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Ask HN: Economics of domain hoarders

8 points by iqster 16y ago

I'm in the process of building a Twitter app. Taking a break from coding (hey ... it's new years day), I go over to godaddy and try to register a decent sounding domain name. As you can guess, a large fraction of domain names that include "twit" or "tweet" are taken. I expected this ... there are supposedly 300K twitter apps out there. Normally, I'd move from name-to-name quickly ... and just keep searching until I found a decent name. Today, however, I decided to check out what "lives" at these domain names. Again, no surprise ... crap, crap and more crap. So HN: what are the economics for people who hoard domain names with no intention of setting up meaningful websites?

thefox 16y ago
just-another-twitter-app.com maybe.
gexla 16y ago
Simple. Domains are so cheap that if you buy one for ~ $8 then you only need to make that money back in one year for it to be profitable. That's less than 70 cents per month for a .com. There are a number of parking services where making that much money isn't terribly difficult. So... the more you buy, the more money you could possibly make. Some might just make their money back, some might do very well. Overall, the domaineers are likely at least breaking even. Add in the fact that they have a bit of experience doing this, then for sure they are making money.
- user24 16y ago
  yep. Plus the domainer websites are awash with news stories about domains selling for thousands, so plenty of newbies think it's going to be easy money.
- iqster 16y ago
  Good point. 70 cents a month is likely easy to recover. Another thought I had was hoarders attempting to grab usable names in order to extort real companies to pony up. I believe this happened a lot in the late 90s. Wonder how common it is today?
  - deleted 16y ago
    [deleted]
  - michaelelliot 16y ago
    This has become quite a fruitless endeavor. WIPO and other domain arbitrators will swiftly hand domains over to their rightful owners if there is a trademark or history of trading under a particular name.
iwwr 16y ago
It would be interesting if domains could be bought and owned (instead of being rented like today) by means of cryptographic certificates. This would allow anonymous ownership as well.
jasonmcalacanis 16y ago
.co did something interesting by making domains $30... which is no different than $8 if you're buying a small number of them. However, these is a huge issue if you're buying 100 or 500 or 1,000. Moving domains to $25 a year would probably reduce the amount of hoarding, as it would narrow people's focus. For Weblogs Inc. I bought 3,000 domains when we started, and for Mahalo I've bought 2,000 or so. It's a trivial cost to buy all the possible options you might need. If the economics were 2, 3, or 4x i would have narrowed the focus down considerably.
- cmontgomeryb 16y ago
  A friend had a client who purchased 1000 domains for his site. I've never even imagined buying this many - can you explain how you use them? Do they all point to the same site? Is the reason simply to catch people who may mistype your real URL ie ycominator, ycombinator, ycombinates etc? I find this fascinating, as even with these thoughts in mind I could only get up to about 10-20 domains for my current project! Thanks for any insight.
arn 16y ago
I think you'll find two audiences. There are those who are looking to flip domain names and pick up a lot of them to resell, then there are those who buy domains more defensively to try to figure out the best domain name for their ideas. In the end, it's just incredibly cheap to get a domain name, so it's no barrier to entry. If I have an idea for a site, the first thing I do is try to find a good domain for it. Depending on how serious I am about the site idea, I will pick up any serious contender for a name. That means for any particular idea, I might register 1-20 domains depending on various factors like how serious of an idea it is and how quickly I find "the" domain name. I'll even buy from set-price brokers up to 4 figures for a domain I think I will eventually use. My portfolio is about 350 domains at the moment, which costs me ~$3150 a year to maintain. That is a footnote expense in almost any profitable small business.
sabj 16y ago
The other category to consider are those domainers who hold websites which are _not_ typically covered in ads; they might just have a notice on them saying "contact firm X for details." In many cases, I have even written such outfits saying, "is XYZ.com for sale?" and been told no, it isn't, or something like that. I have seen this for some domains which are more high-end, more generic useful words and less just pure spam. This said, it's still a disgusting waste of internet real estate.

8 points by iqster 16y ago

thefox 16y ago

just-another-twitter-app.com maybe.

gexla 16y ago

Simple. Domains are so cheap that if you buy one for ~ $8 then you only need to make that money back in one year for it to be profitable. That's less than 70 cents per month for a .com. There are a number of parking services where making that much money isn't terribly difficult. So... the more you buy, the more money you could possibly make. Some might just make their money back, some might do very well. Overall, the domaineers are likely at least breaking even. Add in the fact that they have a bit of experience doing this, then for sure they are making money.

user24 16y ago
yep. Plus the domainer websites are awash with news stories about domains selling for thousands, so plenty of newbies think it's going to be easy money.
iqster 16y ago
Good point. 70 cents a month is likely easy to recover. Another thought I had was hoarders attempting to grab usable names in order to extort real companies to pony up. I believe this happened a lot in the late 90s. Wonder how common it is today?
- deleted 16y ago
  [deleted]
- michaelelliot 16y ago
  This has become quite a fruitless endeavor. WIPO and other domain arbitrators will swiftly hand domains over to their rightful owners if there is a trademark or history of trading under a particular name.

iwwr 16y ago

It would be interesting if domains could be bought and owned (instead of being rented like today) by means of cryptographic certificates. This would allow anonymous ownership as well.

jasonmcalacanis 16y ago

.co did something interesting by making domains $30... which is no different than $8 if you're buying a small number of them. However, these is a huge issue if you're buying 100 or 500 or 1,000. Moving domains to $25 a year would probably reduce the amount of hoarding, as it would narrow people's focus. For Weblogs Inc. I bought 3,000 domains when we started, and for Mahalo I've bought 2,000 or so. It's a trivial cost to buy all the possible options you might need. If the economics were 2, 3, or 4x i would have narrowed the focus down considerably.

cmontgomeryb 16y ago
A friend had a client who purchased 1000 domains for his site. I've never even imagined buying this many - can you explain how you use them? Do they all point to the same site? Is the reason simply to catch people who may mistype your real URL ie ycominator, ycombinator, ycombinates etc? I find this fascinating, as even with these thoughts in mind I could only get up to about 10-20 domains for my current project! Thanks for any insight.

arn 16y ago

I think you'll find two audiences. There are those who are looking to flip domain names and pick up a lot of them to resell, then there are those who buy domains more defensively to try to figure out the best domain name for their ideas. In the end, it's just incredibly cheap to get a domain name, so it's no barrier to entry. If I have an idea for a site, the first thing I do is try to find a good domain for it. Depending on how serious I am about the site idea, I will pick up any serious contender for a name. That means for any particular idea, I might register 1-20 domains depending on various factors like how serious of an idea it is and how quickly I find "the" domain name. I'll even buy from set-price brokers up to 4 figures for a domain I think I will eventually use. My portfolio is about 350 domains at the moment, which costs me ~$3150 a year to maintain. That is a footnote expense in almost any profitable small business.

sabj 16y ago

The other category to consider are those domainers who hold websites which are _not_ typically covered in ads; they might just have a notice on them saying "contact firm X for details." In many cases, I have even written such outfits saying, "is XYZ.com for sale?" and been told no, it isn't, or something like that. I have seen this for some domains which are more high-end, more generic useful words and less just pure spam. This said, it's still a disgusting waste of internet real estate.