An Introduction to Buying and Selling Domain Names

The domain name industry is extremely active and competitive, which makes it no surprise that so many people are becoming involved in buying and selling domain names on a daily basis. Unfortunately, there is a lot of misinformation online concerning the value and selling process of domain names.

If you're interested in profiting from one of the fastest growing industries in the world, then it's important to have the facts on domaineering.

Types of Domain Speculation

Domain speculation is the art of judging the value of buying and selling domain names. For many individuals and businesses, this practice has become a full-time profitable job.

There are currently two main types of domain speculators: those that buy domains, build sites around them, and then flip the domain and accompanying website, and then there are those that buy and sell domain names without web sites attached. While both can be very lucrative businesses, the second type is much easier for novices to learn, and as such, shall be the topic of discussion for this article.

How to Obtain Valuable Domain Names

Buying a domain name is simple, however, finding one that will actually yield a profit is much more difficult. There are a myriad of factors that determine the value of a domain name, but the major factors are memorability and keyword/SEO optimization.

One of the best ways to obtain a valuable domain that is already search engine optimized is to purchase existing domains via auction sites. This strategy can be beneficial mainly in two ways. Firstly, any domain that has already been purchased was probably already researched for potential benefits. Secondly and more importantly, the second benefit is that many recently expired domains still retain some of the search engine optimization attributes that were built up by the previous owner. For example, a recently expired domain name may still have active backlinks on the web, and the page rank of the domain could still be high, giving the purchaser instant SEO gratification with minimal effort.

Using keyword research tools is another great way to find out which domains could prove to be valuable, as many webmasters use such tools when deciding which domains to buy. If you can obtain a domain name that contains a popular keyword, then you can easily find a buyer in most cases.

Selling the Domain Name

Acquiring what you believe may be a valuable domain name is the easiest part of the equation. Finding the right buyer is much more difficult. Using auction sites and forums is perhaps the best way to find qualified buyers that are interested in your domain, and using auctions will take some of the stress away from establishing the value of a domain name yourself.

If your domain name is related to a particular niche, then you may find success by advertising in forums that are related to that niche. Simply placing a link in the signature of your posts can tremendously speed up the selling process. While it may be possible to find prospective webmasters on niche-specific forums, it is generally better to advertise on webmaster forums, where there is a high volume of potential customers.

Most auction sites will be heavy with competition, and many of the domains for sale also include a full pre-constructed web site that may already be generating a profit. Before listing your domain for sale, it is important to ensure that you're not stepping into a market that is saturated with full website and domain packages.

Domain Name Squatting and Volume Selling

Unfortunately, most domain names take at least a couple of months to sell, especially without an attached website. Thus, there is no need to become discouraged if your domain name does not sell immediately. Most people make the mistake of quitting their domain speculation endeavor after waiting for several months to sell without success. In reality, domain name squatting can be just as profitable, and it is a valid form of long term investing.

Consider, for example, the domain name hammocks.com. How much was this domain name worth in 1995 vs. 2010? For the domaineer with patience, hammocks.com sold in 2010 for $700,000, surely a significantly higher amount than it would have secured in the 1990s.

Instead of focusing on one domain name to sell quickly, try selling large volumes of domain names over longer periods of time. While this may require a more substantial investment, it will also return a greater profit in the long term. Remember, if you follow the basic principles of domain name speculation, there is good chance that your domain names will sell eventually.

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How Domain Names Work

Most people understand that a domain name is simply the basic web address of a web site, but few people actually understand how domain names work. If you're struggling to understand the basics of how domain names function on a technical level, then the information contained herein may prove to be quite useful.

A domain name is actually a lingual representation of an IP address, which is a series of numbers separated by dots. Every web site is given an IP address, however it is much more difficult to remember this segmented sequence of numbers instead of remembering a simple phrase. This is the basic concept of domain names, but the process through which an IP address is translated into a domain names is a bit more complicated.

