One of the ways to make money online is to invest in domain names, which you can then sell, hold or develop in order to increase their value over time.
The basic principle of domain names is that they are the internet equivalent of real estate and not unlike property developing in the real world, domain names offer the potential to be bought and sold for a quick profit, used to generate an income or developed and improved so that they increase in value.
If you are thinking of investing in domain names as a way of diversifying it is an alternative investment that certainly has potential, but for every success story where a domain name has been bought cheaply and sold for a much higher price, there are plenty of domain’s that don’t always give a stellar return.
How it works
It is amazing to think that the internet is still in its infancy in relative terms, and it is still developing at a phenomenal rate.
Every business that wants an internet site has to buy a domain name and obviously they will want to buy one that is easy to remember and matches their business.
In the early days, some people were buying up domain names for big brands in the hope that they would want to buy it off them for a big profit but rules about the fairness of this practice mean that this is not going to happen now, although there is still plenty of potential to attract a good offer if you acquire a desirable domain name.
A famous story involving CNN is that they bought iReport.com for $750,000 from a shrewd domain name speculator who figured that he could get a lot more than he paid for the name.
We can’t all expect to achieve those sort of gains but if you work on the basis that a domain with an inherent value will always be sought after, you can achieve a potential profit on your initial investment.
Strategies for investing
A lot of desirable domain names have a .com handle and you should expect most of the good ones to have been sold already but you can still buy them when they comes up for sale in an online auction.
Auction prices can vary greatly and you can sometimes pick up a good name at a reasonable price simply because no one was bidding against you at the time of the auction. Do your research and find out about the history and status of the domain name, such as whether it is generating web traffic and has a reasonable Google ranking.
Parking for profit
Another option is holding domains in order to allow them to increase in value over time. This is known as parking for profit and you will find that many serious domain investors might own thousands of domain names, which they monetize through advertising like Google AdSense and then sell on for a profit.
Although this method of investing does not offer an instant uplift on your stake, you can create a full featured website around your domain with a view to adding value and attracting a buyer who wants a readymade website.
This method requires business and technical expertise so you will need to have these skills or work with someone who can develop the sites on your behalf in order to maximise your returns.
Domain investment has a lot of potential for delivering a profitable return and there are still plenty of opportunities to make money as the internet is still expanding and more domains are being created and needed all the time.