Commercial resale of domain names

An economic effect of the widespread usage of domain names has been the resale market for generic domain names that has sprung up in the last decade. Certain domains, especially those related to business, gambling, pornography, and other commercially lucrative fields of digital world trade have become very much in demand to corporations and entrepreneurs due to their intrinsic value in attracting clients. The most expensive Internet domain name to date, according to Guinness World Records, is business.com which was resold in 1999 for $7.5 million, but this was $7.5 million in stock options, not in cash. Later the stock was valued at, not sold, for $2 million and may even be worth less today Newsweek. There are disputes about the high values of domain names claimed and the actual prices of many sales.

Another high value domain name, sex.com, was stolen from its rightful owner by means of a forged transfer instruction via fax. During the height of the dot-com era, the domain was earning millions of dollars per month in advertising revenue from the large influx of visitors that arrived daily. Two long-running U.S. lawsuits resulted, one against the thief and one against the domain registrar VeriSign. In one of the cases, Kremen v. Network Solutions, the court found in favor of the plaintiff, leading to an unprecedented ruling that classified domain names as property, granting them the same legal protections. In 1999, Microsoft traded the valuable name Bob.com with internet entrepreneur Bob Kerstein for the name Windows2000.com which was the name of their new operating system.

One of the reasons for the value of domain names is that even without advertising or marketing, they attract clients seeking services and products who simply type in the generic name. Furthermore, generic domain names such as movies.com or Books.com are extremely easy for potential customers to remember, increasing the probability that they become repeat customers or regular clients.

Although the current domain market is nowhere as strong as it was during the dot-com heyday, it remains strong and is currently experiencing solid growth again. Annually tens of millions of dollars change hands due to the resale of domains. Large numbers of registered domain names lapse and are deleted each year. On average 25,000 domain names drop (are deleted) every day.

People who buy and sell domain names are known as domainers.