Observations on the valuation of Domain Names - a growing part of the Intellectual Property Market

1. Probing The Domain Name Valua3on Universe
Observa3ons On The Evolving Intellectual Property Market For Domain Name Values
By Nicholas Assef LLB(Hons) LLM MBA
e: naa@lcc.asia

2. CONTENTS
SIGNIFICANCE OF A NAME 1
BACKGROUND INFORMATION 2
Why Register A Domain Name 2
How Large Is The Domain Name Market ? 2
Enter the Mobile Economy 2
What Factors Contribute To Such A High Incidence Of Domain Name Expiry / Lapse ? 3
What makes a good Domain Name ? 3
Valua%on Acronyms & Associated Models 4
So Much Informa%on So Li;le Time 5
Existence of A Free Market 5
Companies Opera%ng In The Space 5
TRADITIONAL APPROACHES & CHALLENGES TO DOMAIN NAME VALUATION 6
A Review of Accepted Approaches 6
Comparable Analysis 6
Discounted Cashflows 6
Value of Revenue 7
Links & Traffic Numbers 7
Are These Tradi%onal Views Accurate ? 8
Tribalism at Work 8
Links 8
Traffic Numbers 8
Exper%se & Domain Name Valua%on 8
Conclusions on Tradi%onal Valua%on Approaches 9
ALTERNATE APPROACHES TO DOMAIN NAME VALUATION 10
Are These Challenges In Valua%on Unique To Domain Names ? 10
Collec%ble 10
Intellectual Capital / Property 11
SOMETIMES SIMPLE IS SENSIBLE 11
Conclusion 11

3. Probing the Domain Name Valua3on Universe | 1
LCC
business classifieds sector in par3cular, the drive to deploy
local search solu3ons has been significant.
Against the rapidly increasing recogni3on of the importance
of the simple domain name in the e‐commerce dynamic, this
paper explores a range of issues including:
Reviewing the tradi3onal approaches to domain name •
valua3on. Technical and not so technical.
Commen3ng on the shorYalls in some of these tradi3onal •
valua3on approaches.
Highligh3ng a number of the service providers that have •
sprung up around the domain name industry.
Challenges to achieving large valua3on premiums for •
domain name assets.
Conclusions and observa3ons governing valua3on at this •
point in 3me in this new asset class’ evolu3on.
One of the conclusions that this paper reaches is that the
majority of approaches canvassed in rela3on to valua3on
have some form of academic merit. That being said, most
approaches overlook the prac3cal challenges of this emerging
asset class and so from a commercial perspec3ve have their
limita3ons.
Another interes3ng observa3on of the writer’s is that the end
registrant/speculator should not be so concerned on cashing
out on the 7 figure domain trade as the ‘thickening’ of ac3vity
in the 4 and 5 figure range10
. This is in many ways the sweet
spot of the domain trading industry, and one where the writer
believes ac3vity is set to increase with 3me. Naviga3ng
across the domain exchange marketplaces, and reviewing
the repor3ng of sales over many months, it is this range that
is seeing quality assets exchange at sensible and explainable
values.
The over riding conclusion to this paper is that the domain
name is a simple but powerful extension of intellectual capital.
A tool that has the capacity of enhancing the market posi3on
of an end user – par3cularly against the backdrop of the
emergence of new geographic markets, and the increasing
appe3te of Internet users for ‘local search’ solu3ons.
For the company wan3ng to uniquely posi3on itself in the vast
‘sea’ of the Internet the domain name is a naviga3on beacon
that can quickly assist in branding and market posi3on –
delivering a poten3al global branding outcome, via the simple
registra3on of a unique iden3fier.
Significance Of A Domain Name
What is in a name ? In the environment of the Internet
significant money is the writer’s observa3on. The domain
name is the ‘door’ to a company or individual’s online
presence. As such it is a highly valuable and much sought
ader item.
The simple domain name aeracts a high level of aeen3on
in the ‘secondary market’ of trade1
. Any why not. For a
few dollars outlayed in the registra3on process, the savvy
domainer2
has the possibility of genera3ng a substan3al
profit. Conver3ng a simple .com registra3on into a mul3
million dollar piece of intellectual property has its aerac3ons –
the greed bell in the human brain cannot help but commence
ringing.
But is it that easy to make your fortune in this asset class ?
Generally not. The humble domain name that is commercially
mone3sable is an item of rela3vely limited supply. Whether
one wants to contend a domain name is akin to real estate,
a collec3ble or intellectual property the URL3
has come to
represent a powerful & credible marke3ng tool.
And the playing field keeps evolving. From the early day of
the Internet ICANN4
has gradually released addi3onal domain
name extensions to the first genera3on TLDs5
, gTLDs6
and
ccTLDs7
. As well as those in local language characters8
. Some
extensions are proving valuable. Others not so9
. Many of these
ccTLDs extensions cover emerging na3ons such as India, Brazil,
Germany, China and Russia – where Internet penetra3on is
on the rise and so the value of these indigenous extensions
are also star3ng to move in value upwards. Par3cularly
given the established habit of local users to naturally seek to
navigate to local sites which are more aeuned at providing
specific informa3on relevant to their geography. In the online
Domain Name Records
A number of the highest priced domain name sales
recorded are :
Fund.com for US$10million•
Beer.com for US$7.5million•
Business.com for US$7.5million•
As reported on dnjournal.com, toys.com also traded in
2009, apparently in bankruptcy, for US$2.5 million.
1
Secondary trade refers to the buying & selling of domain names in the free market, after the initial registration has taken place
2
Colloquial term for an individual who trades in the buying and selling of Domain names
3
URL stands for Uniform Resource Locator
4
Internet Corporation for Assigned Names and Numbers www.icann.org
5
Top Level Domain Names
6
Generic Top Level Domains
7
Country Code Top Level Domains
8
Refers to Internationalized Domain Names or IDNs
9
The value of various extensions, such as .me, are so personal that their ability to generate secondary market value is limited. Other extensions, such
as .biz, are not achieving the values of other purse gTLDs with the leadership continuing to be the .com extension
10
$1,000 to $99,999 trading range

