Making money from domain names

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Making money from domain names - By: Martin21 Taylor20, Posted on: 2007-10-13

Like its design and features, the domain name also plays a vital role in a website’s success. Irrespective of the nature of the website, a catchy domain name is essential for creating a lasting impression. With millions of websites online, what differentiates one website from another is not the design or features but the domain name of the website.
For example, a website may have the most user friendly interface, but if its domain name is something like wehaveworkforhomebusinesses.com chances are that people will have trouble remember such a long domain name; however if the domain name is shorter like workfromhome.com, its highly likely people will remember the domain name and this will ensure regular traffic.
You might have heard of organizations paying millions to buy a domain name from its existing owner. If you are wondering how a domain name can be used to make money online, here are a few pointers. To begin with, it is important to understand that all domain names are available on a ‘lease’ basis; this means that every 3-5 years a domain name has to be renewed. If the webmaster is no longer interested in renewing a domain name, the domain name expires and is made available for use by some other webmaster.
Much like a popular restaurant, when the ownership changes the new owner inherits all existing customers. Similarly, a domain name continues to enjoy traffic for some time after the domain has expired. If the new webmaster plays his cards right, he can utilize the existing traffic to his advantage. All it takes is a little bit of research; once a domain expires a person can buy a popular domain and then sell it to the highest bidder. Also, there is specialized software available that can keep track of expired domains and all a person has to do is decide which domains are worth buying once they expire.
Apart from expired domains, another method is buying new domains that might be popular in the future. Buying new domain names requires considerable skill and research, but it is possible to buy new domains and hold on to them till they are popular. For example, let us assume a company xyz is looking to launch their own website; a person that has already bought the domain name xyz.com can sell it to the company for a profit. The term ‘premium domains’ is used for domain names that are extremely popular or sought after, and the price of some premium domain names can be close to a million dollars.
Earlier, every domain name was required to link to a webpage or website; this was primarily to discourage people from holding on to a large number of domain names. If a domain name was not linked to a website or webpage it was cancelled, however most domain name providers today automatically create a dummy page so that a domain name is not cancelled due to non compliance to domain name ownership rules.
As mentioned earlier in the article, it is possible for an individual to purchase a domain name that is similar to that of a large organization, this activity is termed as cyber squatting. Although cyber squatting is not illegal, an organization can gain control of a domain name by legal means; however organizations almost always prefer to reach an out of court settlement than enter into an expensive legal battle. In addition, not all law suits go in the favour of the organization, so most organizations prefer settling out of court. Although cyber squatting is not a highly recommended activity, the truth is that the right domain name can earn a person millions of dollars. In essence, a little bit of luck and foresight can help a person earn millions overnight.
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Article sponsored by www.domainnewshub.com the leading internet resource that helps people make money buying and selling domain names.

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Martin Taylor is the author of this article on Domain Name Resources. Find more information about Domain Name Tool Kithere.