Domain Names - A Profitable Business

Mitch has a list of 10 tips to help you choose your domain name. The ones I never really thought about are number 6 and 7:

6. Purchase Spelling Mistakes

7. Get the “You Suck” Domains

Hmmm…

If you read his post you’ll see that both Gooogle.com and Gooooogle.com actually take you to Google’s home page. Note that the first misspelling has 3 o’s in it while the second one has 5. What about the misspelling that has 4 o’s? Well Goooogle.com takes you to a directory of paid links.

Rightfully Mitch wonders why Google couldn’t get the misspelling with the 4 o’s. It’s hard to really know exactly what happened there. There’s a few possible theories and we could speculate all day long.

The bottom line is that, I believe, whoever owns the 4 o’s misspelling is profiting so much from it that he or she is asking for an outrageous price which Google is not willing to pay (quite improbable if you ask me), or (more likely) is not willing to sell it. And this is where I wanted to get.

There’s a real business that brings in a (small) fortune to those who own a piece of it. These “entrepreneurs” go after such misspellings, “you suck” domains and other combinations and, the bad part, after well established domain names whose owners disregard the renewal notices and let them expire.

It’s so profitable that there’s a wide variety of resources and tools for such entrepreneurs which help them get the scoop on which domain names are about to expire, which ones have common misspellings (and whether they are registered yet or not), which ones are popular (ranking high in the search engines, receiving tons of traffic from inbound links etc.) and so on and so forth. All meant to help them decide whether it’s worth going after a name or not. Those who get their hands on such names profit from a (sometimes) huge amount of traffic they’ve done nothing to deserve.

These new owners put up a directory of paid links and just wait for the money to come in. Probably the first lesson one should learn about doing business online is that “build it and they’ll come” is not the way it goes. Well, we’ve just got ourselves the exception from the rule. These guys don’t need to do anything since, as I said, they already have a large amount of traffic.

“Where are they getting people to pay for links on those web sites?” you might ask yourself. Judging by the above rule, even if they have all these popular domain names, they would still need customers to pay for a listing. And, since most visitors are most likely not interested, they don’t really have any business. Right? Right, yet wrong.

Here’s the thing: there’s plenty of paid links directories (some actually built for this business) who offer you the chance to become an affiliate. All you have to do is put up a web site, use their code and you’ve got your own directory of paid links on which you make money every time someone clicks one of the links (it works, somewhat, in the same manner as AdSense). And what better way of making such an affiliate program profitable than owning a popular, well established domain name?

Some of these entrepreneurs even go as far as registering names that don’t belong to anyone, are not any kind of misspelling or anything like that. They register usual words in the vocabulary and their popular combinations (I would guess it works on the same principle as password hacking programs). Those who do this are not after the revenue generated by traffic (there’s no traffic since these are brand new domains), but rather after the money of someone who’s looking to register such a domain as these folks have 2 options: either pay what he or she asks or come up with a different name.

As you could very easily understand, I don’t endorse or approve of this business model, even though there’s no law against it and from a pragmatic point of view there’s nothing really wrong with it. I believe it’s, to a certain degree, morally wrong. That’s why I didn’t link to any of the resources for this business.

I’m quite positive that, in case you decide to give it a try, you’ll find plenty of information by doing a simple search on Google, Gooogle or Gooooogle. Don’t try your luck on Goooogle though.

One more thing. Unlike many other online business opportunities, where it’s debatable whether the market for a certain model is saturated or not, I strongly believe you would have to face a ferocious competition with this one. The more popular a domain name, the tougher the competition. Especially with popular ones that are about to expire you could compare it to the the stock market or, probably better, eBay: if you’re not present to place your bet at the right moment, all the time spent to get your hands on your favorite one will be in vain.

For the rest of us, it’s good advice to take those renewal notices very seriously and not let our domain names expire. It’s also a good idea, once our web sites get popular, to go after as many probable mispellings and combinations of our domain names as possible. What’s it gonna cost us? Definitely less than the business we would lose by not doing so.

Update: if you think it’s really that hard to overlook a renewal notice, read this report on Google. If you follow the comments you’ll see that even eBay had such a problem.

Posted in Online Business |