There was a time in the early days of the Internet when it was easy to make money with domain names. Then the idea got so hot that almost everyone was trying it. Obviously, that made it harder for those who were new to get into the game. But things have shifted again. If you’re interested in trying, you can make money investing in domain names.
A Look Back at Making Money with Domain Names
If you do a deep dive into this site, you’ll find a 2006 post titled Alternative Investments – Domain Names. Think back to technology in 2006. Chances are that you had a personal computer at home. However, the iPhone was yet to be invented. And you likely chatted using AIM. Things were different back then.
In fact, the Internet was about to explode in new and interesting ways. Blogging was about to become big business. And savvy folks realized that they had the potential to make a lot of money with domain names. If you bought a domain name that people ended up vying for a year or two later, you could make tens of thousands of dollars off of just that one domain sale. And the risk was low because domain prices were low.
Valuable Domain Names Quickly Got More Expensive
Some lucky smart people even get really rich. For example, Page Howe bought then quickly sold Seniors.com and Guy.com for over one million dollars each in 2007. Of course, by this time, people were starting to realize that having the right domain name was a really important business move. So the costs of those popular – or potentially popular – domain names started climbing.
It made the business of trying to make money with domain names riskier. On one hand, you could make a lot of money flipping domain names. On the other hand, buying them could cost you a lot more. Therefore, you could also lose more. Whether or not to get into this business became a much trickier question for the average investor, especially for those who weren’t confident in their knowledge of the information technology sector.
Can You Make Money With Domain Names Today?
It’s been fifteen years since that article on domain names as alternative investments. In Internet time, that’s several lifetimes of change. So, is it possible to make money with domain names today? Yes. In particular, if you’re looking for a way to make a side income, then buying and selling domain names can be a great option. There are three core ways that you can make money with domain names:
1. Holding (Parking) Domains
If you don’t want to invest a lot of time into this side business, then buying domains just to hold them is a good way to go. Basically, here’s how it works:
- You buy a series of domain names.
- Then you set up advertising on those sites.
- And when people land on the sites and click the ads, you make money.
There are a variety of ways that you can do this, but the usual route is to work with a domain trading platform that offers advertising on parked domains. Examples include Sedo, GoDaddy, and DittoDomains.
2. Flipping Domain Names
This is the option that most people have in mind when they think about how to make money with domains. You buy domains that are already out there, registered. Then you sell them, and you make a profit.
Of course, you might do any number of other things in between: hold on to the domain for awhile, make it nicer to make it more profitable before the sale, etc. Think of it like house flipping, except the “house” is the website.
Most people who opt for this choice use domain name marketplaces. Existing domain owners list their domains for sale. You can purchase the ones that you want, and you might purchases tens or hundreds at a time. Then you’ll likely use the same types of marketplaces to sell those domains. (Incidentally, these marketplaces are also where you’ll likely buy domains for parking as well.)
Alternatively, you might work with a domain broker who makes domain purchases for you. Or you might find a domain name that you like and reach out to the site’s owner directly to try to negotiate a sale.
3. Building Out Domains
If you’re interested in a more long-term project, and you enjoy creating websites, then you might build out domains. In other words, you’ll create a blog or website. There are numerous ways to make money from websites – through advertising, sponsored posts, creating and selling your own products, promoting your business services, etc.
Buying Domain Names to Create Websites
You can either:
- Register a domain name that doesn’t already exist. In this case, you build it up entirely from scratch.
- Purchase an existing domain name, then build out the site to make it better.
Many people choose the latter and even make a full-time business out of it. Essentially the concept is to buy domain names that you believe you could make money working with. Then you build out the site. Maybe you do it yourself. More likely, you hire designers, bloggers, SEO experts, etc. to work with you to make the site great. At that point, you either sell the site (which is a version of flipping domain names) or you hang on to it and keep making money off of it.
You might invest in a variety of domain names in the same niche – buying several domains related to bread making or fishing or art history, for example. This is a great way to delve into a specific area of interest while also trying to dominate a market. And it gives you a chance to cross-promote your domains, explore different techniques in the niche, etc.
Alternatively, you might explore different interests by buying a variety of different domain names. This gives you a chance to see where your skills might work best. Either way, you have a chance at earning some extra income. The risk, of course, is that you spend money on the domain names, as well as the people you hire to help you with them, and then you fail to turn a profit.
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