Domain Name Levels

Domain names are divided into three different levels that represent different parts of a domain name. The first level (also known as the top-level) of the domain is the extension of the domain. For example, in the domain name “www.exampledomain.com,” the .com portion of the domain is the top-level domain (TLD).

There are also country code top-level domains that are referred to as ccTLDs.

In all, there are over 200 top-level domains (TLDs) or domain name extensions to choose from, most of which are country code TLDs. Generic TLDs contain three or four letters, like .com, .net, .org, or .info, while country code top-level domains usually contain two letters following a .co, such as .co.uk (United Kingdom) or .co.in (India).

A complete list of country code TLDs can be found on the official IANA web site.

Domain Name Formatting

Domain names have to be at least two characters long and cannot exceed 63 characters total (minus the TLD). Domain names can include any combinations of numbers, letters and hyphens, but cannot contain any other symbols or spaces. The first and last characters of a domain name cannot be a hyphen.

Connecting Domain Names to IP Addresses

When you type in a domain name in the address bar of your browser, you're actually connecting to a specific IP address. The domain name is directly associated with this IP address upon registration, and the connection of domain names to IP addresses is managed and regulated by ICANN ( Internet Corporation for Assigned Names and Numbers).

The best analogy for domain names and IP addresses would be vanity phone numbers – you can call some numbers by inputting a word or phrase into the keypad of the phone, but in reality, you're actually accessing a phone number through your telephone line. Technically, you can enter the IP address of a web site into your browser and it will appear as usual, but this is rarely done because it is much less convenient.

Domain Name Registration

In order to associate a domain name with a web site or an IP address, you must first register the domain (by purchasing it). Registering a domain name is simple and requires no special skills or prerequisites.
ICANN continuously maintains a list of accredited domain registrars from which you can purchase domain names.

Domains are registered for a specified time period, after which the domain expires and is open for new registration by another individual or business. When a domain registration is about to expire, the registrant of the domain is notified via email or phone call within two weeks of the expiration date.

It is important to note that intellectual property rights do apply to domain names, so you are not legally allowed to register a domain name that contains a term or phrase that is trademarked or copyrighted.

Pointing a Domain Name

After registering a domain name, it is necessary to point the domain name to a web site. This can usually be done within the control panel of the domain registrar's web site. Simply change the name servers of your domain, and it will be pointed towards whichever nameserver you'd like.

Usually, you will need to obtain the names of these nameservers from your web hosting company. Most web hosts will include information on how to point your domain in the proper fashion.

It is important to note that it can take anywhere from a couple of minutes to several days for a domain to become active on the internet after the official completion of registration and nameserver adjustments.

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The Basics of Domain Name Registration

Domain names are words or phrases that are combined with a domain TLD to access a website through a browser. In simple terms, the domain name is just the name of your web site. It is important to note that it is possible to have several domain names pointing to the same web site through the process of URL forwarding.

It is also possible to own a domain name without associating it with a web site; when this is done it is called a “parked” domain, as it is not yet being used.

Registering a domain is usually a simple process, and most people can do so without assistance. However, if you're having trouble understanding the domain name registration process, then you may want to consider the following information.

Where to Buy Domain Names

Domain names are sold by domain registrars that have access to the DNS database. Many web hosting companies are also domain name registrars, and some even offer package deals that include discounts for hosting plans and domain names bundled together. In fact, some web hosts offer free domain names with certain hosting plans. Often times you can receive a discount when purchasing multiple domain extensions simultaneously.

Aside from standard domain registrars, it is also possible to purchase aged domains from domain auction sites. Purchasing an aged domain has many benefits, including better search engine optimization attributes with no effort.

During the domain name registration, there are a variety of options to choose from, some of which can be confusing to the novice webmaster. The following information may help you make the best decisions during the registration process.

