Gone are the days when domain name was just a name to address an IP address where the websites are hosted. Today, domain name has become property, which is also used for showing off. They are now more meaningful, they represent the brand. And this is causing the domain name trading hotter.
There are companies which are ready to invest huge money in a domain name, which they think, can help them gain more traction. Recently China is showing an increased interest in domain names. And more importantly the 3-letter .COM domains. According to a technology portal, 136 out total 676 possible 2-letter .COM domain names are now owned by Chinese.
Take this example – Google recently restructured its business and named the holding company as Alphabet. Ideally it should have used the domain name Alphabet.com. But this domain name is owned by a major auto company and it will not part with it (its a matter of respect). So, Google took the domain abc.xyz. It is unique, catchy and somehow represents alphabets. (.XYZ is one of the new TLDs which were recently opened up for registration. Other TLDs now available are .NETWORK, .SERVICES, .GURU and even .WTF is possible now!).
Though the interest is more in special short domain names, but there are certain names which one thought were not sought after. Even those domain names are getting sold like hot cakes. A domain name which would get sold at an average price of $10,000 is now selling at an average price of $50,000.
But what makes a domain name so pricey?
Since the Internet has picked up, there is race to get that unique name, which is also catchy or is generic. For example hotels.com, a generic word which represents a business, can be a perfect domain name for hotel business. and being a generic word, is easy to remember and will appear more often in web search (remember, SEO?).
The other reason is the short supply. Only 26 1-letter .COM domain names are possible (36, if you include the single digits). This scarcity makes them hot cakes. Now there can be only as much domain names possible.
It is not simple to understand this domain name business. But who have understood it are already making wealthy trades. Some may it is a fad and some have invested huge amounts. I feel with the way Internet is penetrating in our lives, a domain will always be in demand. And with the limited names available, they will always be in demand.