4. 2 | Probing the Domain Name Valua3on Universe
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Background Informa%on
Domains are a seriously fascina3ng piece of intellectual
property. And more importantly, given the low registra3on
costs involved, are an asset class that can be traded by virtually
everybody.
There is also the ‘gold rush’ aspect that the domain name
industry has generated. Stories of trades for high sums are of
course plen3ful. To the uneducated it appears in many ways
to be easy money. Register a name and it has the poten3al of
being worth many mul3ples of that in a short period of 3me.
Compelling.
Specula3on in the marketplace is rife. Camping on well chosen
words and phrases has become so prolific that it has spawned
the en3re ‘parking’ industry. Domain name ‘hoax’ emails are
on the rise11
. Domain name conferences12
are held regularly
around the globe at which an element of the agenda is a ‘Live
Auc3on’ of domain names. Numerous online domain name
exchanges have sprung up.
All this means that the humble domain name, whilst s3ll in
its infancy13
, is rapidly emerging as a mainstream asset class
which has deep commercial value and aeachment.
Why Register & Maintain A Domain Name
To con3nue to register a domain name one has to have some
form of commitment. That commitment may originate from a
number of areas including :
A simple commercial purpose. • The domain name is
associated with the registrant’s business and therefore is
the cyberspace ‘brand’ for the parent company. Be it Coca
Cola Corpora2on to the neighbourhood plumber, based
on this approach the commitment for ongoing registra3on
is high and commercially driven.
A domain related commercial purpose. • The domain
name is a commercial purpose in and of itself, and as such
its ongoing registra3on drives a business. In short the
business is being built around the domain, which in turn is
evolved from a simple word into a brand14
.
Specula%on.• Just as in any market certain specula3on
strategies are beeer posi3oned for success than others.
Speculators are becoming increasingly focussed on
domain names that will hopefully lead to an opportunity
of commercially based exit. That is, own something today
that a company will want to acquire tomorrow, as it will
deliver that company a poten3al strategic advantage in its
posi3oning on the Internet. This is a more sophis3cated
approach than the previous blatant land grabs of
realis3cally any form of .com URL15
.
Fun. • Many like domaining to a hobby. Nothing more.
Nothing less. Such domain fans are not commercially
driven, and given the low 3cket value of their hobby can
afford to indulge it on an ongoing basis. The end use may
be to run a personal or hobby oriented web page – or
alterna3vely there may be no end use whatsoever. The
buzz of ownership is all that maeers.
How Large Is The Domain Name Market?
It is of course no great surprise that the domain name market
has become large and lucra3ve. Website www.domaintools.
com notes that just in .com extension there are currently
80,255,248 currently registered URLs with a whopping
300,368,117 which are deleted (no longer ac2ve). Quite extra
ordinary when one considers that the asset class came into
being in 1994.
With the release of numerous addi3onal extensions by
ICANN, coupled with the increasing global penetra3on of
Internet connec3vity (in par2cular in large countries such as
India, China, Russia and Brazil) the writer an3cipates that
the domain name market is set to con3nue to grow for the
foreseeable future, with this being driven by both specula3on
and commercialisa3on.
As more individuals and businesses commence to drive
commerce through the Internet, the requirement of well
framed URLs will become just that more important – in
par3cular across developing countries and geographies16
.
Enter the Mobile Economy
Addi3onally, and importantly, access to the underlying
websites that the URL gate keeps is rapidly shiding beyond the
fixed line access to the Internet.
The trend will undoubtedly shid, in the writer’s opinion, to
the convenience of the mobile device – par3cularly amongst
younger users who gravitate to mobile phones and other
Internet ready mobile hardware17
. The increased availability
of more budget oriented data plans across the mobile
device in emerging economies will further add to the mobile
experience, including the consump3on of digital media,
gaming and social interac3on.
Consider a na3on such as India. The Telecom Regulatory
Authority of India released on 20th August 2009 Telecom
Subscrip3on Data for July 2009. Over 14 million new wireless
subscribers were added in a month, with total wireless
subscrip3ons in India exceeding 441 million18
.
With an ever increasing array of content available on the
11
One recent one received by the writer related to an application in China of registering a series of
ccTLDs relating to one of the writer’s URLs. The email was a call to action to immediately dialogue
with the Chinese authorities to prevent an unauthorized registration and potential misuse. Of course
the follow up email was also an invitation to register those domains for the writer. The veil of being a
regulatory intermediary seeking to protect interests, to that of a commercial service provider was almost
instantaneous. Fortunately credit card details were not handed over. One of the increasing approaches
being used to attempt to generate revenue from this industry in an unscrupulous fashion
12
For example T.R.A.F.F.I.C, Domainer Mardi Gras and DOMAINfest Global are all popular events
13
The URL was created in 1994 by Tim Berners Lee : http://www.ietf.org/rfc/rfc1738.txt
14
www.Internetrealestate.com is the core site of Internet Real Estate group, arguably one of the most savvy of
the developers of simple domain names. The bi-line on the home page of this company’s website says it all :
“Developing Internet Brands”
15
And there are tools to help with name generation as well. Sites such as www.MakeWords.com position
themselves to assist users ‘find unique and memorable name ideas…..’. ‘With just a few clicks users can easily
generate hundreds of random phonetic names…….’. Also the reader can review similar sites such as www.
nameboy.com & www.123finder.com
16
Geographic URLs have been introduced for some years. For example, .asia
17
Examples include the Apple I-Tough which is Wi Fi ready
18
Refer to www.trai.gov.in for additional data on the rapid expansion of the Indian market

