical activity, it may be best to stay away.[2]

Making Money Through Your Domains

  1. Set up an online account for payments. Since domain transactions take place over the internet, it may be best to arrange for easy payments the same way. An online payment account like PayPal is a good way to facilitate rapid transactions.
  2. Get appraisals for your domain names. When selling, you will want to know what kind of price you should expect to get for your sites. There are a variety of websites that offer free appraisals for valuation. This includes larger domain auction sites such as Sedo.com, GoDaddy.com, and DomainIndex.com. These of course are only estimates, but they can give you a good idea of what certain domains might be worth.
    • Be aware that estimates can vary widely between these sites, and some sites don't judge high value sites as well.[6]
  3. Park the domain with a domain parking service. Since you may not have content to put on the site, a parking service puts up a dummy page with ads. When people visit and click on the ads, that's money for you. This method works best with popular keyword domains that get lots of traffic. In most cases, you will not have control over what ads appear on your domains.[7]
  4. Build a website for your domain. Adding content to your site beyond just ads can add value. More content drives traffic, which raises the site's profile, improving its placement through search engines.[8]
  5. List the domain for sale. Get a good sense of the domain's value, and put a notice on the site that the domain is for sale. You can also list your domain on one of several online auction sites, such as Sedo, GoDaddy, Flippa, or AfterNic, which will allow domain shoppers to see it.
    • If you are interested in selling, make sure you advertise your domains. Companies may not know to look for what you have. Send messages to businesses that might be interested in purchasing certain domain names that you own.

Navigating Legal Troubles

  1. Avoid "cybersquatting." Domain squatting, or "cybersquatting" involves owning a domain that use the name of a trademarked company, product, or phrase. If you intend to make money off such a domain name, the holder of that copyright may have a legal claim against you.[9]
    • If you are unsure whether or not your domain involves the use of a copyrighted name, check a database. The World Intellectual Property Organization (WIPO) maintains a searchable Trademark Database that covers various international trademarks.[10]
    • Courts have found that "typo" domains, that is domains that deliberately misspell a company's mark, can be confusingly similar, and thus covered by legislation. If your domain name references another company or product, even without an exact spelling, the copyright owner may have a claim against you.[11]
  2. Know your rights under the Anti-cyber squatting Consumer Protection Act (ACPA). This is the main federal law that deals with domain name trademark disputes. These distinctions are still a legal gray area, and being able to make these claims is no guarantee you will win a case. You should consult with a copyright lawyer to help determine the validity of your defense. If you are accused of cybersquatting, you may be able to keep your domain if you can make any of the following defenses in court:
    • If you registered your domain before the other company or individual obtained the trademark. You can't have registered in bad faith if the trademark didn't existed.
    • If the third party in question does not have the trademark rights they claim, or it is not a very strong claim. In most cases, the third party will need their trademark registered with the US Patent and Trademark Office (USPTO). The USPTO website has a trademark search engine that you can consult. This may also require a cybersquatting attorney to help determine if the trademark claim is strong enough.
    • If your domain contains a generic or descriptive word. Claims over generic terms can be very weak. This becomes more difficult for you to determine the closer the term comes to an actual copyrighted proper name.
    • If you have a legitimate business for the domain that is not connected in any way to the third party. To help prove this, you may need a business plan or some other documentation describing how you used the website. This will show that you were not trying to profit off of an already established trademark, but trying to develop one of your own.
  3. Do not alert a company that you own a domain with their trademark. If you registered the website in good faith (that is, tried and failed to find their trademark beforehand), and intend to set up a legitimate business unrelated to the trademark holder, they may not find you.[12]
    • Do not contact them attempting to sell the name. That opens you up to trademark infringement, and they may be able to sue you to get the name without paying.
  4. If you are threatened with a lawsuit, hire a lawyer. While trademark laws surrounding intellectual property on the Internet are not fully fleshed out, there are
    • If you are under threat from a larger business, and think you may be in the right legally, you may be able to gain additional support from a group like the Domain Name Rights Coalition.[13]

Tips

  • As with any investment, the general advice "buy low, sell high" applies to internet domains.
  • Remember, in the end, the domain is only worth what someone is willing to pay for it. If someone isn't willing to pay your price, you will need to lower it.
  • Given the relative age of the internet, most of the truly lucrative names have been taken. That said, there are plenty of opportunities available for shrewd or lucky investors.

Related Articles

Sources and Citations

  1. ↑ http://www.investopedia.com/financial-edge/0412/how-to-make-money-with-domain-names.aspx
  2. ↑ 2.0 2.1 http://www.businessweek.com/smallbiz/content/jul2009/sb20090717_925271.htm
  3. ↑ http://www.ha.com/information/domain-name-values.s
  4. ↑ http://www.businessweek.com/smallbiz/content/jul2009/sb20090717_925271.htm
  5. ↑ http://www.igoldrush.com/domain-guide/domain-buying-and-selling/determining-the-value-of-your-domain-names
  6. ↑ http://domainnamewire.com/2012/04/03/godaddy-now-offers-free-domain-appraisals-but/
  7. ↑ http://www.thesitewizard.com/domain/domain-name-parking-explained.shtml
  8. ↑ http://www.devnic.com/tutorials/expired_domain_name_traffic.html
  9. ↑ http://www.nolo.com/legal-encyclopedia/cybersquatting-what-what-can-be-29778.html
  10. ↑ http://www.wipo.int/sme/en/e_commerce/domain_names.htm
  11. ↑ http://www.internetlibrary.com/publications/anticybsquattSamson9-05_art.cfm
  12. ↑ http://www.domainnameexpert.com/faqs/legal_faq.html
  13. ↑ http://www.nolo.com/legal-encyclopedia/avoid-trademark-infringement-domain-name-29032.html
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