One Hot Reason to Invest in a Domain Registrar

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By Jacob Maslow

danica-godaddyDomain registrars are companies that register domain names. Domain names are the building blocks of the internet. If you don’t have a domain name, it is hard for people to find your website. It really is that simple.

You have to understand that the internet is actually a collection of linked computers. These computers don’t link to each other or find each other’s addresses using letters. Instead, they use numbers. These are web server numbers. A web server, on the other hand, can be segmented into different parts, and each part can host a website. To solve this problem, domain names were invented. Moreover, people remember things and places based on their name.

The investment appeal of a domain registrar might not be very obvious. After all, it seems like a pretty static industry. It seems like a pretty hard-to-scale business model. If anything, it looks like a space that only has room for one player and that player might not make all that much money. While there is a huge interest in domain names, there are many domain registrars and it is a very fragmented market.

With that said, if you are offered an opportunity to invest in a domain registrar, you might want to ask one particularly pointed question. This question can really make the difference whether the domain registrar you are thinking of investing in knows what it is doing or not. If it is just focused on charging a fee for domain registrations, you probably would be better off investing your money elsewhere. However, if you ask that company if they plan to speculate on their expired registered domains, that company might be worth investing in.

You have to understand that domain names are valuable if they have commercial appeal, and some names are more valuable than others. Domain registrars that understand this would cherry-pick expired domains that have tremendous SEO or branding appeal. They can then flip these expired domains for more than $8.95 a year. We are talking of thousands or even hundreds of thousands of dollars for premium domain names. This is precisely what Go Daddy is doing, but the good news is that there is room for many more players in that space.

Domain flipping is a big business. Sure, the industry does change and the search engine value of exact-match domains has gone down. Regardless, buying and selling expired domains can still be quite lucrative.

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