5. Probing the Domain Name Valua3on Universe | 3
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Internet, the importance of simply naviga3ng to topics that
the user wants to view will become increasingly important.
The domain name can be a highly potent tool to facilitate
simple naviga3on – and with the rapidly increasing use of
mobile applica3ons simple domain names will be just that
more aerac3ve.
What Factors Contribute To Such A High Incidence Of
Domain Name Expiry / Lapse ?
Why is the incidence of expiry / lapse almost 4 3mes that
of what is represented as being current registra3ons ? The
writer believes that there are many factors at work, with the
following offered as some of the more logical observa3ons &
explana3ons :
There are lots of• ‘good ideas at the 2me’ given the high
incidence of registra3on followed by dele3on / expiry.
Given the high incidence of squasng / specula3on there
is a natural tendency to immediately try and capture the
high ground in cyberspace by registering a domain name.
The barrier to registering a domain name is all but non •
existent19
. There are numerous service providers that
allow the ‘good idea’ to be converted into a piece of
intellectual property by nothing more than a few key
strokes and a credit card. All one needs is Internet access
and it is game on.
The cost of registra3on is very low – and gradually •
falling20
, in par3cular at the gTLD level21
, as with any
commodi3sed industry. The sheer number of domains
that have been registered and lapsed is evidence of the
‘disposable capital’ involved in the registra3on process.
That is ini3al capital22
that the end user is willing to
forego or ‘dispose of’ down the track because the loss
associated with it is not financially threatening.
A domain name is an incredibly fragile piece of •
intellectual property whose value is effec3vely binary. It
is something or nothing. The domain name needs to be
registered each year to con3nue to have the poten3al
for ‘value’. A failure to register by one user means that
the value can quickly flow into the hands of another23
if
the registra3on window is missed on renewal24
. In the
context of lapses / expiry this is relevant as if there was
a commercial driver to aeachment to the domain name
then it would be illogical to allow it to lapse.
The expiring domain names also bear clear testament to
what has oden been termed the ‘Internet gold rush’. An
exuberance by many speculators that grabbing a piece of
Internet land will pay off handsomely in the near term.
Unfortunately this is simply not the case. The number of
‘deleted’ names provides clear evidence of the fact that many
people have simply made a bet that has not paid off, and they
have no interest in doubling up (con2nuing to register).
Secondary trading is s3ll highly selec3ve – with buyers
now able to access large volumes of informa3on on lapsing
domain names conveniently. And in the writer’s opinion the
convenience of the industry is a large magnet to aeract and
retain members of this community. Addi3onally, the tools
being marketed by the wider industry players are on the
increase, and the level of sophis3ca3on of those tools is also
on the increase25
.
It does appear that a very basic ques3on con3nues to be
ignored by many speculators. And that is – who will these
domain names / the proper/es associated with them
eventually be sold onto ?
It is argued by the writer that some basic, and oden very
straighYorward, analysis is missing in the speculator’s
approach to the domain name investment. The game of ‘pass
the parcel’ cannot go on forever. Eventually the fundamental
user needs to be found26
.
And the fundamental commercially driven user wants quality.
What makes a good Domain Name ?
There are a number of tradi3onal reasons given for the
commercial aerac3veness of a domain name. These include:
Marke%ng Commitment and Trac%on
The Internet has of course spawned many success
stories with domain names / brands that have nothing
to do with simple valua3on theory, and in fact fly in the
face of it.
Ebay is the oden quoted example. A deriva3ve of
the term ‘bay’ tradi3onal valua3on analysis would of
course ques3on its worth.
Under the writer’s opinion, however, it is a classic case
of the intersect of capital, a brilliant management team
and significant dollars being available and well directed
to build a brand.
The point is that the norm can be bent, but only with
stand out execu3on on a business plan will the brand
drive the domain name value into the elite pricing /
value range.
19
Save for certain countries that require some form of local presence in order to effect registration of indigenous URLs
20
A simple Google search of ‘domain names’ will display a number of service providers competing for registration business on price
21
Although the writer is still amused at the attempted practice of some players to still try and charge high prices for registration – in particular at the gTLD level
22
The registration fee and / or the renewal fee
23
Sites such as www.igoldrush.com detail lists of expired domain names. The number of services providing this style of information is, from the writer’s observation, on the rise
24
Ensure that any registrar that you hold domain names with has an auto renewal service, and that you have selected for this service to be active
25
The writer is a heavy user of www.godaddy.com, and is continually amazed at the development of this business model over the last 2 years. It is an exceptional service, highly convenient and a price leader
26
The end user may be a portfolio player that seeks to monetise networks of URLs

6. 4 | Probing the Domain Name Valua3on Universe
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Length.1. The tradi3onal rule of thumb has been the
shorter the beeer. Ra3onale on this includes the
‘pres3ge’ associated with having a pure name, the ability
of search engines to pick up on the Domain, the ease of
communica3on of the domain and the confidence that
the Internet consumer has in now understanding the
value of the pure domain name.
Extension. 2. The .com extension has tradi3onally been the
dominant URL in terms of highest value. It is generic in
presenta3on and reflects the true borderless nature of
the Internet. One argument has been that given the .com
extension is the most mature in terms of usage, a high
page ranking along with a pure .com is meant to reflect
pres3ge27
. The writer argues that this tradi3onal view is
gradually giving way to localisa3on – with that localisa3on
best effected via a similarly high quality ccTLD.
Links.3. The tradi3onal view has been that the more page
links the beeer. This is meant to reflect in traffic numbers.
Services such as www.alexa.com specifically detail the
page links to sites. Links can be built, however, and
the savvy SEO professional has liele trouble in crea3ng
numerous linking sites quickly.
Page Rank. 4. Where the URL displays on the natural
search results of key search engines is regarded as highly
valuable. This in part due to the behavioural paeerns of
the consumer in displaying a preference to ‘click’ in the
visible search displays28
.
Registra%on Age. 5. The number of years that the domain
name has been in existence arguably has an effect on its
value. Simply because the number of links that are able to
be connected to the URL can rise.
Traffic. 6. The higher the traffic that flows through the
Domain the beeer. Par3cularly in the Google economy
of today where there should be a loose correla3on
between traffic numbers and the ability to mone3se via
products such as Google AdSense. There is then the
concept of traffic density which relates to the geographic
concentra3on of traffic flowing through a URL / site.
Simplicity. 7. Common words are oden argued as being of
higher value than complicated words. Par3cularly where
the simplicity is interlinked with a commercial cause. This
is very hard to argue against when the top priced domains
of all 3me are reviewed.
Purity. 8. Things such as inser3ng a prefix, a slight mis‐
spelling or a suffix do not in general deliver a compelling
valua3on argument. The same goes for a hyphen being
inserted29
. These URLs can s3ll be valuable, but it will
likely be much lower than the simple pure version.
Commercial Opportunity. 9. Be it short or long the ability of
the domain name to simply fit into the Google economy
is an important factor. Is it easily searched ? How many
natural searches result in the URL being displayed ? Some
sectors are more popular than others. Is there poten3al
for a legal challenge to be mounted against the name
itself ?30
Many of these factors are of course simple common sense
once the fabric of the Internet is understood. A core thesis is
therefore that simple and popular translates into value.
Whilst this is arguably correct, there are many examples of
the intrinsic value in the name itself being the driver to value.
The writer argues that for the vast majority of secondary
trades taking place, traffic, page rank, etc. are, however, of
secondary importance.
Valua%on Acronyms & Associated Models
Acronyms are a part and parcel of the Internet.
The website Caslon Analy3cs31
notes that there are a number
of valua3on ‘acronyms’ that are being used to approach
the task of valua3on. The two men3oned here are the Six S
Model and the MULE Model.
The Six S Model approaches the task by factoring in the
following elements :
Size• ‐ is the URL short enough to remember ?
Sense• ‐ Does it iden3fy the business / product ?
Sound• ‐ Does it ‘sound good’ ?
Spelling• ‐ Is it spelt correctly ?
Search• ‐ Does it display in searches or has the
poten3al to ?
Scope• ‐ Does it relate to an industry that has ‘scope’ for
commercial success ?
All preey straighYorward and reasonable.
The MULE approach advocates the following approach :
M• ‐ market type32
U• ‐ usefulness33
L• ‐ length34
E • ‐ ease35
What is the similarity of these approaches ? It should be
obvious. Both assessments are qualita2ve as opposed to
quan2ta2vely driven. Beauty, therefore, can be in many ways
in the eye of the beholder with these simple approaches
reflec3ng the immaturity of the topic of valua3on in what is a
rapidly emerging asset class.
In defence of these commonsense approaches, however,
reference should again be made to the heavy branding /
27
Given the expertise of SEO service providers the writer questions the relevance of natural search reflecting in position today. 10 years ago definitely. Today the ability to manipulate search engine outputs is real
28
SEO optimization can again enhance the page rank of any URL
29
Some of these concepts being outlined in various articles detailed on www.igoldrush.com. A ‘hyphen’ trade of high value was recently reported on DNJournal.com. Hotel-Reservation.com reportedly trading for circa
USD $209,916 in September 2009
30
The law has fortunately developed to protect the holder of an associated physical brand where ‘squatting’ occurs online. Generic can lead to value, but sitting on another company’s name (without commercial use), for
example, is most probably worthless
31
www.caslon.com.au
32
“professional services versus youth/design demographics that favour funky names such as fatbrain or bluesskyfrog versus consumers intent on finding vendors of cars, homes, phones, perfumes and health products”
33
“Will people buy - Catchy, Clever, Concise”
34
Letters/Words/Numbers
35
How it sounds/Does it flow

