People often ask me what I look for when buying a domain name. While there are many factors that I consider, I think the single most important thing about a domain name is its potential commercial usage. When evaluating domain names to acquire, I ask myself, “how can this domain name be used, and would it make sense to build a website around this domain name?” If you are able to know exactly what will be on the website before even navigating to it because it’s a category killer name, you probably have a good name.

I hardly ever buy a domain name based on traffic or revenue numbers. There are too many non-controllable factors when buying based on these statistics, so my buying decision is not determined by these stats. Yes, I do ask about a domain name’s traffic, but that is to make sure the name “has a pulse” to get a feel for whether it is worth sinking money into a development project. The single most important thing to me is commercial usage.

Whether I am planning to build a website on the domain name or whether I plan to sell the domain name to someone who will build a website, I want to know whether the domain name makes sense to have a website. Sure, there are plenty of great “brandable” domain names out there, but why do I want to spend my time trying to convince someone about how great it sounds or why that particular domain name would be great for a particular site? I would rather be able to contact someone in the industry or someone in the domain industry and say, I have the category killer name for this particular niche, and the domain name is actually the name of a particular category or niche.

A person should never have to say, “this domain name would make a great xyz website.” A great, commercially viable, generic domain name shouldn’t need any explanation. For example, my newest acquisition is EstatePlanners.com. I believe this domain name needs no explanation, and that’s why I like it.

It seems obvious, but it’s never a good idea to use the same passwords for different email accounts, domain registrar accounts, bank accounts…etc. Whenever you need to log on to an account online, it’s best to have different complicated login passwords. If you use the same password and that is stolen by a thief, they will have access to all of your private information and can easily log into your account and take control of everything:

From the Boston Globe,

“Using the same password for multiple Web pages is the Internet-era equivalent of having the same key for your home, car and bank safe-deposit box.”

Whenever it is offered, I strongly advise that you get a security fob to add an extra layer of protection to your accounts. I have a Paypal security key (which costs just $5.00), and I have recommended that at least one domain registrar implement this level of security to protect our digital assets.

In the past couple of months, I have seen several domain forum threads and domain blog posts discussing development versus parking, and debating whether there has been a shift in thinking among domain investors. As I read up on this “debate,” I have to say that I believe this train left the station long ago. Perhaps this would have been a good discussion at least a year ago, because if you look around at the top domain owners, almost everyone is developing at least one of their prime domain names into revenue generating businesses, and most are working on many more than a single domain name.

Domain development comes in all forms - be it blogs, affiliate websites, hybrid affiliate websites, full e-commerce sites, directories, mashed-up sites using Google tools…etc, etc, etc. I consider anything that doesn’t involve simply changing the nameservers and showing advertising links to be considered development. If you look around, there really is no debate - just about every major domain investor is developing at this very moment.

To give you an idea of where I am coming from and to prove that this is the greatest non-debate of all time, here are a few of the brightest and most prolific domain owners along with at least one public development project (several of these domain investors (or their companies) have many developed websites):

Sahar Sarid - FuneralHomes.com / Assista.com
Michael Berkens - HomeFashions.com
Scott Day - Chairs.com / Shops.com
Rick Latona - SanJuan.com / Trusts.com
Rick Schwartz - Property.com / Widgets.com
Castello Brothers - Daycare.com / PalmSprings.com
Kevin Ham - Vancouver.com
Ron Jackson - DNJournal.com / NameNewbie.com
Lonnie Borck - netRocket.com
Nat Cohen - Maryland.com / OceanCity.com
BuyDomains/NameMedia - Photography.com

Most of the people listed above have more than just the single domain name developed, and many have several developed websites and full businesses with their ventures. Many of these people (and others) have been developing their domain names for a while, but a few have just recently started developing their domain names, as have I. Market conditions, legal risk, declining PPC values, and other factors have contributed to this movement to develop.

At least in my opinion, the question should not be about whether you should develop or park your names, but rather it should be about which of your domain names you will develop. PPC does still play a major roll in many domain portfolios, but I think development will be important for long term profitability. As most people will admit, development is very difficult and time consuming, and if you don’t do it right, you will spend quite a bit of time spinning your wheels.

I think the real question and debate should be about “what domain name(s) should I develop first, and what development model should I use?”

I want to clear up a couple of misconceptions that I’ve seen pointed to me and my blog recently. The purpose of my blog is to give an inside view of what I am doing with my domain names and how I am generating revenue or trying to generate revenue. Some of what I am doing will make me money while some of what I am doing will end with me spinning my wheels. This is my first experience with starting a business, and it has been an evolving process. I enjoy chatting about the domain industry, and I am happy to share an inside view of my business model and plans.

