Domain names are appreciating, just like land or traditional real estate

Posted November 16, 2009 by

Domain names are appreciating, hard assets just like land or traditional real estate. The difference is, that domain names (like the Internet) are still in the 2nd inning, with a “Wild-Wild West” element which often leads to returns when these assets are sold that outperform other asset classes. For instance, Computer.com was acquired for $250,000 (they had inherited the domain in an acquisition). Nine months later, the buyer sold it to Systemax for $800,000, who then sold it for $2,200,000 nine months after that.

Many of the domain sales to larger companies are under a Non-Disclosure Agreement regarding price, but most are made public, including:

Gambling.com $17M
Games.com by AOL for $11.5m
Fund.com $10.2m
Porn.com $9.5m
Beer.com $7.2m
Toys.com to Toys R Us for $5.1m
Clothes.com to Zappos for $4.9m
Vodka.com for $3.5m
Creditcards.com $3m
Candy.com $3m
Timeshares.com to Wyndham $3M
Computer.com $2.2m
Datarecovery.com for $1.8m
Camera.com for $1.5M
Ad.com for $1.4m

MANY large brands also own and leverage their category domain name. Some examples are:

Johnson and Johnson owns Baby.com (primary address on television)
Barnes and Noble own Books.com
AOL owns Love.com and Games.com
IAC owns Gifts.com and Hotels.com
Bank of America owns Loans.com
ABN Ambro owns Mortgages.com

Food companies such as Kraft, Pharmaceutical companies, and financial institutions own category domain names that are both generic and relevant to their specific industries; in some cases, these companies manage thousands of domains internally. Pharmaceutical company GlaxoSmithKline owns and operates Depression.com and Asthma. Glaxo is able to provide their visitors with the most recent and relevant information on these particular diseases, therefore becoming an authority in that specific industry. Instantly, visitors trust the gsk brand, allowing them to market their brand of depression and asthma medications to a much wider and more targeted audience. Monster.com owns and operates Jobs.com, as does Toys R Us with Toys.com.

Additionally, many companies with multi-hundred-million, and even billion, dollar market caps or valuations switched either their domain name from their specific brand to a category domain name, or these companies changed the name of their brand altogether, and each company experienced exponential—from increasing the consumer-to-business/business-to-business traffic, to the exit valuation. The list below details just a few companies that have benefited from this:

-Dealtime became Shopping.com pre IPO (eBay acquired shortly after IPO for $635m)

-Hotel Reservation Network paid $10m for (and became) Hotels.com pre S 1 and IAC acquired.

-Teckno Surf became Advertising.com. AOL acquired for $495m.

-Rent.com was acquired by eBay for 400m+

-Dictionary.com was acquired by Ask.com

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