7. Probing the Domain Name Valua3on Universe | 5
LCC
intellectual capital basis of the domain name.
The above acronyms are uncomplicated but powerful. They
are easily understood by the novice and seasoned trader alike.
And are a useful backdrop to explaining how the assessment
of value can take place in a fragmented and evolving
marketplace.
So Much Informa%on So Li;le Time
One of the beau3es of the Internet is also one of its curses.
There is just so much informa3on out there that oden it
is difficult to quickly put one’s hand on the most useful /
valuable. The spawning of all manner of business models
around the domain name industry is case in point.
On all sides of this sector of the Internet ecosystem, there
are numerous business models now in opera3on providing
‘picks and shovels’ to the avid Domainer. Some of the more
noteworthy being :
Domain Name Brokers.•
Domain Name Expiry Registers.•
Domain Name Valuers.•
Domain Name Parking Agents.•
Registrars.•
Regulators.•
Domain Name Lis3ng Sites.•
Domain Name Publica3ons• (journals / magazines).
Domain Name Financing Organisa3ons.•
Conference Organisers focussing on the industry.•
And of course there are the blogs, chat rooms and other social
media forums in which Domainers gather to debate, praise
and ridicule the industry (some2mes users seemingly doing all
three in the one communica2on).
Suffice to say it is clearly a situa3on where one scratches
the surface and it is evident that a very deep and complex
ecosystem is being created. Whether this is a sustainable
business environment will be established by 3me, but today
there are many players posi3oning themselves based on the
expecta3on that this economy will not only remain stable, but
will expand materially from its present size.
It is in this was analogous to the age old gold rush. Whilst
many players are seeking to make their fortune in registering
that all desirable domain name, there is an industry sprou3ng
up servicing that fortune hunter. The writer’s observa3on is
that many of these service providers are becoming richer than
the prospectors themselves. Another similarity to the gold
rush phenomena.
It should also be recognised that the service providers are
incen3vised to keep the game going. Ensuring ongoing
publicity for high 3cket sales is of paramount importance, and
a powerful tool in keeping the speculator mo3vated. There is
an ingrained conflict of interest in publicising the wealth being
generated from domain name sales. It is self serving to those
selling ‘picks and shovels’– although this is a common element
of many industries and in no way unique to domaining.
Existence of A Free Market
In addi3on to ‘direct naviga3on’36
companies there are an
ever increasing number of URL exchanges that allow for the
simple facilita3on of trades of URLs. It is easy to check out
the latest offerings, and if you are brave enough to sign up for
an email no3fica3on service your inbox will also be filed with
announcements of impending and live auc3ons.
For the interested reader, a number of the leading brokers /
exchanges are as follows37
:
www.namedrive.com•
www.sedo.com •
www.RickLatona.com •
www.NameJet.com •
www.SnapNames.com •
www.Moniker.com •
www.AdernicDLS.com •
The upshot of all this is that the ability to buy, or sell, a
domain name could not be more straighYorward. There is
a healthy and open marketplace through which this form of
commerce can transact – similar to any other exchange driven
environment / asset class (eg. fx or futures).
On reviewing the sheer number of names that these sites
market, the reader will appreciate the repeated themes of this
paper:
A flight to quality is commencing.1.
The key is finding the end user. 2.
Companies Opera%ng In The Space
There are many companies that have commenced the process
of acquiring porYolios of domain names and then developing
those proper3es. Some more successful than others. Some
private. Some public. Some with ‘bricks & mortar’ legs to
their business. Some purely online (blending e‐commerce and
marke2ng services). Some have been doing it for many years.
Others are new entrants.
Ones that the reader may care to review38
to brief themselves
on alterna3ves of business model include :
36
Direct navigation is the practice of by passing the use of a search engine to find a web site via the practice of typing in the site specific URL
37
These sites are provided for information purposes only, and convenience for readers to quickly navigate to exchanges where the trading value of domain names can be explored
38
These companies are provided for information purposes only, and convenience for the reader to quickly review a variety of business models based on, or associated with, domain names

