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Internet Domain Business Essay, Research Paper

The companies who want to acquire Internet address are facing many difficulties nowadays. There is clearly an excess of demand in domain name business. The prices of effective Web-site addresses have become very expensive.

Initially, there were so-called cybersquatters, speculators, who brought attention to the Internet domain name business. They registered well-known brand names with the intention of selling them at much higher price. For example, they bought the URL www.McDonalds.com and sold it to the company afterwards.

Registering an URL with the ending .com, .net, and .org costs only $70 today. But there are already over 6 million names that have been registered, so companies or people who want their own Internet address usually discover that the domain they want is already taken. If all the simpler and shorter names are registered, the newcomers have to find longer words that are suitable for them or combine some words together. That is the reason why domains have become so valuable, because for marketing purposes, memorable names are more demanded.

Companies want their customers to have direct access to their Web page just by typing in the short URL. If they do not have a good Web site address, the search for its name results in numerous misleading results. Even if the company’s Web page is found, the brand recognition gets very weak, because of so many similar names the result shows. “Javed recently completed a study of business names on the Internet that illustrates the point. He found 8,793 names containing the word “web” (including Webtron, USWeb, and Webtech) and 7,901 names with the word “link” (like Linknet, WorldLink, Linksys)” (Hadekel 1). The short and noticeable names like Nike or Sony are much better off.

The number of existing names make also the life of those businesses difficult that are specialized on selecting names for businesses and their products. They have to make up names that are globally readable in different countries and areas of world, without any translation problems or trademark conflicts, are memorable and last but not the least, have available domain names.

So far, the record price that is paid for a domain name is $7.5 million. An entrepreneur, Marc Ostrofsky had bought it three years ago, and now sold it to ECompanies. This event gives some insight to how valuable Internet addresses really are. In public eyes it is still seen as a very extraordinary purchase, but experts argue that in long run, this kind of deals become as common as real estate business exchanges. As real estate broker Steve Newman puts it, “It used to be a big deal when a house sold in Beverly Hills for $1 million, but people aren’t shocked anymore that a house sold for $1 million” (Kaplan 1).

A new business type has arisen from this problem of domain name shortage, brokers who sell Internet domain names. The largest enterprise in this area is GreatDomains.com. The sellers can post their listings at their Web-site and the company collects a 7% to 15% commission and a $250 escrow fee from the seller. The GreatDomains’ revenue is growing fast.

The risk for the companies that sell Internet addresses is that when there will be available new domain name suffixes, for example .biz and .store, the supply will exceed demand. This means that people have more variety of names from which to choose and they are not willing to pay so high prices anymore.

For the conclusion, the Internet domain name business, that initially seemed questionable to many people, has proved to be profitable business that is in growing stage. It seems to continue at this rate for at least some more years. Although the every day Internet users may not even be aware of the struggle the companies have had to get a best domain name, they take advantage of this feature and make this effort worthy.

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