4 min read

Digital Commercial Land

Despite being well into the information age, the common understanding of domain names is still quite low. People "kind of" know that domain names cost money, or that "all the good ones are taken." But they rarely know there's an entire domain name industry behind that: dedicated marketplaces, podcasts, brokers, investors, even conferences.

To help explain them, domain names are often described as digital real estate. That's not wrong, but we think it's more precise to call them digital commercial land. A domain name derives its value from the commercial value it brings to a business. Not everyone needs a domain name the way everyone needs somewhere to live, but every business needs one.

A domain name can be like a corner block in the middle of a large city, or a block on the main road of a small country town. A successful business can be built anywhere, but location still makes a massive difference in the long run.

Aerial view of surveyed farmland on the edge of a town, with pin markers and dotted lines plotting out a block, like a parcel of land waiting to be developed.

The parallels between physical land and domain names run deep:

Physical LandDomain Names

Organic road or foot traffic passing by the land.People organically typing in a domain name to see what's there.

A convenient location.A memorable word that's easy to type.

Businesses of any size can build on a block, from a small office to a corporate skyscraper.Businesses of any size can use a strong domain. A mortgage broker and a major bank might run on equally short, sharp URLs.

Land can be used for a park or an apartment building.A domain can host an ad click landing page or a billion-dollar social network.

Land bought years before a population boom can be worth a fortune.A domain registered in the 1990s can now be worth millions.

Real estate investors hold property portfolios they don't plan to occupy themselves.Domain investors hold portfolios of thousands of generic domains for resale.

Real estate agents.Domain brokers.

Real estate listing websites.Domain aftermarket platforms.

Land is cheaper in regional areas.Domains are cheaper when they're longer or harder to spell.

Real estate markets have price bubbles.Domain markets have had bubbles too, like China's in 2015.

Squatters can occupy land without legal right.Cybersquatters register domains, often trademarked names, hoping to resell them at a premium.

Landowners pay ongoing council rates to retain ownership.Domain owners pay a small annual renewal fee. Let it lapse, and you lose the land.

Land can be subdivided into smaller lots.A domain can be subdivided too, via subdomains, letting one piece of digital land host several distinct projects.

The 2020 pandemic made it clear just how much domain names are digital commercial land. As physical shopfronts and office buildings were vacated, the volume of domain names sold and registered boomed. More bricks-and-mortar businesses realised they needed a digital shopfront, one that, unlike a physical location, isn't limited to a single geographic area. A domain name is global.

The "digital real estate" analogy isn't quite right. Domain names aren't dwellings or buildings on a lot, they're more like empty lots where anything could be built. The best ones get snapped up for commercial reasons. Domain names are digital commercial land, and that's what makes them such valuable assets.

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