I have been buying and selling domain names for a few years, and I’ve been fortunate enough to have the opportunity to work on my business full time. As my life and business progresses, I have to make certain business decisions to put me in a strong financial position for years to come. I see buying and selling domain names as a great opportunity (and one I have been successful at for a little while), but I also see it becoming more difficult. As a result, I have started to develop a few of my better domain names using various strategies I have been happy to share (mini-sites, affiliate websites, full businesses…etc).

While I don’t think development is for everyone nor is it for every domain name, I do see it as a way to grow constant revenue streams. While domain parking can be a source of passive income if your domain names get type-in traffic, I haven’t been fortunate enough to own many great domain names that generate a ton of PPC revenue - enough that I wouldn’t sell. Since I have dedicated 100% of my energy to growing my business, I am focusing more on development. I have the time, I have the resources and I have the energy to create businesses around logical domain names - starting with Lowell.com.

As I said, I do not think development is for everyone nor is it for every domain name. It takes an extraordinary amount of time to develop a domain name, it’s expensive, and it may be unproven. While I have slowly begun to reap the rewards of development - 12 hotel reservations on Salinas.com last month and some revenue from the job board, I have a long way to go to be profitable. Fortunately, I am able to leverage some of my domain name assets to buy other names for development down the road, including Burbank.com.

I read somewhere that I am selling all my domain assets to focus on development. This is entirely inaccurate. I have always bought and sold domain names, but with the expense of Burbank.com (I bought it from a person who had a functioning newspaper and didn’t have it for sale), I had been selling more rapidly lately - although that is slowing down. I have also been buying domain names even as I am selling. Some of the names are for development (Oenophiles.com) and some are for sale (Metabolizers.com and UnemploymentLine.com).

I still believe the domain market is soft due to worldwide economic conditions, but I am bullish on the domain industry for the long term. In order to sustain my business, I have decided to build businesses around some of my domain names, which I highlighted in my post about the perfect portfolio for me. As the industry evolves, I am evolving as well, and I am happy to share my plans as they evolve.

A few days ago I acquired a great product-related domain name using Sedo. I saw the name at a good price, and I bought it after doing some due diligence, including a Whois History search and a quick search of the USPTO database. All of this came back without any problems, so I bought the name. As I’ve mentioned, I have been selling some domain names lately to pay off the cost of the Burbank.com acquisition, so I emailed a few clients and acquaintances offering this name for a good price.

Several hours after I sent the email, one of my acquaintances emailed me back with a listing from the USPTO. Unfortunately when I was searching for “this product” in the USPTO database, there were no listings; however, a search of “thisproduct” as a single word would have yielded the result. The product is similar to “Band Aids” in that other products in this category are often called “this product,” although it is less common than Band Aids, and the product has only been around for 5-6 years - about the same time as the industry. I emailed the original owner of the domain name (since 2003) and he told me Read More »

Some solid advice on DomainingTips.com on how to turn average domain names into valuable revenue-producing domain names. People often complain that they were too late in the game to get the “good names,” but this proves there is no such thing as being late in the domain industry. The successful entrepreneur will learn how he can make his domain names profitable rather than lamenting about what could have been had he only known about domain names years earlier.

Timing is important, but it isn’t everything. There is no easy money in the domain industry, but the article gives a step-by-step guide to one way to make money - even if you started today. If you want longevity in the industry, you need to find a niche that works for you, and there is some good advice in the article.

I was having a philosophical domain discussion last night about the future of the domain industry and where domain investors stand. This got me thinking about “my perfect domain portfolio” and my plans for the future. While we all tend to focus on the short-term, I think it’s important to think further out and set some long-term goals. I know this well help me stay focused on the bigger picture when dealing with present issues.

With that in mind, I would like to share what I think is “my perfect domain portfolio” in 5 years time. I cannot say whether this will still hold true in 5 years, but it is what I am visualizing at the moment.

I will have 2 fully developed city .com geographic domain names that are benefiting each community and the advertisers. I would like both domain names to be cities of between 100-150,000 people, as I believe a city of this size will benefit from a well-developed website. I think it would be much more difficult for a website to have an impact on a larger city, and as much as money is important, I believe a nice living can be made in the mid-size cities. I want to establish strong relationships in both cities, and I want each website to be well-received and beneficial to each city. I believe I have started this with my Lowell.com website, which is still being developed.

