I am in the midst of a discussion with one of my blog readers, Bruce Gittleman (who gave me permission to use his name and domain names), and the discussion centers on whether Rick Schwartz’s pending sale of Candy.com will lift the values of four domain names Bruce owns, CandySweets.com (reg’d in 1999), WeLoveCandy.com, SheLovesCandy.com and BuyGreatCandy.com. There is a saying, “a rising tide lifts all boats,” and some people liken it to a big domain sale increasing the value of similar or related domain names, but I don’t think it applies in this situation.

After a large domain sale like Candy.com, world event like the election of President Obama, or tragedy like the tsunami in Thailand, people register thousands of domain names with the hopes of capitalizing on the increased publicity. It is my belief that 99.9% of these types of domain names do not sell. Although Bruce didn’t specifically register his brandable domain names because of Rick’s pending sale, if they are put up for sale now, they will compete with thousands of other similar names on sites like Ebay.

There are several reasons that I outlined why I think Bruce will be hardpressed to sell his domain names for a profit – especially given the current economic conditions:

1. Since nobody has contacted Bruce since 1999 (assumption), chances are good that nobody will all of a sudden want them… so
2. Bruce will have to contact candy companies on his own to sell/market them, which is  very time consuming
3. It will be difficult finding someone who wants these, so Bruce will have to sell them on the concept rather than just on the value of the names alone.
4. Once Bruce gets someone interested, he will then have to convince them to spend the money.  Bruce has already invested over $75 in renewal fees alone + the time it takes to convince them that they need the domain name
5. It’s very difficult to convince a company to spend thousands of dollars on a brandable name, when they can just as easily spend $8 to register: TheyLoveCandy.com, SheLovesCandies.com, or another unregistered brandable domain name

There are always people who spend hundreds of dollars on “trendy” domain names that are mostly a waste of money, in my opinion. Instead of spending $800 dollars on 100 new registrations like these, it would be better to buy one $800 domain name that gets some traffic and actually has meaning, rather than creating brandable domain names that nobody cared to register in the past.

Generic domain names like Candy.com and Auction.com sell for 7 figures because everyone around the world knows them.  They haven’t been developed into businesses before, yet their brand value and goodwill is already immense. Additionally, the type-in traffic is and always will be strong, and this traffic can be converted into sales immediately after turning it into a business.

In my opinion, 99.99% of the new registrations that come after big sales are worthless. In general, I do think similar meaningful names like CandyBars.com and Auctions.com become worth more as domain names, but I really don’t think brandable names become more valuable.

What do you think?

BTW, I thank Bruce for being a good sport about this and allowing me to use him and his names as examples.  If the four names he owns are of interest to you or your company, drop me a note and I will put you in touch.

There’s an interesting article in the New York Times today discussing how difficult economic conditions and a tough job market are forcing people to think about how they can make their own work. “Forced Entrepreneurship,” as it is referred to by Mark V. Cannice, (ED of the entrepreneurship program at the University of San Francisco), is where people figure out a way to make money from their own work.

One of the easiest ways for a person to do this is setting up a website and complementing it by using online social media venues like Twitter and Facebook. I’ve seen an uptick in domain offers, although they are mostly for brandable domain names owned by friends and colleagues.  I believe this is a sign that many forced entrepreneurs are looking to build their unique brand online, and when they find their idea domain name is already registered, they are trying to buy it in the aftermarket.

I personally don’t really care to invest in brandable domain names, as I liken them to lottery tickets, but I think there is growing interest. With the job situation poor for several months and getting worse, many people are going to give up on their job searches, and some will try to build a business on a dream they may have had for years. I think this is going to lead to more domain sales and registrations.