Domain Name Extensions

The first option you'll need to consider is the domain name extension, which is basically the letters that appear after the last dot. For example, .com is a domain name extension. While most people tend to choose a .com domain, it may be best to research the meaning of each extension before choosing one that is suitable for your web site. There are now an abundance of extensions, such as .org, .net, .co, .tv, and a plethora of country-specific domain extensions.

The domain extension is the main factor that will affect the cost of the domain registration. Dot com domains tend to cost the most, with a yearly registration costing about $10 from most domain registrars. The cheapest domain extension other than free domains is .info, which usually only costs about $1 per year. Free domain names include .tk and .cc, however, it is important to note that these domains generally have a harder time ranking higher in the search engine results.

Registration Length

When registering a domain, you have the option of choosing how long you would like to lease the domain. Usually, the typical time periods available are 1 year, 3 years, 5 years, and 10 years. Most professional business owners register domains for 10 years at a time, as this will prevent any unnecessary expiration and/or loss of the domain. However, if you don't want to spare the additional expense of registering the domain for long periods of time, then it should be noted that adequate notification is usually issued by the domain registrar before the domain registration expires.

Registration Privacy

Another important option to consider during the registration is whether or not you would like the domain ownership details to be private. When you register a domain name, by default, the contact and billing information for the domain are stored in a publicly viewable database known as the WHOIS database.

Contrary to popular belief, this database is often used by marketers (including telemarketers) to send harassing advertisements. The information can also be used for legal disputes or personal vendettas as well. If you don't want your name, address, phone number and other personal information available to the public, then you may want to consider private domain registration. The option for private registration is offered by most domain registrars, and it usually only costs about $10 extra per year.

Business Certification

You'll also have the option of certifying the domain as an official business entity, which offers a variety of advantages. Certifying a domain usually only costs about $2- $5, depending upon the particular registrar. Having a certified domain will mean that you can legally prove ownership in court using a printed certificate of the domain registration. If you plan on using your web site to operate an official business, then you may want to consider the benefits of certifying your domain name during the registration process.

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Understanding The Value of Domain Names

Domain names are an integral part of the way the internet functions, as they directly represent the name of a web site. Without domain names, a web surfer would have to type in an IP address in the address bar of their browser, which is basically a string of numbers separated by dots. Obviously, these segmented number sequences are much more difficult to remember than the standard web site name, thus domain names were invented.

Understanding the basics of domain names is rather simple, especially for those with adequate internet knowledge and a bit of technical sense. However, trying to judge the value of a domain name is much more difficult. In fact, there are even companies and individuals known as domain speculators that specialize in judging the value of domain names.

There are three basic factors that directly contribute to the value of a domain name: memorability, keyword/SEO optimization potential, and the value of the attached site (if applicable).

If you're curious about the value of a domain name, then you may find the following information to be quite useful.

The Length of the Name

Statistically, domain names that are shorter have been sold for higher profits. This is because shorter domain names are generally more memorable, and therefore, they become popular more easily than longer domain names. The length of the domain name is the most important factor that affects the memorability of the attached web site.

In addition, with a shorter domain name, there is a lessened likelihood of typos.

In today's competitive internet industry, it is nearly impossible to find a domain name that is shorter than six letters. Names like eBay, Ask, Google, Yahoo, Go, and Bing are all perfect example of incredibly popular domain names that are under six letters. Purchasing a domain name that is less than six letters usually requires you to bid on the name at an auction site, or purchase the domain directly from the owner. Either way, these domains are never cheap, and they are usually more than $10,000.

Keyword/SEO Optimization

Another very important factor to consider when judging the value of a domain name is whether or not the name contains and frequently searched for keywords. For example, although the word “basketball” is much more than six letters, it is a very common term that would most likely yield a lot of web traffic from search engines.

When people purchase domain names, ideally they'd like to put forth minimal effort to begin seeing progress. For this reason, many domain speculators and webmasters only buy domain names that already have a significant keyword value. Thus, it is important to consider the predefined popularity of name before judging its value. For example, while the domain name “boomboombam.com” may sound appealing to some people, it has no keyword value because nobody is searching for that term. When registering domain names, it is best to ensure that your desired name has some inherent keyword value.

