The proliferation of high-priced domain names in the news these days brings up a logical question; what makes one name more valuable than another? Ask this question to a dozen people and you'll likely get a dozen diverse responses, as everyone has their own opinion on what creates value in a Domain Name. But within those responses you'll also find some core elements that observers, for the most part anyway, seem to concede make up a choice Domain Name.
This posting is an attempt to summarize those characteristics that are most desirable in a Domain Name. Use it along with your own common sense and good instincts, and please feel free to comment on it.
The Top Level Domain, or TLD, is still seen as the most important factor in a Domain Names value. The dotcom (.com) domain is still the all-time favorite, specifically due to its familiarity among all Internet users worldwide. Country-specific TLD's are getting to be more popular, especially in Canada (.ca), Germany (.de) and Australia (.au) - as well the British public are very used to using their commercial domain (.co.uk) . Here in the US we don't use the .us domain that frequently as we're still pretty well ingrained with .com, but that could change soon. One TLD to look out for would be the new European (.eu) domain that is about to be released.
While they don't yet command the same prices as the dotcoms the relatively new .biz and .info domains could one day be the next hot properties. We're simply running out of good dotcom names, so as popular websites start appearing with other TLD's the public will gradually accept them. DotInfo and DotBiz lend themselves to some very catchy and descriptive names that will undoubtedly become more valuable as the Internet extends even further into our lives.
The number of characters permissible in a domain name was recently expanded, making names such as "myverylongdomainnamethatilike.com" feasible. This of course is both a blessing and a curse, as a number of very descriptive and VERY long names are now springing into existence.
For resale value shorter is better, the Wall Street Journal uses wsj.com and not their full name as they realize their audience isn't going to want to type that into their browser bar. Most people seem to agree that the shorter names are the most valuable. In addition, names consisting of one word are the Internet equivalent of Oceanside property - and for this reason they are just about impossible to find in any TLD. Two-word domains are still available, although finding two words that make some sort of sense when used together is a bit tricky.
While long domain names are generally undesirable there can be exceptions, often due to current events, celebrities or news items. During the start of the war a popular site was "welovetheiraqiinformationminister.com", a site devoted to the quotes and antics of that lovable Iraqi Information Minister Muhammed Saeed al-Sahaf (the fellow who was still reporting glorious Iraqi army victories as US troops were storming Baghdad in the background). Yours truly is still kicking himself for not grabbing "runawaybride.com" when the world was rivited to the crazy story of Jennifer Wilbanks and her spur-of-the-moment cross-country trip. If you're fast to spot a breaking news item you could score a victory with a catchy related name, no matter how long it is.
The Name Itself
It shouldn't require a degree in Rocket Science to see how names like business.com and news.com could be perceived to be more valuable than ornithorhynchus.com ("ornithorhynchus" is the Greek word for Platypus, in case you'd forgotten). A name that describes the sites function or the business's product is good news for everyone.
But sometimes the obvious isn't so obvious. Back in the early days of the Net (anyone remember Gopher, Jughead and Veronica?) who would have picked "amazon.com" to be the name that everyone would associate with online book orders? Why not "books.com" or "library.com"? And how about eBay, would anyone have picked that name out of the hat back in the early days?
Social trends and cute catchy names can influence name values tremendously. Although it's been a word for a long time (it refers to a mathematical expression for one hundred to the power of one hundred) "Google" only entered into the common vernacular recently, those who aren't math professors (or trivia addicts) hadn't heard the phrase until Google started taking over the world at the dawn of the new millennium.
To Hyphen or Not To Hyphen
Yes, that is the question. As for the answer, well this is probably the most debated topic among those who claim to be experts.
The argument for using hyphenated words (like hawaii-beach-vacations.com) is for their clarity to both humans and search engine spiders above non-hyphenated names (like hawaiibeachvacations.com). The argument against them is that they are harder to remember or to spell to someone over the phone.
In general the hyphenated names seem to trade for less value, so if you're purchasing domain names solely for investment purposes you might want to avoid or limit the number of hyphenated names in your portfolio. If you're buying a domain name for your business you might want to consider a hyphenated name, if possible you'd probably be best to splurge and buy both versions - you can point them to the same website and capture the traffic sent by both names.
While domain names are being purchased at a phenomenal rate there are also names that are expiring every day, and this market has become a lucrative one for domain name speculators. They will literally sit on a good domain name until the moment it expires, then they'll try and grab it.
A "used" domain name can be more valuable than one that is just freshly registered for two reasons. First, the name was probably registered back when there were more choices available, so it could likely be a very good name to start with. Secondly, if there was once a site associated with the name it may have a reputation - if the reputation is a good one that the name could be valuable in that it already has an existing customer traffic base.
Of course this last point is only really useful if you're planning to continue with a site that is along the same theme as the original. If you buy "cowfarmer.com" and then change it from an agricultural site to a site selling skins for iPods you'll likely lose the majority of the established traffic (and if you have any business partners you'll probably loose them too!).
Assigning a Monetary Value
This is the difficult part, putting a dollars value on a domain name. Would you have evaluated "business.com" for 7.5 million dollars? How would you evaluate a name like "newcarsales.com"?
Sadly there is no standard for assigning a pricetag to a name. If you have a great name but no one seems to be interested you may well sell it for very little. However if you have a buyer who ses your name as being just perfect for his/her latest business venture then you may be able to command a ridiculously high price for it.
Several Domain Name appraisal services have come into existence recently. Some buyers use them as a deciding factor in making a purchase, which is scary as there are no guidelines that these appraisers have to follow - you're literally paying them for an opinion. As a seller I can see little value in them, especially as the appraisal result vary greatly between services.
The best guidelines for a domain names value are to keep your eye on recent Domain Name sales. Find names similar to yours and see how much they fetched, this will start to give you a ballpark figure that you can use in evaluating your name.
The value of a name is mostly that of individual perception, but some key elements still factor in. Keep these in mind and you should be able to build up a portfolio with considerable value.