8. 6 | Probing the Domain Name Valua3on Universe
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Marchex Inc ‐ www.marchex.com
Publicly traded direct naviga3on and marke3ng company.
Large porYolio of domain names focussed on local search.
Internet Real Estate Group ‐ www.Internetrealestate.com
Arguably the leading experts in the development of online
des3na3on sites. Have excep3onal track record in ‘trading’
domain names.
Internet REIT ‐ www.ireit.com
Owner and manager of a high quality domain name porYolio.
The Knot Inc ‐ www.theknot.com
US based publicly traded company. Des3na3on site for
Weddings. Have acquired a number of online proper3es on
related topics.
Dark Blue Sea ‐ www.darkbluesea.com
Australian publicly listed company holding a vast porYolio of
.com URLs.
Live Current Inc ‐ www.livecurrent.com
Listed company building what it terms Des3na3onHubs. Holds
a large URL porYolio.
Most of these companies are ac3ve acquirers and traders of
domain names. With the leaders being pro ac3ve developers
of online proper3es. The writer draws aeen3on to Marchex’s
business model – which the company posi3ons as “Advancing
Local Search & Performance Adver3sing”.
Tradi%onal Approaches & Challenges
to Domain Name Valua%on
A Review of Accepted Approaches
Not surprisingly the accepted approaches to the issue of
domain name value are in many ways based on tradi3onal
& credible bricks & mortar valua3on principles. At the
commercial applica3on level, however, there does appear
to be a bit of a square peg and a round hole styled situa3on
taking place.
A summary overview of the most commonly advocated
approaches is detailed below.
Comparable Analysis
The secondary trading of domain names is reported regularly39
and informa3on on sales is increasing in volume, with all sales
agents ac3vely distribu3ng such data. Of course the domain
name brokers want as much data in the marketplace on their
successes as possible – given that those successes will of
course generate more business for them.
A simple approach, therefore, is to assess the sale price of a
recently reported domain name transac3on that is similar in
presenta3on / name / form to that which the poten3al vendor
holds.
This approach, the writer contends, has its aerac3ons as it
takes into account the real 3me (or near real 2me) behaviour
of the willing buyer and the willing seller in the marketplace.
The key thing for a comparable analysis is actually the
iden3fica3on of the op3mal end purchaser willing to transact
on the basis of historic data. The word of cau3on of course
is just because a name is similar does not mean it is as
aerac3ve.
Comparable analysis in any valua3on exercise is a tool of
es3ma3on which needs to be refined by more specific analysis
of the asset undergoing specific considera3on. As with any
other asset class this approach should be applied to the
domain name. The point is that just because a name that has
traded is similar to the Vendor’s, the Vendor should not take
that trade as being a defini3ve reference point.
Discounted Cashflows
In such a young and emerging environment as the domain
name industry the use of a DCF analysis to value a domain
name is, in the writer’s opinion, fraught with danger40
.
This is for a number of simple reasons (leaving aside academic
arguments of the calcula3on of WACC, Betas and the like) :
The DCF analysis is a best prac3ce valua3on tool in •
situa3ons where a mature cashflow sustainable business
model exists. Not one that is subject to ongoing growth
vola3lity and has uncertain cashflows (if any). DCFs are
typically applied to industrial companies or to find the
current value of minerals & resources.
Following on from this point it will be near on impossible •
to understand the dynamics of how a domain name /
website will func3on over the next 5 to 10 years, which
is the 3me horizon over which a typical DCF assessment
is recommended to be completed. The en3re industry
sector is subject to such ‘revolu3onary’ (not evolu3onary)
change that key growth and opera3onal assump3ons
that would be applied to a business model today will
with almost 100% certainty undergo radical altera3on in
the coming 12 to 24 months. How, for example, might
a defendable41
perpetuity period argument for such an
asset class be arrived at ?
Aeemp3ng to establish the correct input assump3ons on •
39
Many industry publications such as Domain Name Journal provide regular reporting on sales, identifying such crucial elements as URL, price & the broker. In fact at www.dnjournal.com there is an excellent service by the
editor Ron Jackson which outlines many of the leading domain sales that take place via the leading brokers / agents each week
40
The reader should separate the valuation of the domain name from the potential value of an e-commerce site underpinned by the domain name
41
‘Defence’ here relates to the conduct of a rigorous examination of the underlying assumptions that would deliver a perpetuity period output in a DCF model

9. Probing the Domain Name Valua3on Universe | 7
LCC
fundamental value drivers such as growth rates, beta, etc.
will prove to be next to impossible – par3cularly where
no cashflow / low cashflow exists as is commonplace with
domain names.
During the dot com bubble of 1999 – 2001 many DCF analyses
were proffered to support fledgling business models. Suffice
to say the error in applying this valua3on approach back then
is echoed in applying such an approach across the board to
domain names today.
Value of Revenue
Certain arguments are made that the value of the domain
name should simply be a reflec3on of the revenue that that
domain name generates.
The writer ques3ons this. Simply because many of the parking
agents are, one might say, conserva3ve in the way that they
report traffic and share revenues42
with their end users /
clients43
. The deals for the URL owner (par2cularly if only
holding a name or two) can be inconsistent to say the least.
This is not an unusual situa3on, however, given that many of
the service providers are capitalizing on a marketplace that is
not uniformly informed.
Addi3onally, the ‘value of revenue’ approach poten3ally44
fails
to inves3gate or acknowledge the cost of securing the revenue
(ini2al traffic acquisi2on cost), nor the cost of maintaining the
revenue (ongoing traffic acquisi2on cost).
Simply put, driving revenue is in many ways a func3on of
how much you want to spend on securing it, and the deal
you cut with a parking agent, alliance network, ad network or
combina3on of the above.
Then needs to be considered the skill set of the SEO
professional on whom the marke3ng spend is entrusted – and
whose job is to improve search ranking. Some are (as with
any industry) beeer at gesng results than others. A few are
geniuses.
The reader can review issues such as traffic acquisi3on cost
by reviewing the annual financial reports of a number of the
companies outlined in this paper (Dark Blue Sea Limited for
example). Traffic acquisi3on cost is conveniently broken out.
Revenue across a URL does not magically materialize –
par3cularly not in today’s Google economy where keyword
pricing is driven by an auc3on mechanism. It takes money to
make money, and revenue across a URL is oden the result of
a series of commercial nego3a3ons and alliances, combined
with exper3se in op3mizing the posi3on of the URL in search
engines.
The desire of the end user to simply secure a great domain
name should also be factored in. The cashflow of the URL
may be of no interest. The real driver is the acquisi3on of
an online dis3nc3on point from a branding and marke3ng
perspec3ve – and what that purchaser can build out behind
the name.
Links & Traffic Numbers
The observa3ons on links & traffic numbers, whilst
superficially this appears to be a logical way to approach
the valua3on assessment, is arguably also subject to
straighYorward manipula3on and therefore what is oden
termed ‘gaming’.
A crack SEO ouYit / prac33oner can quickly construct links
and pages to drive the posi3on of a URL up the Google search
results. The real skill is therefore the reading of the Google
algorithm on an ongoing basis to maintain the posi3on within
the search engine ranking environment45
. Given the rapid
number of domain names and web sites being registered and
submieed to Google, and other search engines, for ranking
the playing field is understandably subject to what amounts to
unpredictable change.
So it should be appreciated that there are 2 efforts. The first
to get the URL ranked high, and the second to keep it there.
The counter spin on this, which the writer acknowledges has
merit, is that the SEO prac33oner has created ‘goodwill’ by
developing the links and associated traffic associated with the
URL and as such the reward should be a reflec3on in the price
of that URL.
What needs to be considered is a party’s investment
to secure revenue across a URL. This is therefore
not a natural search situa3on, but one that has been
manipulated as a result of the dedica3on of the end
URL holder’s cheque book.
SEO & SEM experts can create numerous links quickly.
The point is that exper3se can be a large factor in the
construc3on of the ranking of a URL. One should not
assume that links and traffic numbers happen naturally.
42
A batch of the writer’s domains (about 750) are parked with a known parking agent. A further batch of very similar domains is parked with a competitor. The difference in reporting, revenue sharing and the thresholds in
which revenue cuts in are materially different
43
The writer has noticed across his own portfolio of 5000 + names that a movement of URLs from one agent to another can generate different financial results
44
Some approaches factor in the cost of acquisition of revenue whilst others clearly do not
45
View here a reflection of interviews with 2 seasoned SEO practitioners