Commerciality

Although the term “commerciality” is not technically a word in the dictionary, it is commonly used in the internet industry to describe something with commercial value. If the domain name pertains to something that can be sold or marketed, then there is a very high chance that it will sell for a greater price. A domain name that is related to a popular product would be much more valuable than a domain name that is simply related to a funny phrase or a personal opinion, even if the “non-commercial” domain is shorter. The more of an opportunity there is to make a profit with the domain, the more likely someone will make a substantial investment to acquire the domain.

Letters and Numbers

Surprisingly, even though domains that contain hyphens and numbers are often more appealing and easier to read, these domain names generally rank lower in the search engines. Most people do not include numbers or hyphens when they submit a search engine query. Thus, most domain speculators recommend purchasing a domain name that does not contain any hyphens (-) or numbers.

Many people make the mistake of purchasing a domain name like “products4skincare.com” simply because the alternative “productsforskincare.com” is not available. If you run into a roadblock like this, it may be best to move in to a new idea, rather than purchasing a domain name with hyphens and/or numbers. Choosing a domain name that is memorable, contains no symbols or numbers, and includes popular keyword phrases is the best way to ensure that your domain name investment is safe and profitable.

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What is the Domain Name System?

The domain name system, also referred to as simply the DNS, is an intricate worldwide network of web servers that collectively comprise a global database of domain names and IP addresses. The domain name system is the central point of the entire internet, and it is directly responsible for the way web addresses are used.

The job the domain name system is to take standard web addresses and domain names and translate them into segments of numbers that are compatible with computer dialogue. These numbers are known as IP addresses, and they are an integral part of the way the internet works.

Domain Name System and Domains

The domain name system is organized into a carefully structured hierarchy of servers that transmit data, keep the DNS database secure, and ensure its continuity.

When you register a web site, the site that you used to purchase your domain name usually holds the DNS records for your domain. DNS servers are also referred to as simply “nameservers.” Domains are stored on the DNS servers to which they are “pointed.” Pointing a domain is as simple as changing a setting within the control panel of your domain registrar account.

Assigning DNS Servers

The owner of a domain has the right to point their domain towards any DNS they would like, and after purchasing a hosting plan, a domain owner will usually point their domain towards the DNS of their web server.

Pointing a domain is as simple as typing the web address of the DNS server into a box. A DNS server web address usually appears as NS1.WEBHOST.COM and NS2.WEBHOST.COM. Every web host has two nameservers for redundancy, or protection from any unexpected mishaps, such as server crashes and security attacks. Although nameserver addresses are frequently displayed in capital letters, they are not case sensitive.

Finding the address of your web hosts nameserver is as simple as asking a hosting agent or browsing the control panel of your hosting account. Most of the time, this information will be displayed within the control panel of your web hosting account.

How IP Addresses Are Loaded

IP addresses are managed by different organizations that independently own DNS servers. For example, all .com web addresses are handled by Network Solutions, Inc. Thus, when a .com web site is accessed in your web browser, the site is loaded from a DNS server at Network Solutions, Inc., and the data is then transferred to your computer based on the URL that is attached to the IP address. Most people don't realize that they can also enter in the exact IP address of the site instead of the domain name and access the same information.

In essence, the domain name system is simply a database that translates regular letters into numbers that computers can decipher and use for communication. The database is distributed evenly amongst thousands of servers to prevent data failure, ensuring that every web site remains active and can be accessed when entered into the address bar of a browser.

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What is a DNS Server?

A DNS (Domain Name System) server is a type of web server used to interact with the domain name system, which is the global directory of domain names and corresponding IP addresses. DNS technology automatically translates long and confusing IP address (which are segmented number sequences separated by dots, such as 127.0.0.1) into standard domain names that are easier to remember.

