savvy

The investment potential of domain names

Domain names have outperformed other investments in recent times. For example we purchased “pluto.biz” for around $40. We had it independently valued at around USD $3,300 - that is 8150% extra value on top of the original registration price. Wall Street’s NYSE and London Stock Exchange read and weep!

There is no doubt that domain names can be very valuable assets. They define your most basic identification message to users of the World Wide Web. There are lots of self professed experts with all kinds of methodologies for valuation of domain names. What we believe makes a good domain name is at least as much of an art as a science.

What makes a good domain name?

So you may wonder what the basic ground-rules are. Generally speaking, the best domain names are short, memorable, simple, and preferably “.com” names. Ask yourself what words your clients would enter into the title bar when trying to find you or your products. If you are trading as “Widgets Inc” and you sell widgets, then the chances are your answer would be widgets.com or widget.com. So the top scoring domain name to bring potential customers to your website would be one of these two.

Multiple domain names can be used to feed traffic through to one main website. You would be well advised to get these names even if your company name is not “Widgets Inc”. Unfortunately for you, mostly someone else got there first.

The newer .info and .biz names were launched in 2001. They were created to open up the net to new users and businesses as the online population grows. Make no mistake it is growing and rapidly too. The tech-stocks may have been overvalued and crashed, but the growth of the Internet marches on. In the US, Japan and Europe Internet connectivity is becoming ubiquitous and increasingly mobile. Even so, there is still huge growth potential in South America, Asia and the Middle East. It is only a matter of time before the online population quadruples from its present level.

The economics is not complicated as demand for domain names grows two things will happen. The system will have to expand to meet that demand. However, that may have to be through more extensions. Eventually .biz and .info names will acquire elevated levels of esteem and value as .com did before.

Because the USA has the largest and most mature online community and economy, its corporations tend to have more good .com domain names than elsewhere. The future looks particularly bright for .info names, as “.info” works in most languages. Typically .info and .biz names are more popular in Europe and South America.

Because the .biz and .info top level domains (“TLDs”) are newer than .com the nameyouwant.biz or .info is still more likely to be available for registration than .com equivalents. These newer TLDs are going fast, even after the initial “land rush” when most real words were snapped-up by eager investors.

Get it while you can

Our tip from our own experience is that if you find a real word that suits your needs is available, get it while you can. The costs are small and even if it’s a goof you can always let it lapse or maybe sell it.

On the other hand if you don’t get it and someone else does while you agonise over your choices, you can regret it for free. If this has already happened to you, then you could approach the current owners of suitable names and offer to buy them.

The key benefit of registration is that it buys the ability to keep your options open in the short-term. The choice to use the name can be deferred until later when you are better informed. For example, we registered flirt247.com several years ago. We have since been approached by potential buyers and partners wishing to exploit the name. We have the choices, because we have the name. We have our own portfolio of names some of which admittedly we may never use, but we own the choices and six figure cumulative value of those names as assets.

Savvy

Perhaps unsurprisingly, the owner of the .com form of a name often is a savvy corporation and so they also snapped-up all the new TLD versions of their name too. So the chances are that you may have to be a little more creative. The good news for creative registrants is that purely descriptive terms are mostly not registrable as trade marks. They still pull the Internet traffic though!

If you are setting up a business or product for Internet based marketing, then before you start to dream-up your name solution we have some more valuable tips for you to bear in mind.

Big companies employ Intellectual Property managers, consultants and specialist lawyers. The good news for you is that our main shareholder and founder (Mark Taylor) is an Intellectual Property specialist lawyer who advises those same large corporations and we are giving you the same advice.

The Branding Trinity

The perfect ten for any business is the “branding trinity” of matching

ü domain names

ü company (/ product) names and

ü trade marks

Tick all three of these boxes and you have the ingredients to make best use of your marketing spend. Imagine for example you have a great company name, but someone else has the matching domain names. The chances are you are going to be loosing internet traffic to those guys. Imagine you get the domain name and the company name only to find that someone else holds a conflicting trademark for the class of goods or services you want to provide under that name. That could be a short route to getting sued.

Doing the leg-work

To help you research this little threesome you can check the availability of domain names and register them at www.TLDE.com. We have also added a search facility for UK company names with the kind permission of Companies House.

The third and final part of the branding trinity is the registered trademark. You can use this link to the USPTO or this one to search UK and EU trademark registries to see if your desired name is available for registration as a trademark and to check for similar and possibly conflicting third party marks.

Legal pitfalls and loopholes

A basic if oversimplified rule of thumb which will save you from getting sued for trade mark infringement is do not register domain names which correspond to trade marks which belong to others. If you do, you could be accused of cyber-squatting, loose your domain name either under the ICANN or other Dispute Resolution Services or the really expensive way i.e. through the Courts! www.Lawtal.com ™ is our law portal through which to obtain access to the laws applicable, lawyers and law firms in various jurisdictions around the world, including in particular North America. Lawtal can provide more helpful tips on avoiding these pitfalls.

As you may surmise there are some savvy ways around the problems identified above. A good IP lawyer may be able to kill an obstructive trademark or company registration or find a way around it in certain circumstances.

Cyber-squatting

Some wiseguys actually set-out to register the trademarks of others, not because they want to get sued, but because they want to sell them back to the trademark owner at a profit. Often this is very embarrassing for a meggacorp’s IP manager to admit he forgot to register the company or product domain names, so confidential deals are done and the wiseguys paid-off.

It costs the complainant (usually a trademark owner) around $1,000 to pursue a claim under the ICANN UDRP to oppose a domain name registration, so as to try to acquire the name by that route. Then there are the lawyers’ fees if lawyers are retained to handle the dispute. Often it makes sound economic and public relations sense to buy the name from the wiseguy and keep the dirty deal confidential…

In the US as a result of successful lobbying by trade mark owners, there are now severe penalties that can be used against cyber-squatters if cyber-squatting is proved in Court.

Incubator program

If you have ability and determination then we may be able to offer you a supported route to developing an online business or presence. We have opportunities for entrepreneurs, equity investors, venture capitalists and potential partners in a selection of projects, which are part of The London Domain Exchange incubator program. The business plans for these mobile and or electronic business projects may be confidential but you are welcome to browse their web identities and see whether they are online yet at www.TLDE.com/projects/.

Our pitch

We welcome approaches from prospective partners and investors to build up teams for each venture, which is part of this program. We also welcome propositions for new ventures. We are looking for people and organisations to partner with who have the right attributes. Whether you can add value through your own endeavours or capital investment or both we are prepared to consider proposals.

A large portion of our portfolio of names is earmarked for use in a Yahoo.com style email service, but with much more choice of names for users. We have names in English, French, Spanish, German, Portuguese and phonetic java Japanese.

While we hope to do interesting things with all our names we will inevitably dispose of some of them. If you are just interested in buying one of our portfolio of names from us we will consider realistic offers. The valuations of our names range from around USD $500 up to $500,000.

If you have a proposal for us or would like to make an offer on one of our listed portfolio, then please use the contact form on our landing page.

Good hunting!

London Domain Exchange Limited

http://TLDE.com