10. 8 | Probing the Domain Name Valua3on Universe
LCC
This is a great argument and one that the writer agrees has
merit. But the ques3on is what is the co‐rela3on (if any)
between the work done to develop & maintain the URL
and the value commanded for the domain name in the
marketplace ? Within the mergers & acquisi3ons world the
quality of the profit generated by a company is examined for
sustainability. The ongoing performance of the business to
deliver a predictable result.
What is not clear in the links and traffic game is how historic
effort translates into a sustainable search engine posi3on. The
Internet is evolving as are its search engines.
Are These Tradi%onal Views Accurate ?
Superficially approaches such as links, revenue and DCF appear
appealing, but their applica3on to the vast majority of domain
name sales is tenuous at best.
The underlying commercial value driver, the writer believes,
is the rapid maturing of the online environment (in terms
of sophis2ca2on), in combina3on with the expansion of the
reach of ISP services into large popula3ons & geographies that
previously had no access (developing na2ons).
The writer also argues that this accelera3on of overall global
penetra3on of popula3on bases is only set to con3nue46
.
Tribalism at Work
The Internet is all about tribes. Much has been wrieen on this.
Individuals swarm to des3na3ons of common interest such
as a popular search engine (google.com), a popular general
social network site (facebook.com) regionally specific social
media site (bharatstudent.com – Indian Edutainment site) or a
popular e‐commerce site (ebay.com).
The .com extension, whilst interna3onal in presenta3on, is
being gradually challenged by the value and importance of
geographically specific URLs. Individuals have great comfort in
dealing with websites that are local (geographically) to them.
Therefore the sea change has commenced, with the
writer believing the .com extension will make way in many
economies for local extensions over the coming 2 to 5 years.
And those local extensions (ccTLDs) will be simple to navigate
to (as with the gTLDs) and increasingly commercially focussed.
Links
Links are of course important, but given the ability of SEO
consultants to generate hundreds, if not thousands, of links
over 3me the overall importance in the scheme of domain
name valua3on47
is arguably going to decrease. Par3cularly as
more professionals become skilled in this area of the Internet.
The writer is not convinced that there should be any
correla3on between the raw number of links that have been
deployed and value.
If links are a cri3cal value driver then addi3onal due diligence
inquiry during any acquisi3on process may well seek to
understand exactly how those links came into being and how
long they have been in existence for. Blowing away the smoke
and looking past the mirror is advisable.
Traffic Numbers
Traffic generated across a site is of course a fundamental
requirement for value to be generated. Without traffic the
site is invisible in the vast sea of the Internet.
But traffic in and of itself is not the dominant determinant for
value. There are a number of arguments against a mechanical
approach to the analysis of traffic numbers including :
Does the site visitor result in any form of secondary •
interac3on. It is great that they have found the domain
name, but what then ?
What is the cost of acquisi3on and maintenance •
of traffic ?
What are the natural traffic trends of comparable •
industry URLs or sites ?
The last point is of importance. Just as with any sector there
are areas of the Internet that generate more traffic ac3on
than others. Not surprisingly the adult industry, sport, travel,
digital media and social media plaYorms are traffic rich.
When analysing traffic it is also quite useful to look towards
sector trends, and assess whether a domain name is
genera3ng unusual traffic against a fundamental market
backdrop. If it is highly trafficked, but unusually so, a highly
skilled SEO professional might be responsible.
Whether this should be factored into value is a maeer for the
final end buyer, but the writer would argue that it should be
– as the SEO professional is an added cost to the maintenance
of the URL’s market posi3on. Given the shiding sands of
the Internet itself yesterday’s investment in traffic may not
translate into a sustainable situa3on.
Exper%se & Domain Name Valua%on
The reader will be gathering by now that the writer’s posi3on
is that the examina3on of yesterday’s ac3vi3es on a URL are
not sufficient to base the aerac3veness of a URL tomorrow.
And this opinion is based on an observa3on of many industries
(online and tradi2onal).
46
Fast broadband connectivity not only is a convenience but a lubricant to commerce taking place
47
Not overall site valuation. There is a difference. Market position online, as with offline, is imperative and being able to have an e-commerce destination that is highly ranked will always make the underlying operation
more valuable than a lowly ranked competitor

11. Probing the Domain Name Valua3on Universe | 9
LCC
The historic observa3on of links, traffic & Internet user
behaviour in general does not in any way consider the skills,
resources and commercial drivers of a party that might buy
a domain name. That is, what can the purchaser do with the
domain name to transform its current ac3vity into a more
commercially driven ac3vity tomorrow ?
And this is not a recent phenomena.
Beer.com is case in point. So the story goes a URL that
was registered by a college student and then subsequently
acquired and then traded by Internet Real Estate Group to
Interbrew.
Why would Interbrew pay US$7.5 million for this domain
name which did not have a high level of commercialisa3on
aeached to it at the 3me ?
Simple answer. Because that company had the resources
to transform the domain name into a des3na3on site that
becomes a great place to visit for the visitor – and that visitor
would want to visit 3me and 3me again48
.
Whilst there are many analogies drawn with the real world
and domain names the writer believes that the real estate
game is in many ways one of the more apt descrip3ons.
The simple domain name can be the gateway into something
special that is subsequently developed. But to succeed the
developer must combine capital, exper3se and an ability
to locate a piece of property (the domain name) that is in a
market sector that can be commercially or ‘socially’ enriched.
So against this fundamental view of the writer where does
that place technically driven services of online sites valuing
URLs ? Today there are many organisa3ons that proffer
exper3se on the value of a domain name. These services
appear comprehensive and draw upon a range of sensible
mechanisms to arrive at a value range. Whether it is via
a paid assessment or a ‘plug and play’ es3ma3on of the
value of a name by simply entering it and some key sta3s3cs
onto a site49
, the writer believes that such approaches are
understandably inaccurate in the current domain name
valua3on scheme of things.
By their nature & construc3on these services cannot consider
the poten/al for the development of a domain name. As such
their valua3on output is based on backward looking data50
,
and does not adequately consider forward looking prospec3ve
data / the poten3al of a developer to transform the domain
into a high value des3na3on.
Finally the writer would challenge, even if the historic data
is material in size, how does the exper3se of the current
registrant of the URL become an input into a mechanical
approach51
? Or their simple desire to own a name ?
To prove the point the writer entered many reported sales
into one of the beeer iden3fied online es3ma3on tools52
.
The valua3on es3mates output on autobuddy.net were the
same as many other names. This URL was reported as sold
by Adernic DLS for USD $1,888 – but the es3mator placed
its value as ‘registra3on fee’53
only. Lawyerquest.com was
es3mated as USD $70.00. It was reportedly sold by Sedo.com
for USD $3,750.00. To the scep3c the writer would suggest
that you do your own comparisons. The above examples were
not ‘cherry picked’, and in the writer’s opinion simply reflect
the challenges of mechanical approaches –v‐ tradi3onal free
market forces.
Conclusions on Tradi%onal Valua%on Approaches
The writer’s conclusions on the tradi3onal approach to the
es3ma3on of a domain name’s value are therefore as follows :
There is no single rule that can be applied to all. Whilst 1.
the standard appraisal models have merit, they are
backward looking in nature and do not take into account
the poten3al for development of a domain name
property. They can also overlook the impact of human
resource and traffic acquisi3on expenditure.
Domain names, be they generic or geographic, con3nue 2.
to command high value. They are ac3vely traded and
will con3nue to be so. They are, ader all, a gateway to a
des3na3on point on the Internet.
Large companies con3nue to acquire and develop 3.
porYolios of domain names. The Google economy
supports this commercial opportunity. But there is a
flight to quality taking place. Many of the speculators will
be washed out here, as with any other rapidly maturing
asset class.
There has been an incredible amount of specula3on in 4.
the Internet marketplace, and it is likely to con3nue for
some 3me yet. Unfortunately much of the specula3on
is misplaced as the names are of such poor quality that
it is difficult to see how a sophis3cated end player will
be persuaded to pay a super premium to acquire this
intellectual property.
Mechanical valua3on approaches have their limita3ons in 5.
what is a free market driven situa3on.
What is also clear from this analysis is that a number of
players are besng big on the ongoing fungibility of the simple
domain name. Given the development of the ecosystem, and
the increased penetra3on of technology into the cultures,
48
Beer.com is a great site. Rich in content and tools to elicit interaction from the site visitor
49
Certain sites do not even ask for statistics. Simply the name. Those sites then seek out relevant information
50
And this data can be subject to manipulation or simply not be robust enough to be relevant for any assessment to take place
51
Expertise is of course a factor in traditional valuation, with that input factored into the certainty of financial forecasts being achieved by a management team
52
Both reported sales taken from the weekly sales data listing of DNJournal.com. Which the avid reader should check each week
53
So give or take USD $7.00 to USD $10.00 depending on the end users buying power

