The names that are used to identify web sites are known as “domain names”. The most common types end in .com, .net. and .org, although there are other types as well. Domain names have an independent existence from web sites – a person can own one by registering any previously unused name (although there are some restrictions about what types of characters, etc., are valid), which costs just a few dollars per year per name.
Domain name registration happens on a first-come-first-served basis. This means that the first person to identify a potentially valuable domain name has an asset, and it may well be that others are in interested in purchasing this asset from him. This fact has led to the development of a domain name marketplace, and business ventures where people purchase domain names with the intent of reselling (“flipping”) them. In some cases, domain names purchased for just a few dollars have been resold for many thousands.
As with any other business, not everybody who enters the domain name flipping business will be successful. The least successful tend to be those to who take a slapdash approach to the venture, who do not do their research, or who are over confident. You can not simply purchase any random domain name, and hope to resell it for a hefty profit:
* Many domain names purchased for resale, simply do not sell. It is therefore necessary to research the market and understand what kinds of names are saleable. Furthermore, since many domains, even good ones, do not sell immediately, it may be necessary to acquire a portfolio of names with the goal of successfully selling just a proportion of them. There is always a risk, especially if you do not know what you are doing, that you may not be able to flip domains that you register, and in that case, you would be out of pocket for the registration fees.
* Domain names that infringe trademarks can lead to disputes, potential loss of the name, and even getting sued. It is therefore important to educate yourself about these issues, and not to register names in bad faith (“cybersquatting”).
Building a successful domain name flipping business, as with any other business, therefore requires both understanding your potential customers and knowing how to operate your business, including, for example, knowledge of how best to market your names and how to transfer names (escrow procedures). You are of course never going to learn these kinds of things from a short article, but what you can do is study the market and learn from guides written by those who have worked in this area, such as Brian Pubrat’s “Domain Cash Vault”, or Edwin John’s “How I Sell My Domain Names”.
