Domain names have become an integral part of business branding and online presence in the digital age. With over 330 million domain names registered worldwide, competition for memorable and concise domain names has intensified. This has led to the rise of premium domain names – short, catchy, easy-to-remember domain names that directly relate to a business or brand.
Premium domains are in high demand as companies seek to establish strong branding and instant brand recall. Research indicates domains with two to three words that relate to a product or service generate more traffic and have higher resale values. As premium domains get scarcer, their value continues to rise. This article will explore the history, value, and future trajectory of the premium domain name industry.
Brief History of Domain Names
The domain name system was created in the 1980s to map domain names to IP addresses. Initially, domain registrations were free, as the goal was to grow the network. The first commercial domain name sale occurred in 1990 when Symbolics.com sold for $100,000. As more businesses established an online presence, domain names grew in value for their branding power.
ICANN began accrediting registrars in 1999, which paved the way for mass registration. With millions of generic domain extensions registered, attention shifted to premium .com domain names. Domain aftermarket platforms like Sedo emerged in 2001, facilitating domain trading and sales. Prominent, ultra-premium sales like Business.com for $7.5 million in 1999 demonstrated the immense value of domains.
What Constitutes a Premium Domain Name?
Premium domain names typically have the following characteristics:
- Short, memorable, and brandable – The domain is usually 1-3 words that are easy to remember and spell. Short domains stand out and encapsulate a brand name well.
- “.com” extension – The most coveted top-level domains are .com, .net, and .org. .com remains king for branding and is universally recognized.
- Generic word or phrase – Names like loans.com clearly relate to an industry or product. Being generic, yet brandable, makes them valuable and easy to market.
- Numbers or hyphens – Domains with digits or hyphens are considered less premium than names with dictionary words only. Names like business5.com have fallen out of favor.
- No trademark infringement – Premium domains cannot use trademarked terms like Google or Coca-Cola without permission. Made up, non-trademarked terms are preferred.
- Easy to type – Names using alternating vowels and consonants are best. Misspelled or confusing names like expedia.com decrease a domain’s value.
- Industry relevance – A domain name matching one’s business or industry fetches higher prices. Tech.com or jets.com have intrinsic value to tech or aviation companies.
Factors Driving the Value of Premium Domains
Several key factors make premium domains so valuable and drive their prices ever higher:
- Scarcity – There are a finite number of short, brandable .com domains. With 330 million registered domains, premium names get scarcer by the day.
- Brand identity – A domain is often a company’s first brand impression online. Distinct names like google.com are invaluable.
- Competitive advantage – Owning the perfect domain gives businesses an edge on competitors pursuing similar domains.
- Easy to remember – Human brains instinctively favor short names. This memorability translates into more traffic and sharing.
- High resale value – With demand outpacing supply, owners can often sell domains for significantly more than purchase prices.
- Alternative to trademarks – Acquiring a matching domain circumvents the lengthy trademarking process.
- Cost of alternatives – Alternatives like sprayreg.com lack branding power and are far less memorable.
As these factors increase competition, premium domain values rise. Owners of generic yet brandable domains can demand seven or even 8-figure sums.
Noteworthy Premium Domain Sales
Some of the most expensive domain sales to date demonstrate their vast value:
- CarInsurance.com – $49.7 million in 2010
- Insurance.com – $35.6 million in 2010
- VacationRentals.com – $35 million in 2007
- PrivateJet.com – $30.18 million in 2012
- Internet.com – $18 million in 2009
- 360.com – $17 million in 2015
- Sex.com – $14 million in 2010
- Fund.com – $10 million in 2008
- Porn.com – $9.5 million in 2007
- Diamond.com – $7.5 million in 2006
These multi-million dollar sales underscore the stark premium commanded by category-defining generic domain names. As ecommerce grows globally, their value should continue rising.
Portfolios of Premium Domains
Recognizing their immense potential, domain investors aim to acquire portfolios of premium domains. Holding domains related to various industries maximizes their chances of high resale value. With a stockpile of premium names, investors can then develop, monetize through pay-per-click ads, sell, or launch startups using their domains.
Prominent domain portfolio owners include:
- Marchex – Over 300,000 domains. Their portfolio alone is valued at over $1 billion.
- Mike Mann – Over 70,000 domains. Earned $9 million from the sale of men.com alone.
- Rick Schwartz – Widely considered the industry’s top domainer. Sold Porno.com for $8 million and other names for 7-figures.
- Frank Schilling – Has sold domains worth over $300 million.
- Kevin Ham – Sold Men.com for $1.3 million and built a portfolio of premium adult domains.
These investors scour the domain aftermarket, acquire expired domains, or use proprietary tools to identify valuable available names. Their domain investment funds demonstrate the immense success possible by stockpiling prime digital real estate.
Aftermarket Platforms for Buying and Selling
For startups and individuals seeking premium domains, several aftermarket platforms have emerged:
- Sedo – The largest domain aftermarket. Sellers list domains for auction or with “Buy Now” prices.
- GoDaddy Auctions – Popular for unique traffic, this site lets buyers browse domains by category or search.
- Flippa – An exchange focused on buying/selling online businesses and associated domains.
- NameJet – A domain auction site also offering brokerage and appraisal services.
- DomainNameSales.com – Has over $250 million in domain transactions. Sellers list domains with asking prices.
For premium domain seekers, these platforms allow browsing listed domains across diverse industries. Buyers can search for the perfect available name or buy rights to names not yet listed.
What does the future hold for premium domains? A few predictions according to experts:
- Values will keep rising – As .com domains dwindle, prices for outstanding names should continue climbing.
- More 8-figure sales – We’ll see more sales like carinsurance.com as companies compete for category-defining domains.
- Alternate extensions growing – New extensions like .guru, .club and .io will see increased usage and regard. But .com remains king.
- Expired domains will flourish – Allowing premium names to expire promises big paydays. Domainers will snap them up.
- International growth – Asia, Africa, and South America present new markets for premium domains as millions there come online.
- Regulation – Stricter ICANN or governmental policies could place restrictions on premium domain trading.
While still early days, premium domains present a unique space merging branding, intellectual property, and speculative investment. As the supply dwindles, their value should continue rising. Yet unpredictability exists around regulation and tech trends. Overall, the premium domain market promises lucrative opportunities for brands and investors alike.
Premium domain names have risen to prominence as vital online real estate for brands. Their scarcity, memorability, and inherent value for marketing will continue driving prices upward. While securing a coveted name demands significant investment, the long-term dividends for brands and potential resale value outweigh costs. For domainers, identifying high-quality names to purchase, develop, or sell promises lucrative returns. The premium domain space should remain an exciting one to follow in coming years as more seek the perfect name to represent their brand online.