At the end of the 20th century the world of internet addresses was in the grips of gold fever. The basic premise: snap up domains on the cheap and sell them on for a fortune. The papers were full of headlines reporting million-dollar deals. But are things still the same today? What is the current state of play on the market? A glimpse behind the scenes at the world of domain trading

Madonna must still feel a flush of irritation every now and again when she thinks about her domain address. If she ever thinks about it that is, as the Queen of Pop seems to have let the whole subject pass her by somewhat. Let’s start at the beginning: in the mid-90s, at the height of her career, the US singer went on hiatus and stepped out of the limelight for a while. No one really paid too much attention to the internet back then. The domain madonna.com had been on the market for years without any takers. Including the pop diva herself. But then, after her comeback in 1998, someone bought the domain. For 20,000 US dollars. The issue: it wasn’t Madonna. But in the meantime she had seen how important owning the domain was. What followed was a series of legal disputes and a fight for ownership of the madonna.com domain.

Domain trading becomes a viable business model
The story of Madonna and her domain of choice is just one of many. Numerous companies, authorities and artists likewise missed the chance to claim meaningful domains for themselves in the early days of the world wide web. Others – with greater vision – saw an opportunity and took it. Anyone quick enough to spot a domain’s potential at an early stage and acquire it was able to turn a tidy profit. After all, it was a case of first come, first served. And rising value with very little capital outlay. Domain trading was a completely new business model. In the early 2000s, there was a proliferation of headlines such as “Millions in profits from domain sales” and “Gold fever among domain speculators”. The business.com and the-wall-street.com domains changed hands in 1999 for around nine million euros, earning them a place among the most expensive to this day.

Domain trading continues to thrive
But all of that happened around 20 years ago. And the market has since settled down. In 2018, the .at zone expanded by around 17,642 domains, helping to take the total number of .at domains registered worldwide to 1,307,435 (as at August 2019). Headlines highlighting bidding wars and legal disputes are few and far between. And the legal framework has since been tightened up to protect brand owners from rights abuses. Which is why generic – i.e. descriptive – domains such as sneakers.com etc. are all the rage. But all of the best generic domains are long gone. The market appears to have been well and truly stripped clean. So is it still possible to make money from domain trading? The amounts being bandied about still seem huge. A look at the latest chart topper: in 2019 the domain voice.com was sold for 30 million US dollars.

Trading domains in the upper price segment
Daniel Dingeldey, attorney-at-law and domain expert says: “It is still possible to earn very good money through domain trading.” Dingeldey runs domain-recht.de, which is the biggest German-language blog dedicated to internet domains out there. His newsletter keeps subscribers up to speed on all the latest developments. But he also has a word of caution: the big money is to be made in the upper price segment. The highest grossing sales that attract the most attention are generated through reselling. “This means that an investor starts out by investing in a domain with lasting value and has to be in a position to bring significant amounts of capital to the table,” Dingeldey notes. The most successful and best-known domain investors aim to make the biggest cut possible – for example by buying a domain for 200,000 dollars and selling it on at a later date for two million. But it’s not quite that simple. “Time, patience and a firm financial footing are crucial,” Dingeldey notes. That said, it is possible to turn a profit through everyday domain flipping. It is a business like any other. “You pick up domains for 200 US dollars and sell them on immediately for 400. It’s a lot of work though.”

Domain trading on platforms
How are domains traded in the first place? Platforms like Sedo, a subsidiary of the United Internet group, bring buyers and sellers together. Some domains are offered in auctions, with the prize going to the highest bidder. There are 19 million domains available for sale on Sedo. Besides these platforms, there are domain traders who offer their registered domains on websites, or reach out to potential customers directly. This approach is one way to secure considerable gains for domains that were purchased for relatively little money. According to Sedo, some of these addresses really are worth millions today. So if anyone is thinking about deleting a domain, they should definitely look into its potential value first.

Endings play a major role in domain trading
The top level domain has a major role to play when it comes to domain trading. “.com remains the ending of choice for domain investors,” Dingeldey confirms. Domains with this particular ending tend to command higher prices. “Although this predominantly applies to the US domain scene,” he adds. Dingeldey goes on to explain that anyone looking to appeal to the European domain market will be well served with country endings such as .at, .de and .fr. 2014 saw the introduction of gTLDs (generic top level domains), which made endings such as .shop and .club possible. “In my view, the new generic top level domains have yet to establish a proper foothold,” Dingeldey concludes.

Madonna takes no chances
In many cases, companies or private individuals have their hearts set on a specific domain only to discover – as in Madonna’s case – that they are already taken. Anyone affected in this way can attempt to reach out to the domain owner and try their luck. But as there is no guarantee of success, looking around for alternatives is advisable.
Ultimately, everything turned out all right for Madonna. Today she is the owner of madonna.com. What it cost her is not known. But as trading platform Sedo reported, the pop diva registered several other top level domains at the same time. Better safe than sorry.

 Did you know...
...that .tv is a particularly popular top-level domain for television broadcasters, but does not actually come from the word television? It is the country code allocated to Tuvalu by the International Standards Organisation (ISO). With a GDP of 40 million US dollars, this country in the southwest Pacific ocean had the smallest economy in the world in 2017. Tuvalu sells rights to its top-level domains to a registry, which generates significant income – USD five million a year. The country puts this money to use in various ways, including paying to join the United Nations. Prominent examples of .tv domains include twitch.tv and arte.tv

 Die teuersten Domainverkäufe 2018:

Files.com 750.000 US-Dollar
Christian.com 600.000 US-Dollar
Dax.com 500.000 US-Dollar

 Die Domainzahlen der TLD 2018:

.at       1.298.943 (+17.624 im Vergleich zum Vorjahr)
.de      16.204.526 (- 108.614 im Vergleich zum Vorjahr)
.com   138.992.610 (+7.097.320 im Vergleich zum Vorjahr)

_{Sources: sedo.de und domain-recht.de}