Should business owners invest in a premium domain name?

Now I used to work in the domain name industry as a domain name broker a number of years ago. But I took a long hiatus and when I came back to the industry as a small business owner and buyer, the industry had changed so much.

Domain names used to be a really good buy.

There were many reasons to invest in a domain name. Mainly that you could buy a domain and it would be like buying a house. It’s a property that accumulates value the older it gets. It did so quite literally because Google would rank those domains that were older higher in the search engine results.

So you would buy a domain at say $500 and let it sit for a few years and then when the times comes to sell you’d make say $1000 for example. The person buying the domain was either someone who needed the premium domain for usage or another domain investor. And there were so many domain investors out there. At one point, I saw one company had even started offering capital loans using domains as collateral.

So the value of the domain was it’s age, but not only that, it also had SEO value as a keyword. So Google would rank higher results for say, “Kenneth Tran” if the domain was “www.kennethtran.com”. And probably for good reason too because with a domain like that, you could be almost sure that the domain was about “Kenneth Tran”.

But since then the market has changed in several ways.

For one, startup companies which were a big buyer of premium domains for example “Mint.com” although I am not sure at this time what the price was. But a new trend started emerging.

Startups started buying domain names that were mispellings, but pronounced the same. For example, Lyft instead of Lift was a good buy from a domain broker’s perspective. This is a huge change because domain buyers previously had only purchased mispellings of names in order to redirect the traffic back to the correct spelling website. For example, buying “Kennith” and “Keneth” in addition to “Kenneth” was a relatively common buy.

So now you have all these people trying to guess what are the best names to buy based on that, in addition to the speculation that was already happening on all the other levels. Buying up all the keywords was the norm and so any and all (or most) keywords became premium domain names.

Now your average blogger, small business owner, or general internet user is not well financed enough to purchase these premium domain names and so of course ICANN releases more TLDs (or maybe they released them for other reasons). How many more?

Well, a lot. By a lot, I mean tons.

Go to any domain registrar and you can see how many they’ve released. It’s almost insane.

And this changed the market completely.

So now you have domains like .marketing and .agency out there. Not to mention freenom started releasing domain names for free like .tk and .ml (yes, free). So domain name appraisals are all out of whack.

For example, what’s a name like mesothelioma.me worth? It’s a highly valuable domain name for the legal industry because of the keyword “mesothelioma”. Probably not as much as the .com, but definitely not nothing that’s for sure.

So should business owners invest in a premium domain name, now that there are so many other “dots” besides dotcom available?

Well, if you’re investing in a domain name in order to resell the domain at a later date for a profit, then getting a .com is still a safe bet. Why? Because the value of a dotcom is still unlikely to change just because cheaper alternatives are available. The type of people who buy premium domain names, well funded startup companies for example, are not going to go with an alternative TLD because for branding purposes they really need the dotcom version. Although I will point out that less well funded (or well funded but cost sensitive) startups do have a propensity to pick up .io and .co domain names.

If you’re going to invest in alternative and cheaper TLDs in order to resell them at a later date, then you might be better off putting your money elsewhere. The reason is because ICANN is continuing to release more of these TLDs and it looks like they’re unlikely to stop. The only thing we know at this moment is that the dotcoms will hold value because of their original brand value to all types of consumers. Your average grandpa or grandma (or average person of any age really) is not going to be comfortable with anything that’s not .com, .net, or .org.

But if you’re going to buy the premium domain names for usage, then it’s up in the air. For example, which would be the better domain- therock.com or thero.ck? Probably the former still, but the latter is not a bad choice as well for creative stylistic value. It’s memorable to say the very least.

So should you invest in a premium domain name? Perhaps, if you can afford it. But if not, then you really don’t have a choice due to the skyrocketing prices of premium domain names.

And even then, if you can afford it, you need to take real long look to see if the spend cost and brand value is going to fit in your overall business strategy.

MBA PhD; Author of the viral book ART OF WAR 2, featured in VentureBeat & Forbes… Nephew of General Le Quang Luong