April 07, 2008
Pizza dot com

I'm fascinated by this.

Fourteen years ago, Chris Clark shelled out 20 bucks to register the domain name "pizza.com." This afternoon, he sold it for $2.6 million.

"It's crazy, it's just crazy," he said somewhat giddily yesterday morning from his home in North Potomac. By then, a week's worth of anonymous bidding at an online auction site had pushed the price to today's high. The auction closed at 2 p.m. today.

"That amount of money is significant," said Clark, 43, who recently launched a software company. "It will make a significant difference in my life, for sure."

With more than 150 million domain names already listed with registry firms, coming up with unused -- and uncomplicated -- Web addresses is close to impossible. That's led to an active secondary sales market, where domain owners try reselling their Web names to big corporate spenders.

Most domains resell for about $2,000, domain traders say. But the premium names -- the generic ones that cover an entire industry and end in the all-important ".com" -- can draw millions.

Business.com sold for $7.5 million in 1999, and so did diamond.com seven years later, according to an industry trade magazine. In 2006, a Russian alcohol exporter bought vodka.com for $3 million, while sex.com sold for about $12 million in cash and stock. Last month, fund.com sold for $10 million.

The best generic names -- those like books.com (owned by Barnes & Noble) and pets.com (PetSmart) -- were snapped up long ago during the early 1990s, back when the World Wide Web was still relatively shiny and new.

Such names are popular because they naturally draw Web traffic. An Illinois T-shirt company, for example, recently paid $225,000 to buy tees.com after executives learned that the site was getting 17,000 hits a month -- mostly by people who typed in the address out of curiosity.

The idea of typing in a random domain name "out of curiosity", in this day and age of spyware and viruses, just boggles my mind. Way back in 1998, when I was putting together a little web page of information for people who'd be coming in from out of state to attend our wedding, I went looking for the URL of DoubleTree Hotels, with whom we'd reserved a block of rooms. While on a break at work, I entered www.doubletree.com in IE on my computer. That took me to a nasty hardcore porn site. This was back before corporate filtering was ubiquitous, so I got quite an eyeful; thankfully, this was also before the malware epidemic, so that was all I got. The lesson I learned, and it's one I strictly adhere to today, is to always use a search engine when I don't know the address offhand. It's served me very well.

(In case you're curious, by the way, the correct URL was www.doubletreehotels.com. I don't know if the other version is still a porn site, and I have no intention of trying to find out.)

The other thing that struck me: Seventeen thousand hits a month? That's maybe a third of my traffic. Is that really worth almost a quarter million bucks? Clearly, I need to rethink my no-advertising policy. Thanks to Kevin Drum for the link.

Posted by Charles Kuffner on April 07, 2008 to Bidness