Commercial resale of domain names

An economic effect of the widespread usage of domain names has been the resale market (After 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 importance 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, because value is an opinion by people.

Another high-priced 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 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.

Very important to remember is that a domain (name, address) must be valued separately from the web (content, revenue)that it is used for. The high prices have usually been paid for the revenue that was generated from the web at the domain's address (url.). The intrinsic value of a domain is the registration fee. There is no such a thing as a current market value for a domain: It just takes what somebody pays. The Fair Market Value of a domain can be anything from the registration fee: The lowest known past selling price, the highest known past selling, price, the most recent selling price, or just any past selling price and any of these (or any sum resp. division etc.) is usually added to the current or expected revenue from the web content (advertising, sales, etc.). Domain (name + ext.) should not be mixed with Web (content + revenue). The estimation by appraisers are always the addition of what they would like that a domain is worth together with the effective/expected/desired revenue from the web content. Some people put value on the length of the SLD (name) and other people prefer description capability, but the shorter a SLD is, the less descriptive it can be. Also, if short is crucial, then the TLD (extension) should be short too. It is less realistic to get a domain like LL.travel or LL.mobi than a domain travel.LL or mobi.LL. This illustrates the relativity of domain value estimation. It can be safely put that the revenue af a web (content) can be easily stated, but that the value of a domain (SLD.TLD aka name.ext) is a matter of opinions and preferences. In the end, however, any sale depend of the estimates by the domain seller and the domain buyer.

People who buy and sell domain names are known as domainers. People who sell value estimation services are known as appraisers.
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Other-level domains

In addition to the top-level domains, there are second-level domain (SLD) names. These are the names directly to the left of .com, .net, and the other top-level domains. As an example, in the domain en.wikipedia.org, "wikipedia" is the second-level domain.

On the next level are third-level domains. These domains are immediately to the left of a second-level domain. In the en.wikipedia.org example, "en" is a third-level domain. There can be fourth and fifth level domains and so on, with virtually no limitation. An example of a working domain with five levels is www.sos.state.oh.us. Each level is separated by a dot or period symbol between them.

Domains of third or higher level are also known as subdomains, though this term technically applies to a domain of any level, since even a top-level domain is a "subdomain" of the "root" domain (a "zeroth-level" domain that is designated by a dot alone).

Traditionally, the second level domain was the name of the company or the name used on the internet. The third level was commonly used to designate a particular host server. Therefore, ftp.wikipedia.org might be an FTP server, www.wikipedia.org would be a World Wide Web Server, and mail.wikipedia.org could be an email server. Modern technology now allows multiple servers to serve a single subdomain, or multiple protocols or domains to be served by a single computer. Therefore, subdomains may or may not have any real purpose.
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