12. 10 | Probing the Domain Name Valua3on Universe
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countries and geographies it is difficult to argue against. The
3metable for this maturing is, however, uncertain.
The writer is not convinced that certain marketed mechanisms
of assessment should be the shining beacon to arriving
at value. Simply because as the whole Internet economy
matures, the skillsets of service providers to the industry also
improve – and manipula3on can take place of fundamental
things such as traffic and links.
Value should not correlate to the fact that one has hired the
best SEO professional.
But there are other forces at work. The ‘Free Market’ is
dominant.
Alternate Approaches to Domain Name
Valua%on
Are These Challenges In Valua%on Unique To Domain
Names ?
The complexity of presen3ng a compelling case for valua3on
of a domain name is no different to other asset class of high
intellectual capital/property.
Simple examples are biotechnology, IT technology or
greenfields resources projects.
In each of these there is a great deal of ‘unknown’ as to
the future, and whilst many approaches are adopted to
establishing a valua3on framework, value at the end of the
day ends up being in the eye of the beholder based on an
educated individual assessment.
Many biotech or technology VC deals, for example, place
excep3onally high valua3ons on business plans. Of course
there is significant science applied to jus3fy a party’s posi3on,
but at the end of the day in such unknown areas it ends up
being a combina3on of qualita3ve and best guess quan3ta3ve
drivers that delivers a party a valua3on ‘result’.
In sodware development in par3cular the issue of value is a
difficult one at best. The writer has seen many approaches
to this challenge, with one of the more crea3ve being the
valua3on based upon the number of engineers that the
investee candidate employs. Other approaches have placed
great importance on the ability of sodware technology /
technology in general to commercially scale54
. Discounts
applied where the lifecycle of the technology is believed to
be short (investment payback required to be then made in an
accelerated fashion).
In greenfields resources projects there are aeempts to
es3mate the quan3ty of the relevant resource underpinning
the opportunity.
In these alternate asset classes the approach to valua3on
is typically not based on DCF styled analysis, given the
immaturity of the assets involved / so many unknown factors.
Yet the global markets for each of these assets are rich with
trades / merger & acquisi3on transac3ons.
So what approaches does the writer think most sensible to
explain the current domain name marketplace ?
Collec%ble
The first observa3on is the rare quality of a domain name, and
in this way its similari3es to a collec3ble:
Both a URL and a collec3ble are meant to be rare. In the •
URL this is of course an easy case to make as each URL
is in and of itself unique, only able to be ‘replicated’ via
alternate extensions (which are from a value perspec2ve
oVen far less appealing).
There is a desire of the ‘collector’ to acquire and maintain •
the asset.
The ongoing maintenance of the asset is known • (in fact
far more certain with a URL than a tradi2onal collec2ble).
As such the ‘premium’ for the collec3ble is reflec3ve of a
number of factors including the desirability to own the asset,
its perceived value (both today and future) and its ability to be
traded at some point in 3me should the need arise.
Without liquidity, collec3bles move out of the commercial
sesng into the hobby environment. But with the numerous
marketplaces for domain names the ability to trade (leaving
price aside) is simple to execute. Therefore the domain name
market has a reasonable degree of liquidity.
Another interes3ng observa3on that lends support for the
collec3ble argument is the way in which the online auc3on
environment is developing. Sales agents / auc3on houses
are commencing to publish their es3mates of the value of
a domain name, with this prac3ce of course being similar
to that of general auc3on houses through to specialist art
dealers55
.
Intellectual Capital / Property
Simplifying the underlying concept of the valua3on acronyms
men3oned above, there is the writer believes a strong case to
argue the domain name has a similar value to a logo, brand or
other piece of intellectual property.
54
For examples see : Law of the Telecosm. Gilder’s Law. Shannon’s Law. Law of Bandwidth Efficiency. Westland C. Valuing Technology. Wiley Finance. 2002. At p. 60

