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Domains

What’s in a name? If it happens to be Drugs.com, about $823,000. That was the sale price brokered for the name a few weeks ago by Chatsworth-based GreatDomains.com. The price paid by San Francisco-based Internet startup Venture Frogs, which plans to launch an online pharmacy represents one of the highest prices ever paid for a domain name. If that seems like a lot to pay for a Web address, GreatDomains executives say it’s only the beginning. The company has other names on hand including Loans.com, Houses.com and Shoppingmall.com which it believes will sell for more than $1 million each. “People are realizing how important this market is,” said GreatDomains President Jeffrey Tinsley. “The names are worth what people pay for them, as long as they know how to use it.” Years ago, as the Internet started to take off in popularity, savvy entrepreneurs paid $70 a pop to register what they thought would become the most popular domain names, believing they would be able to sell them at a profit in the future. Others bought names because they were planning to launch their own sites, but the business model didn’t work out or they dropped their plans, leaving them with a name to sell. GreatDomains doesn’t own these names itself; its model is similar to that of a real estate agency, though its 10 “Realtors” have more experience in designing Web sites than selling homes. People can list their domain names on the GreatDomains Web site for free and auction them off or post a set price. If the name sells, GreatDomains makes a 7 percent commission plus $250 in escrow fees (though it collected 10 percent in the Drugs.com deal). GreatDomains allows anyone to list any name for sale, but once actual bids start coming in for a particular name, GreatDomains undertakes a background check to make sure that name is legitimately owned by the seller and that the buyer has the financial wherewithal to pay the bid price. For the big-ticket names, GreatDomains conducts background checks prior to the name being listed. As of last week, more than 60,000 names were listed on the site, priced from $500 up to nearly $500,000. And Tinsley expects the number of listings to double by September. Buzz about the Drugs.com sale has pushed the number of new postings on the site up to about 1,500 new names a day, he said. “This market will expand much, much further,” he said. “Twelve thousand to 13,000 new dot-com sites are registered daily (with Internet registries).” Tinsley declined to discuss company’s revenues or how many sites it has brokered. It started in 1996 as a side project of Multimedia Realty, a Beverly Hills company that was one of the early Web sites to list homes and other properties for sale. (Multimedia now owns a minority position in GreatDomains.) The first few years, sales were slow, Tinsley said. But in April 1999, he and his brother, Chief Operating Officer Jason Tinsley, redesigned the Web site, making it easier to search for names and linking it to Web registries, which allow people to register new Web sites for a fee. Since then, GreatDomains’ listings have exploded. The soaring value of Internet real estate is being fueled by the medium’s growing importance, and the fact that fewer simple names are available. Network Solutions Inc., the Virginia company charged with registering domains, has more than 5.3 million dot-com names registered. And there is talk of creating new suffixes so more names can be added, such as .news or .store. Brad Nye, executive director of the Venice Interactive Community, a Los Angeles Internet association, said he sees more and more companies struggling to track down whether their preferred names have been registered by somebody else. “People are spending money,” Nye said. “If you’re building a long-term, brand-name business and it’s not established, you’d better have a strong name and have a name that’s easy to type in. That’s harder and harder to find.” For that reason, popular commerce names are fetching hefty prices. One company shelled out $1.3 million for the name Wallstreet.com in January. San Francisco-based Guru.com went so far as to hire an ex-CIA agent to track down a Web-site address owner, then forked over thousands of dollars for its domain name. “We wanted a name that was short, hip, had some kind of relevance, and was memorable for people,” said Guru.com President James Slavet. “There aren’t that many good names left.” The GreatDomains site allows users to type in a category and browse through the offerings. A search for clothes turns up sites such as clothesalz.com on sale for $450,000 or fashiondiva.com for $1,500. There’s also a section for “bargain” names starting at $500. To help sellers determine a domain name’s worth, GreatDomain has devised a scale, posted on its site. The system is based on the number of characters in the name, the name’s ability to attract commerce and whether the address is a dot-com. Fewer characters score higher, as do names with a better ability to attract sales (i.e., “cars” beats “camping”), and a “.com” scores better than other suffixes such as “.net” or “.org.” Trademarked names are worthless because of legal issues, although that hasn’t stopped people, known as “cybersquatters,” from trying buying up variations on trademarked names such as prudentialinsurance.com. The generic one-word names are so valuable because some already attract people to the sites without company promotion. Drugs.com reportedly got about 4,000 hits a day, even though there was no Web site posted under that name. The former owner of Drugs.com, like many GreatDomains sellers, registered the name several years ago with big plans to start his own company, Tinsley said. But reality hit and plans to start a pharmaceutical company proved too challenging. So he sold. “Most people who registered these names weren’t speculators,” Tinsley said. “Almost all bought the sites with plans to build all sorts of things and then found it was more than they could handle.” So far, the owner of Drugs.com and other domain owners have come to GreatDomains, but Tinsley said the company is now starting to search for sites and sellers to add to its offerings, rather than just waiting for sellers to come to it. In the coming months, GreatDomains will start auctioning off not only Web domains, but Web businesses. Affordablefurniture.com, a Dallas-based Internet business, will be one of the first to sell not only its name, but its entire operation. A host of other brokers have staked out the online arena, but so far, GreatDomains is leading in selection. Dotbrokers.com, which helped broker the Drugs.com deal, has just over 1,200 names listed at its site. But even with a large selection, company officials have found, there are some things and names money can’t buy. Domains.com, the name Tinsley and others had originally sought for the name of their company, was snapped up before they could get to it so they took their second choice, GreatDomains. “That’s why this works,” Tinsley said. “I spend hours searching registries trying to find a halfway decent name. The market needs this service.”

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