The domain name system is comprised of thousands of domain name servers around the world, which accumulatively make up the largest digital database on the planet. DNS servers operate using special software that transmits data from the DNS server to various web hosts upon request.

In basic terms, the internet would fail to exist as we know it without the Domain Name System and DNS servers.

What is a DNS Root Server?

DNS root servers are the base of the domain name system, communicating only with each other using private network encryption protocols. These web servers are at the top of the internet hierarchy, storing all information related to a domain name and its IP address.

There are only 13 root servers in the entire world, each one labeled a letter of the alphabet, up to M. Ten of these crucial servers are located within the United States, with one in London, one in Japan, and one in Sweden.

What is the DNS Hierarchy?

The domain name system is operated in a hierarchy that keeps the domain name database separate, and the only servers that house the entire database are the aforementioned DNS root servers. The rest of the DNS servers in the world house only fragments of the database for particular web hosts and web sites. Most of these low level DNS servers are owned by Internet Service Providers or private businesses.

When you browse a web site, your web browser is actually directly communicating with your ISP’s DNS server to retrieve data from other domains before displaying it on your screen. In some cases, the DNS server will not need to communicate with another server to display the page; however, in many cases, especially when you visit a foreign or private web page, your ISP’s DNS server will have to act as a DNS client and retrieve data from another DNS server.

Your Connection to DNS Servers

Every computer that is connected to the internet is also connected to a DNS server. When you setup a connection through your Internet Service provider, you are actually establishing a connection with their DNS server. You are given a public IP address that is used to identify your computer on the network.

If you are a webmaster, then you will need to learn the web address of your web host’s DNS server in order to point your domain to that server. Doing this is usually as simple as typing the web of the DNS in your domain registrar’s control panel.

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What Are DNS Records?

DNS stands for Domain Name System, which is the largest digital database in the world, containing information about every web site on the internet. Every web site online has an IP address that is its actual internet location, and this number is used to locate the web site within the database. The data that tells the web server how to respond to your input is known as the DNS records, or zone files. These records play a vital role in the functionality of the internet, and any aspiring internet technology expert should learn the following facts about DNS records and how they are used.

DNS Records Explained

DNS records are basically mapping files that tell the DNS server which IP address each domain is associated with, and how to handle requests sent to each domain. When someone visits a web site, a request is sent to the DNS server and then forwarded to the web server provided by a web hosting company, which contain the data contained on the site.

Various strings of letters are used as commands that dictate the actions of the DNS server, and these strings of commands are called DNS syntax. Some DNS records syntax that are commonly used in nearly all DNS record configurations are A, AAAA, CNAME, MX, PTR, NS, SOA, SRV, TXT, and NAPTR. The following paragraph details the meaning and usage of each of these syntax.

DNS Syntax Types Explained

An “A” record, which stands for “address” is the most basic type of syntax used in DNS records, indicating the actual IP address of the domain. The “AAAA” record is an IPV6 address record that maps a hostname to a 128-bit Ipv6 address. Regular DNS addresses are mapped for 32-bit IPv4 addresses.

The “CNAME” record stands for “canonical name” and serves to make one domain an alias of another domain. CNAME is often used to associate new subdomains with an existing domain's DNS records.

The “MX” record stands for “mail exchange” and is basically a list of mail exchange servers that are to be used for the domain.

The “PTR” record stands for “pointer record” and maps an Ipv4 address to the CNAME on the host.

The “NS” record stands for “name server” and indicates which Name Server is authoritative for the domain.

An “SOA” record stands for “State of Authority” and is easily one of the most essential DSN records because it stores important information like when the domain was last updated and much more.

An “SRV” record stands for “service” and is used to define a TCP service on which the domain operates.

A “TXT” record lets the administrator insert any text they'd like into the DNS record, and it is often used for denoting facts about the domain.

Conclusion

DNS records are an important, yet unseen aspect of how the internet works. If you're studying internet technology or training to become a server administrator, you will definitely need to learn more information about all of the aforementioned DNS record types and their uses.

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