13. Probing the Domain Name Valua3on Universe | 11
LCC
The premium of a short name is obvious. It is now well known
that to hold such a name is arguably an advantage in allowing
customers to find you (if commercial). As such the premium
that is paid for the URL in the secondary marketplace is
similar to the premium that one may pay to posi3on a brand
(be that service or product). A one off payment56
that can
be amor3sed over many years, but in the interim provides a
dis3nc3ve and convenient loca3on for Internet users to locate
something (and thereby the end user’s organisa2on) is a
sensible strategy to deploy.
As such the underlying value is in many ways the end user’s
assessment of the marke3ng value associated with the URL,
with that upfront ‘acquisi3on premium’ being able to be
spread over many years, and ongoing costs being low57
.
In short, for the premium, the end user secures a valuable
piece of cyber space intellectual capital that they can control
into the future. Amongst the benefits it brings ease of
naviga3on, convenience for the customer and credibility for
the user. When compared with the overall marke3ng costs
that a major company may spend over a mul3 year period the
up front investment can be easily jus3fied58
.
And the approach to the value on a ‘brand’ basis is unique
to the poten3al owner. Depending on the current company
posi3on, its future poten3al, the importance of brand, etc.
each user will place their own unique value on an asset such
as a domain name.
The writer believes that the paeern of trading of names (in
par2cular referencing trades around the travel sector) is being
influenced by a ‘market comparable’ approach – in par3cular
within the USD $1,000 to $5,000 value band.
At this price band it is reasonably simple for the poten3al URL
acquirer to ra3onalise the benefit of the domain name –v‐ its
one off expense.
Some%mes Simple Is Sensible
It is not surprising that there is so much debate on approaches
to the valua3on of domain names. The Internet is s3ll a
rela3vely new phenomena, and the intellectual property
(domain names) that allows the loca3on of a site across the
vastness of the Internet is naturally evolving as an asset class
as well. The first domain name came into existence less than
20 years ago ader all.
The difficulty of coming to grips with a standardised valua3on
approach is not surprising. The analogy of markets such as
IT, biotechnology and even specula3ve mining plays should
be considered as verifica3on of the challenges of valuing
immature asset classes.
Combined with this juvenile market, is the poten3al for
manipula3on of perceived value drivers by an ever increasing
pool of service providers and highly skilled industry
professionals. The ability to manipulate such items as traffic
numbers, links and revenue need to be factored in to the
sustainability of any valua3on approach.
The writer’s view is that whilst academically some of the
tradi3onal approaches are definitely credible, in the real world
they have their limita3ons due to the commercial reality on
how data is being manipulated. The mechanical approaches
clearly have limita3ons.
Conclusion
At this stage of the domain name asset class’s development,
therefore, the writer’s conclusion is simple.
Domain names are an asset that is limited in number, but have
excep3onally high unrealised commercial value given the URL
allows an end user to beeer posi3on themselves across the
vastness of the Internet.
Domain names are powerful branding and marke3ng tools.
A premium URL allows the end user the opportunity to best
posi3on their service or product via a combina3on of natural
search / direct naviga3on and search engine op3misa3on.
The trading values of domains are reflec3ve of an end user’s
desire to acquire such assets against what is a developing
marketplace of available data on the appropriate cost of such
names. These ‘trades’ are done in an open marketplace of
URL exchanges.
The convenience of a domain name that lends itself
to natural search via a search engine should not be
underes3mated. The web is a big place. A simple
name that aligns with an Internet users search habits is
a powerful asset.
There is a real challenge to being found on the web via
natural search. Any domain name that can boost the
ability of an end user to be found naturally has value.
Natural search and direct naviga3on are increasingly
relevant ways that Internet users find the sites they
want.
55
Additionally both visible and confidential reserves are not commonplace. Both features of markets such as the fine arts market
56
Being the transfer price for the domain name
57
Ongoing cost being the simple transfer / registration cost
58
The other thing to be borne in mind is that the acquisition of the URL is not a ‘marketing expense’ but a good will purchase that can sit on the balance sheet of the acquirer at the acquisition price

14. 12 | Probing the Domain Name Valua3on Universe
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As such the most credible approach is in many ways the most
transparent. An assessment of what willing buyers and sellers
are transac3ng at.
Such a marketplace can be influenced by other factors, but in
the writer’s opinion it is the ‘Bidder’s’ assessment of value in
owning a credible and conveniently located ‘des3na3on point’
in the URL that drives value. It is a one off expense which can
be amor3sed / spread over many years of ownership.
The comparable market approach is developing rapidly,
primarily because the number of trades are now of sufficient
quan3ty to be sta3s3cally relevant. Service providers
have been evolving their business models to promote the
comparable sales within markets.
Specula3on will con3nue to have its place (as with any other
market), but the real ac3vity will not be at the headline
grabbing mul3 million dollar level – it will be in the mid market
where commercially aerac3ve domain names trade. The
writer again draws aeen3on to the ‘4 figure’ valua3on band.
As such the real driver to value is the end user.
The challenge for porYolio owners is, not surprisingly, the
loca3on of par3es that can derive a real commercial advantage
in the acquisi3on and u3lisa3on of a domain name. As such
the marke3ng of domain names is predicted to increase in
sophis3ca3on to make the poten3al purchaser’s job just that
easier.
And as with other asset classes, URLs of highest quality (be
that at the gTLD or ccTLD level) will con3nue to command the
highest premiums.
It is just on 15 years from when the first domain names
came into being. Over that short period of 3me the Internet
has expanded to become an all consuming and incredibly
convenient technology that touches billions of peoples lives
daily.
With the penetra%on of the Internet, and access to it (both
via wire and wireless) set to con%nue to grow globally, the
writer’s conclusion is that given the importance of the place
of the humble URL in the Internet economy, the price of such
pivotal commercial assets can only con%nue to strengthen.
For context Nicholas Assef is a chronic domainer with a
por:olio of over 5,000 domain names.

15. Probing the Domain Name Valua3on Universe | 13
LCC
Lincoln Crowne & Company (‘LCC’) is an independent bou3que corporate advisory firm with full service offices in Sydney
and Singapore, and representa3ve offices in Ho Chi Minh City, Kuala Lumpur, Manila & Mumbai. LCC’s clients span emerging
companies through to Fortune 50 members, hedge funds and financial sponsors.
LCC specialises in strategy & M & A transac3onal work across the Australian & Asian landscapes. We have experience in
mergers, acquisi3ons, joint ventures, divestments, restructurings and alliances. We have worked extensively in developing Asian
economies, where numerous engagements have focused on developing op3ons for market entry strategies.
We typically approach engagements with a cross border professional team – ensuring a seamless interna3onal process can
be leveraged for each of the Firm’s clients. Being independent we provide our clients with clear & prac3cal advice that is not
clouded by product conflict as can occur with full service investment banks. We believe for the CEO having an independent
advisor has real advantages.
During 2008 & 2009 LCC has undertaken strategy and M & A assignements across a diverse geographic footprint. At a regional
level this has covered Australia, Asia & Europe. Asian economies in which assignments have required work include the
Philippines, Indonesia, India, Singapore, Vietnam, Hong Kong, Malaysia & Thailand.
LCC wins roles via the delivery of high quality ideas and opportuni3es to Australian, Asian and Northern Hemisphere clients.
The later typically seeking to enter the Australasian region. In order to best posi3on LCC to compete a significant investment
programme in technology and research tools is con3nually undertaken. Complimen3ng these resources are highly skilled
professionals who take the 3me to understand client challenges, and then deliver innova3ve solu3ons.
Most importantly of all, we enjoy helping our clients succeed.
For more informa3on, please visit : www.lcc.asia
If you would like to discuss the contents of this document, or would like to discuss a challenge effec3ng your organiza3on, please
do not hesitate to contact :
Nicholas Assef
Execu%ve Chairman
Australia Phone : + 61 2 9262 2121
Singapore Phone : + 65 8189 6441
Email : naa@lcc.asia
Grant McCarthy
Execu%ve Director – Asia
Singapore Phone : + 65 9147 6911
Email : gam@lcc.asia
This communica3on provides general informa3on only and does not cons3tute advice. Any informa3on that chooses to rely on this
informa3on does so at their own risk. LCC disclaims all responsibility & liability rela3ng to any use of this general informa3on.