I will have 2 developed product/service based websites. They won’t necessarily be full businesses, but they will be in a niche that I find particularly interesting. Perhaps a wine or travel related website would be one of these. I hope this could be a fun website I will enjoy managing and be able to work on as more of a hobby than financial endeavor. Hopefully the geo-domain names will generate enough revenue to be able to do this without worrying about generating revenue on these pet projects!

I will have 15-20 domain names of friends and family. Some of my friends don’t really understand domain management, but they know they need (or will need) their domain names in the future. I am holding a few domain names for friends at the moment, and I imagine I will hold more in the next few years as friends get married or take on new challenges in life. For example, my brother is a law student, so I own a domain name that could be relevant to his law firm down the road.

I will want to own 10-20 speculative .com domain names. These are pure speculation that the topic would be of interest to someone or me down the road. These could all be names I keep in the hopper for my own development needs if I wish. They will all be in areas of interest, and I won’t be inclined to sell them.

As some people have seen, I have been selling names from my portfolio more quickly than usual. One reason I am selling them is because I acquired a large geographic domain name a few days ago (that I have been looking to acquire for over 2 months). This new name fits into my 5 year plan, and I need the funds to offset the high acquisition cost. A second reason I am selling is because I know I won’t ever get to develop the names. It’s not a matter of not wanting to develop them, but rather the time it would take.

The opportunity cost of keeping these domain names is greater than if I sell them and use the funds to pay for other expenses. Sure, I am probably getting much less than I could get down the road, but I know the funds I use from the proceeds of the sale will be more beneficial today to help position me to reach my goals in 5 years than they would be if I held on to them. As domain owners, we need to look at the costs of selling vs. the cost of not selling and see how that will affect our 5 year plan.

Rick Latona makes some good points about why domain owners should consider selling some of their domain names:

“I think that many domainers out there have only paper wealth. I’m not speaking of Frank who has both. A good deal of domainers are sitting on names that are worth a pretty penny but generate little income and they refuse to sell the name. I just don’t see the sense in that.“

When I was in college, I opted to not apply for financial aid, as my father’s business inventory would have been counted as assets, and we probably would have been denied. Unfortunately, we couldn’t pay for my college education with curtains, just like you can’t pay for a home or a car with a domain name. Sure, he could sell the curtains and pay for college with the proceeds, but if nobody is buying a particular type of curtain, it’s just worth its value on paper.

I am not telling you to go out and sell your domain names, but I have said before, the importance of having cash on hand is immeasurable. Check Rick’s Blog out when you get a chance.

I have seen many people selling the domain names of celebrities, athletes, politicians and other famous people. These people typically sell the names under the guise that they can be built into fan sites. Since fan sites may not generate revenue, it’s a form of expressing freedom of speech and protected under the First Amendment. While it may be true that owning a fan site on a domain name that uses the celebrity’s name is perfectly legal, by selling the name (or even buying it), the burden of bad faith may may be met, as the seller is profiting from the celebrity whose name made that domain name worth something.

If someone sells the domain name of a well-known person, they are presumably profiting from that person’s good name. By this virtue, bad faith may be claimed by the celebrity, putting the domain name in peril. As some WIPO panels have recently ruled, a change in ownership can be likened to a new registration. Because of this, buying the domain name of a famous person could be the precurser to a UDRP ruling.

Of course I am not an attorney, so this isn’t legal advice, but just my opinion and general domain advice.

I am going through a huge list of .org domain names, and I happen to be sitting here with my fiancee (well, she just left when I started blogging). The list of names I am looking at consists of a couple thousand .org names in every vertical, language, tense…etc. My fiancee saw a few good names that I would have bought in a second if they were .com, but I explained to her why I wouldn’t buy them in the .org extension. I am happy to blog about my thoughts as I have been asked before.

I believe .org is a good extension if the name makes sense to be in the .org. Since .org stands for organization, I believe the name should either make sense as an association of the term or as a group of that specific term. While .org doesn’t get as much play with commercial domain names, you can still make a commercial venture out of an organization.

Soccer.org would be a great domain name for a soccerl-related organization. If I owned it, I would build a directory of soccer clubs throughout the country. You could offer teaching tools, organizational tools or other enticements to sign up for the organization. I don’t think a name like Grapes.org would make sense as a .org, because it just doesn’t make sense as an organization.

As far as I know, almost anyone can own or develop any type of domain name, with the exception of .gov, .edu, and some country codes. However, we need to keep in mind that consumers expect certain things from certain extensions. If a consumer navigates to a .gov website, they expect to see something related to and managed by the government. If they navigate to a .edu website, they expect and educational website owned by a school or teaching institution. Likewise, they would expect the .org to be managed by an organization or association related to the actual term in the domain name. This can be a big advantage.