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domain pricing

Why Domain Names have Scarcity and thus Value

First sold for US$835,000, then the news really hit the mainstream with selling for 7.5 million. By the time sold for 3 million such sales were already ho hum, with million plus sales having become a frequent event. Hundreds of "mid price" name sales have been where a lot of the monetary volume is, such as $198,895 for, and our own companies' sale of for $160,000 (brokered through before the launch of Commonly though most of the high volume transfers are in the hundreds to few thousands of dollars for less 'prestigious' sounding words, such as for $50,000 ranging down to for $500. Why these considerably 'above small change' amounts for something that cost their first owners typically only US$70?

Well, remember each Domain Name is unique. Then there is that key word prestige. Most businesses in Japan would want a piece of land in downtown Tokyo to plonk their headquarters. Unfortunately, as the old saying goes, "land, they are not making any more of it." So there is a shortage of central Tokyo land. Hence the hot price of Tokyo real estate. scarcity and value
So to it goes with "mental real estate." You may have noticed that every commercial net entity seems to want a Dot Com. There are a few rebels and net service providers which seem to like a Dot Net, and not-for-profits seems to like Dot Org, but by and large if you were to name a prominent Internet company it would be "name (X)".com.
You may have also noticed that the big players commonly have a short snappy word in front of their .com. Domain names like,,,,,,, are so much the norm that when you see it looks the odd one out.
Nowadays, as the Internet is currently on track to have 200 million plus domains registered by the year 2003, with tens of millions of Dot Coms alone registered already, it is proving hard to get a short snappy URL (Unique Resource Locator, the techie word for a web address).  
  This shortage of snappy URL's is due to several unavoidable facts of scarcity. Firstly, if you want the Tokyo skyscraper of domains, a common English word such as or even, then forget looking at a fresh registration. There are after all only 8,000 words in the average educated persons vocabulary. Similarly, if you want to go for a pronounceable short made up acronym such as or, then you will find that all alphabet combinations of four letters and less are taken (however, for quite a while five letters and up will remain available because of the exponentially increasing hundreds of thousands, to millions, to billions of extra possibilities that each additional character adds).  
  Well why don't new companies just register or A large part of the answer is prestige, the shorter and more 'generic' (common) words in Dot Com show that you were here on the net in the early World Wild West days or that you can afford to pay big bucks to buy your domain name The other part of the answer is "high memorability."  
  The shorter a URL the less characters you need to type, so the easier it is to remember. Yet also this is a reason to get a powerful English word such as Amazon (.com), as you don't have to remember… "was it or"? Memorability is also the reason for the final major aspects of domain scarcity: Industry Size. If your name describes the product you deal with such as for a loans company then it is usually more memorable to site users, who can then find you again amongst the millions of other Dot Coms. And by this Industry Size criteria is clearly more valuable than  
  So what we end up with as a basic way of gauging a domain name's worth is… short+generic+Dot Com+industry size=shortage+prestige+expensive.  
  That's the basics of the domain name resale market! Since this re-sale market has now become a billion dollar industry some of you may have nearly fallen asleep reading these basic notes, or be asking "what about name (X).com….". If this is you, we have a critique of this often quoted valuation formula as we too believe it has limitations in its over-simplicity;  
  Domain Name Science….The Details--->