How to Make Money Online. Part 1: Buy a Domain

April 12, 2011

I will present in upcoming posts my list of ways to make money online (that don’t involve envelope stuffing or sending anyone a check so they can get their funds out of a Swiss bank account) . I can’t promise you’ll make a killing but you should be able to make a living.

Part 1: Buy low, sell high, or hold for dividends…domains 

Like any newly discovered world, the web in the early years was a land of opportunities for those who had vision and patience (bonus:  little risk of catching malaria).  I’m not even talking about people who made billions writing the first web browser or organizing the web into a little directory site called Yahoo! I’m talking about the thousands who staked a claim to website domain names. These pioneers registered domains names by the thousands including any dictionary word, number, phrase, of course anything sex related then added a .com to the end. These day try finding an available one word domain name. You’ll have to pay thousands of dollars in most cases. Mind.com just sold for $171,000. At one time someone had registered it for about $10. Can’t even find domains with any random 5 characters or less. Even zfgh.com is taken by some lucky owner.

Like land and stocks, domainers like to buy low, sell high or hold on to a site to either develop it into a large business or simply collect income it generates. 

1. Buy
You can search for and register available domains on GoDaddy.com, NetworkSolutions.com, smallbusiness.yahoo.com or dozens of other registrars. ICANN.org is the official internet name assignee and can provide you a full list of accredits domain-name registrars.

In the past, domainers looked for sites that were misspellings of popular sites. So someone typing walmart.com into their web browser’s address field may accidentally leave out the ‘L’. Someone who owned wamart.com may have received a lot of traffic simply by being in the right – or wrong depending on how you look at it – place. Traffic = income.

Interesting fact: Columbia became very popular with domainers because its country code is .co. Many people leave out the “m” in .com.

These days such opportunities are gone. Companies have either bought up any variations of their site name or sued to get them on the basis that it was violation of their copyright.

2. Sell
Once you are a proud owner, you can try to flip a domain by selling it on Godaddy.com or Sedo.com. Unless you knew something the previous owner missed, you will need to  improve the value of the domain before you can resell it for a profit. Usually that means, find ways to attract visitors.

3. Develop
Like a home, many domain buyers are looking to use a domain for themselves for either their business, hobby, etc. To flip a domain for a profit, you’ll need to make domain look more attractive for minimum cost. You can do that by putting lots of good information on your new site which visitors will find through search engines. Just like any media, domains are valued by amount and quality of traffic.

4. Hold
The best reason to hold a domain is to generate revenue from it. The best way to generate revenue is to run advertising. The easiest way is to set up a Google AdSense account and start running Google three-line text or banner ads. Each time a visitor clicks on an ad on your site, you generate anywhere from a few cents to a few dollars depending on the topic. Google’s software matches up the information on your site to show the most relevent ads so your visitors are most likely to click on it.

On average, less than 0.1% of visitors click on these ads. So you’ll need a lot of traffic to generate any substantial income from one site. For that reason, many successful domains own thousands and some even millions of domains. One domain may generate $50 per year but annual renewal is less then $7/year so your profit is over $40/year. Own 3,000 such domains and you’ve got a 6-figure income that mostly runs itself. You can keep adding domains to grow your empire or sell it all for a multiple of the annual income.

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Opening remarks

April 8, 2011

After working for close to two decades in technology and the business of technology, I hope to share in upcoming posts some bits of wisdom about technology, business, sales, marketing and how to mix it all up online. I might also on occasion make mention of good strong coffee and really good (preferably Irish) beer. I couldn’t do much without the first and certainly wouldn’t enjoy it nearly as much without the later.