Making Money From Domain Names

The Idea

From the very early days of the internet as we know it, there have been people who have sought to cash in on the domain name market. For those of you who are lost already, a domain name is simply the name given to a website address, so for my website you’re on now, the domain name is www.theshoestringinvestor.com. Anyone can register a domain name, simply by visiting a domain name registrar, such as Go Daddy or 123-reg. Providing the name isn’t taken it usually only costs around £5 to register a domain for a year. I own a domain (www.mondaynightfootball.co.uk) that I bought a little while back and have plans to use in the future, but it isn’t high up the to-do list right now. I didn’t want it just sitting around gathering dust while I wait to get round to it, so I’ve researched some ways to monetise it passively. There are 3 main ways people seek to make money out of websites.

1. Use It – The best and most responsible option in my eyes, but the most time-consuming. Do something you’re passionate about. Start a blog, sell some craft work, give spurious horse racing tips (perhaps not) – but use your imagination. Once you have a steady flow of visitors you can look to monetise your site in a multitude of ways. Don’t be under any illusion that you’ll be making money overnight, the majority of websites don’t start making significant money for months, years or even ever. Unless you have a truly outstanding idea, don’t think starting a website up is going to provide a steady income stream, but if it is something you enjoy, and do for fun, then it won’t matter so much – any money you do end up making is a bonus.

customer satisfation of Domain Parking Providers

A Domain Parking customer satisfaction survey

2. Park It – This is what I’ve currently opted for. Domain parking has been around for years now, you’ve probably even seen it without realising. When you type in a web address and end up on a page full of adverts, you’ve stumbled across a parked domain ( for an example see www.mondaynightfootball.co.uk). This is essentially where someone has purchased a domain, but for one reason or another haven’t got any content to put on it, yet want to try and make some money anyway. They register the domain with a domain parking company, Sedo and NameDrive seem to be the biggest and most popular, but there are many others. These companies then populate the page with adverts and the owner gets paid a fee each time one is clicked. This is sometimes done by people who haven’t got around to building their site yet, but more often than not it is people who have bought the domain for reason 3, and are just doing this in the meantime.

3. Sell It – There is a huge market in domain names trades. Think of it as something like the internet equivalent of the stock market. People register a domain for £5, and hope that a big company will come along and take it off their hands for thousands, or even millions of pounds. There are people with huge portfolios of domains just waiting for someone to want it enough to compensate them handsomely. Recently investing.com sold for an incredible $2.45m, and that only puts it at a lowly number 26 on the all time records list. The basic principle here is see a trend, buy several domain names associated that you think will be sought after in the coming months or years, and wait for the offers to come rolling in. Again, usually people register with companies like Sedo and NameDrive who act as brokers for a sale. Given that so many people are trying this, and so many domain names are already taken, this is easier said than done.

Investment Required

This all depends on the purpose, and on how big a scale. It could just be £5 for a domain you particularly like, or it could be hundreds to thousands of pounds to build a portfolio in the hope of making serious money. I just don’t think domain markets are viable, every man and his dog seems to want in on the act. For every investing.com success, I’m sure there are hundreds of people sitting on very expensive, but ultimately useless portfolios. As such, I think I will be avoiding rushing in to buy new domains. I will stick to what I have with www.mondaynightfootball.co.uk and see what I can make out of it.

Capital: £5

Time(hrs): 0 (once it’s set up, which takes less than an hour, it is completely passive and managed by NameDrive)

Return On Investment
Making money from Domains. Easier than a parallel park?

Making money from Domains. Easier than a parallel park?

Whilst you can read stories of people who claim they are making thousands of pounds a month from domain parking, I think it is a declining market. Most of the people who seek to make huge money from parking do so by buying a domain name similar to a popular site, but with a spelling error (like www.exampel.com) and rely on enough people mis-typing and landing on their page. In the days of search engines, bookmarks and auto-fill URL bars, I can’t see this being a reliable source of traffic to a site for much longer. I have so far had mondaynightfootball parked with NameDrive for about 2 weeks, and it has netted me about $0.30. Hardly worth it I hear you say. Well maybe you have a point, but over the course of a year that’s $7.80. (£5.16 at today’s rates), which pays for the domain, plus a bit left over for absolutely no work on my behalf. In fact, let’s do a quick bit of maths, I bought the domain from Vidahost for £5.58 for two years. So at £2.79 a year, with a yield of £5.16 a year, that’s a return of 84%. It looks pretty good, however, if I’m honest, this is much more than I expected. I am wondering if it is some kind of phenomenon around being newly registered. It will be interesting to see if this pace continues, and if it does I may look into acquiring more. In all honesty, with a domain like mondaynightfootball I expect over the course of the year to only recover the cost of the domain at best.

Projected ROI:  0-10%

Expected Return: £1-2 at best

Skills/Resources Required

To really build up a portfolio and be a serious prospect in the domain name markets, you need to have a good idea of what is popular, or what may become popular. Obtaining this is all about following the latest trends in business, technology and industry. To build up a serious portfolio also takes a fair bit of money. On a smaller scale though, just buying a few domains with a certain purpose in mind doesn’t take huge amounts of skill or resources.domain ?

Risk

As is the case with most markets where speculation is integral, it is as risky as you make it. Invest in a wide range of well researched and planned out domains to create a varied portfolio, then risk is present, but managed. On the other hand, become convinced that coal mining is the next big thing to hit the internet, buy every conceivable domain related to it and you will find you run the (almost inevitable in this instance) risk that it will not happen, and you splashed out hundreds of pounds on something that becomes worthless in a years time when your registration expires.

Scalability

This can be scaled to a huge level. It only takes a couple of minutes to register a domain (although hopefully significantly longer would be spent researching and considering). Whilst I am sceptical about this being a feasible way to make good returns, I am not ruling out returning to it on a larger scale. Especially if my somewhat obscure domain mondaynightfootball.co.uk continues to do so well.

Viability

I’m not convinced it’s the way of the future. Given that there is barely an industry that hasn’t adopted the internet, it is difficult to predict what will be sought after in the future. Alongside this, as people become more ‘web literate’ the traffic to parked domains will surely dwindle. I could well be wrong though. Buy the right domain and it could be a genuine money-spinner.  That’s my issue though, I just don’t see any way of predicting the ‘right domain’ other than sheer luck, especially as all the obvious ones have been snapped up long ago. It’s something I will keep my eye on, and possibly return to, but for now I think I’ll just stick to my parking my humble mondaynightfootball.co.uk and watch the cents trickle in with intrigue.  And if Sky Sports were to come along with a four figure offer, let’s just say I probably wouldn’t find it too hard to say goodbye to.

The Verdict

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(on a very small scale)

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Comments

  1. After all the mentions, I don’t think the link to mondaynightfootball.co.uk works!

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