Important Considerations When Investing in a Domain Name

Domain names are fast becoming an asset for thousands of worldwide investors and business owners. A domain name is an easy way for people to locate a website on the Internet. For many corporations the names are becoming a brand in their own right and can be traded for additional value because of the brand equity or goodwill they have built.

Some factors contribute to the value of a domain name before it is ever registered. Some names are specific to certain types of organization or geographic location. All are subject to the rules imposed by local governing bodies concerning the legal registration, purpose and disposal of domain names. This article will provide a starting point to those who are interested in purchasing a domain name.

When you choose a domain name you will also register an extension, for example .com, .org or, .gov. A discussion of all possible domain name extensions is beyond the scope of this article; however, the most commonly used ones are worth referring to. The top-level domain name extension, .com, is usually the most valuable because it is considered to be a "worldwide" commerce address and therefore generates more traffic than a local name. With appropriate content a .com name is as applicable to Australia as it is to the United States. The .org extension is intended for use by not for profit organizations and the .gov name is for Government departments.

There are cases when a country specific domain name is more valuable to the user than a .com name. For example a pizza shop that wants to offer deliveries Australia wide would be wise to purchase a .com.au name, specifically intended for commercial use in Australia. When a user searches a popular web search engine such as Google or Yahoo, they may select a box to display results only from Australia. In this case the .com.au names would be displayed but not the .com names.

Domain name length and word count also contribute to the value. Rule of thumb is single word domain names are worth more. Shorter is better. Like everything there are exceptions to the rule. Consider the amount of people that might look up a celebrity name after viewing a news item. britneyspears.com is likely to be as valuable as spears.com although the latter is shorter.

Would you rather purchase easysandwichrecipes or cookbookrecipe? To me both domains are a good choice depending on what you plan to do with the domain name, if its just for investment purposes and holding to sell for a later date, I would look at cookbookrecipe first, but if you plan to build out a website on either of those domain names, then you could have a specific website selling easy sandwich recipes or a website with cook book recipe.

In most cases hyphens or numbers can be used as part of a registered name but these mostly decrease the value.

If in doubt about the value of a domain name, industry experts at Estibot provide online domain name appraisal services. There is a fee for the service, but it may be worth knowing a fair price when buying or selling a particular domain. Godaddy now offers domain name appraisals for free as well as Free Valuator. As with any investment, return on investment is an important consideration when trading domain names.

The Internet Corporation for Assigned Names and Numbers, (ICANN) located in California is responsible for governing the use of international domain name extensions, which are those with 3 letters or more, including .com, .org and .info. Some domain name extensions are further separated to be country specific and are regulated by local governing bodies.

Australian domain names, such as .com.au are governed by the Australian Domain Name Administrator, (AUda) and cannot legally be traded in the same way as other domains. A .com.au name may only be transferred when a business is sold. For this reason, users cannot list a .com.au name or website for sale on netfleet.com.au.

Prior to purchasing any domain name, the buyer should always check that the person selling the domain name is either an accredited registrar or the legal owner of the domain name. To check legal ownership, visit the WHOIS database for international domain names, accessible from Godaddy and the AUda WHOIS database for Australian domain names, which is accessible from the AUda website.

Finally, before purchasing any domain, the user should look at the date of registration by the current owner. If the date of registration is less than 60 days old the user should not buy the domain yet as it cannot be legally transferred during that time, where this use to be true, the rules have changed and as long as the domain name is unlocked it can be transferred within 60 days. The user should also ensure the domain is not ready to expire or they could be facing additional charges to renew the name.

This article is by no means an exhaustive discussion of what to consider prior to purchasing a domain name. It does provide general guidelines to start trading domains and websites. It is recommended that users seek further information from their accredited registrar, or the regulatory bodies discussed above. Smart Choice Domains offers a lot of good free advice on buying, selling, leasing, and lease to own domain ownership.

Although this article is written in good faith and is believed to be accurate, no such guarantee is made. No part of this article should be taken as specific advice.