Speculators Rush to Register Catchy Internet Domain Names.
Knight Ridder/Tribune Business News
| June 07, 1999 | Sidener, Jonathan
Jun. 7 — Five years ago, Tucson resident Ehud Gavron posed a fairly casual question that turned out to be worth $1million.
Gavron’s friend and stockbroker Eric Wade kept switching Internet service providers. Each provider would assign Wade a new e-mail address, making it hard for Gavron to remember how to reach him.
He suggested that Wade get a permanent e-mail address that he could take along if he switched providers. In Internet jargon, he was suggesting that Wade register his own domain name, or dot com.
Neither of the two anticipated that a few years later there would be a dot com frenzy sweeping the Internet, with fortunes made and courts clogged by litigants. As many as 50,000 names are registered each week.
Speculators searched for and registered every catchy name they could think of. In some cases, they registered names already trademarked by other companies. Beanie Baby manufacturer Ty Inc., Mattel Inc., Pfizer Inc. and Porsche AG have filed suits in recent months over Web sites that the companies say come too close to their trademarks.
The Beanie Baby suit was filed in federal court in late April against Mesa resident Susan B. Joy over the site beaniecollectibles.com. The suit said that Joy sought to sell the domain name. The site beaniecollectibles.com has been taken down since the suit was filed, and Joy could not be reached for comment.
Sales of choice domain names have brought astronomical sums over the last year or so. The name altavista.com sold for $3.35million. A Dutch man received an offer of $5million for Linux.com, but sold the name for a lower undisclosed amount. Business.com brought in $150,000.
It costs an individual $70 to register a name for two years. Names are registered through Internic, www.networksolutions.com. The site provides a searchable database to determine whether a name already has been taken. Another site with information on unclaimed names, for a fee, is www.unclaimeddomains.com.
Gavron said it’s flattering that people think he had the vision to grab a hot property.
“I wish everybody would think that I was a genius,” he said.
That’s not the way it happened. Because Wade was a stockbroker, he and Gavron searched for something that would be appropriate. Stockbroker.com was gone. So were several others. Then they hit the jackpot.
“Wallstreet.com wasn’t taken,” Gavron said. Wade used the name for his e-mail. The two had no idea the name would prove valuable down the road. In fact, he bristles at being included among the domain speculators.
“At that time, there was no such thing as domain speculation,” Gavron said.
The two men talked about developing a financial site at Wallstreet.com but only got as far as taking on a third partner and putting up a stock ticker.
Without any advertising or real content, the Web page started getting significant numbers of stray visits from Web surfers.
The group got an inkling that they might have something valuable. But they still weren’t prepared for what happened.
When they were contacted by a pornography dealer who offered them $250,000 for the name, they finally realized what they had.
“If you have a back yard full of junk and someone comes along and offers you $1,000 for an old lawn mower, it might make you wonder what they know,” Gavron said.
The partners decided to auction off the name and set a minimum bid of $300,000.
Bidders offered thousands of shares from the initial public offering of an Internet company. One offered a percentage of a small phone company.
The winning bid was $1.03million from Players Only, an offshore gambling company, which comes to roughly $343,000 each.
Gavron, who owns Aces Research, a Tucson Internet provider, said the windfall is great, but he hasn’t quit his day job.
“I got to tell a lot of credit card companies that I won’t be doing business with them,” he said.
An individual domain name is everything that follows the www in a web address, Amazon.com, for example. They are not to be confused with Internet domains, or top-level domains, which are the portion of a Web address after the final period. Com is the commercial domain. Gov is government. Org is for organizations. Mil is for military. Domain speculation focuses on the dot coms, the individual names within the com domain, because that’s where the money is.
“There’s a gold rush going on out there, and dot coms are the real estate,” said Scottsdale entrepreneur Kevin J. Berk, who owns 17 domain names. Berk said his wife was a little unhappy at first when he spent about $1,000 registering the names.
“As an investment, it’s fairly cheap,” he said.
As an investment, it’s also fairly speculative, he adds. Several new top-level domains may be added that overlap the dot com domain. That would dilute the value of dot com names.
“If they create .store or .company, that will severely impact the value of dot coms,” Berk said.
Berk’s holdings include TvToYourPC.com, DownloadProgram.com and NetPayPerView.com. None of the names were registered for speculation, he said. He has plans to develop each into viable sites. But selling off a name or two makes a nice Plan B if he doesn’t develop it, or if an attractive offer comes along.
“I have to believe that in business, everything is for sale if the price is right,” he said.
Kathleen Forden is the founder and CEO of Chandler-based Limits Unknown, an Internet design and consulting firm. She owns a package of domain names built around the word local, including LocalUS.com, LocalNeighborhood.com and local combined with the two-letter abbreviation for all 50 states, LocalAZ.com, for example.
A few months ago she shopped the package of local names around but didn’t get any offers that she seriously entertained.
“At one point, that was my intention,” she said. “I was undercapitalized to develop them myself.” Since then, she has come up with some backers and has taken the names off the market.
Forden is working with a client trying to find a domain name for an art-related site, but art names have been picked clean. Art.com, ArtGallery.com, ArtMart.com are all taken. Forden and the client approached a couple of the people with attractive names to see if they were interested in selling. The asking price on one in particular was astronomical.
“It was laughable,” she said. “It was in the high five figures.”
Visit Arizona Central, the online edition of The Arizona Republic, on America Online (keyword: Arizona Central) or on the World Wide Web at http://www.azcentral.com
APA
Sidener, Jonathan. “Speculators Rush to Register Catchy Internet Domain Names.” Knight Ridder/Tribune Business News. 1999. Retrieved September 11, 2009 from accessmylibrary: http://www.accessmylibrary.com/article-1G1-54816910/speculators-rush-register-catchy.html
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