Despite being in the information age, the common understanding of domain names is still quite low. People “kind of” know that domain names cost money. Or “all the good ones are taken”. But they rarely know that there is actually a whole domain name industry with dedicated marketplaces, podcasts, brokers, investors and even conferences.
To help educate people, domain names are often described as like Digital Real Estate. While this isn’t wrong I like to be more specific and consider domain names to be more like Digital Commercial Land. Domain names derive their value from the commercial value they bring to a business. Not everyone needs a domain name like everyone needs somewhere to live. But every business needs a domain name
A domain name could be like a corner block of land in the middle of a large city. Or it could be a block of land on the main road of a small country town. While a successful business can be built anywhere, location can make a massive difference in the long run.
The following points describe the parallels of Physical Land Vs Domains:
- Organic road or foot traffic passing by the land. People organically typing in domain name to see what’s there.
- Convenient location. Memorable word and easy to type.
- Any size business could build on a block. Small office building vs. corporate sky scraper. Mortgage Broker vs a Bank could use the same URL.
- Different uses for land. Park vs Apartment Building. Ad click landing page or billion dollar social network site.
- Land purchased years ago before a population boom. Domain name registered in the 90s and now worth millions.
- Real estate investors hold portfolios of property they don’t necessarily plan to occupy themselves. Domain investors hold portfolios of thousands of generic domain names for resale.
- Real estate agents. Domain Brokers.
- Real estate listing websites. Domain aftermarket platforms.
- Cheaper land in regional areas. Cheaper domains that are longer and/or harder to spell.
- Real estate price bubbles. Domain name market bubbles such as 2015 China bubble.
The 2020 COVID pandemic made it clear that domain names are Digital Commercial Land. As physical shop fronts and office buildings were vacated, the volume of domain names sold and registered boomed. More brick and mortar businesses realised they needed a digital shop front. A physical shop front is limited to that geographic location. A domain name is global.
The analogy of domain names being like Digital Real Estate isn’t the best. Domain names aren’t dwellings or buildings on lots. They are more like empty lots where anything could be built on it. The best domain names get snapped up for commercial reasons. Domain names are like Digital Commercial Land and this helps to conceptualise why they are such valuable assets.