Investing in domains

Good afternoon, my name is Dmitry Khvetkevich, head of NIC.UA.

NIC.UA is the leading domain name registrar in Ukraine. Today, I want to talk to you about investing in domains and reveal the secrets and mysteries of the secondary market in the domain industry.

Most people know,What are domains?These are the very same website names that you enter into your browser. For example, NIC.UA.

For 10 years now, I've been speaking at various conferences, where I talk about how to choose the right domain name so that it doesn't get taken away from you, but this problem remains relevant.

I always show real-life examples at conferences. If you visit rozetka.ua, you'll be redirected to rozetka.com.ua. The same goes for google.ua and google.com.ua. Each case has its own set of reasons for such redirects.

So, without going into technical details, as I already said, a domain is your website's address. There are a lot of them now. They are divided into territorial and thematic domains. Territorial domains include .UA, .ZP.UA, .KIEV.UA, or, for example, the .TV domain – which actually has nothing to do with the television industry. Thematic domains include .COM/.NET/.ORG/.BIZ/.com.ua/.biz.ua, etc. The new wave of thematic domains includes .PROMO/.MARKETING/.PHOTO. There are even company domains, for example .APPLE – where Apple is both the owner and registry operator. Only company domains can be registered in such a domain.

A new wave of domains will come very soon and there will be even more of them.

This all applies to the primary domain market—where anyone can visit a registrar's website, like NIC.UA, and register a free name in any domain for a term of 1 to 10 years. And the shorter and more attractive the domain name, the higher its resale value.

If we talk about the secondary market, then everything is much more complicated and more expensive there.

Domains can be registered for immediate sale, or they can be registered specifically for a project. If a company closes or a project fails, these domains are simply not renewed or put up for sale.

What influences the domain price in this case?:

• Short beautiful name
• Domain age
• The topic is not the domain itself, but the information that was on the site
• There are many factors in search engine optimization (the number and quality of sites linking to a given domain).

Why do people buy such domain names?

• To create a new project on an already promoted name
• To redirect the remaining traffic to your project
• To recreate a former website, maintain it, and integrate it into so-called PBN networks (multiple thematic websites aimed at promoting a single commercial one). This is then used for search engine optimization of the main website.

NIC.UA even has a dedicated tool that lists deleted domains, along with their key performance indicators, that were not renewed and are now available for purchase at their regular price.

Proponents of a decentralized internet are the underdogs in the domain market. Domain names are currently being created using the blockchain system, and the distinguishing feature of these domains is that they are permanent and not subject to the control of any government. However, the technology is still in its infancy, so there's nothing to talk about yet.

But this is all theory; let's talk about how they buy and how they sell, where the risks are, and where the fabulous interest rates are.

Many people dislike domainers and call them cybersquatters.

But not all of them are bad or dishonest. I also don't support trademark squatting or simply registering names with well-known brands. However, there are people who develop this business differently.

Where to buy a domain:

• You can buy a domain from NIC.UA
• Can be purchased at a closed/open auction 
• Directly from the registrant.

Domains are sold at a fixed price by domain registrars. In all other cases, the price can vary significantly from the registrar's price. If a domainer wants to purchase a domain that is currently in use, they monitor the registration expiration date and wait for the domain to be deleted. I've already mentioned deleted domains. Over the past five years, hunting for such domains has become a very profitable business. Programmers are writing backorder services that monitor domain expiration dates and attempt to register the domain within the first second after deletion. And after a successful purchase, there's a high chance the domain will appear at an auction for almost a hundred times the registrar's asking price.

You can buy a domain directly at auction.

For example, if you're lucky and find a four-character domain in the most popular .COM zone for, say, $1,000, then that name could fetch $10,000 at the same auction in 5-6 years, as four-character domains in the .COM domain are long gone. For example, there are currently over 160 million addresses registered in this domain.

You can negotiate directly with the domain owner if you see the name is unused, in which case the price may be very reasonable. However, in this case, many are concerned about the seller's integrity, so if you're unsure, it's best to contact a trusted person who can help you complete the transaction from A to Z. We offer this service, among others.

Where and how are domains sold?

Domain owners naturally hold their domains with registrars. However, domains are often held in different extensions and with different registrars to save on renewal costs. Renewal costs vary among registrars, and some domain owners may hold onto them for decades.

Where to buy:

• at auctions
• ads on specialized forums
• park pages or services
• on your personal brand pages/social networks

Domains are often listed at high prices at auctions, and similarly on specialized forums. This is especially true if the domain is not only good in name but also has SEO metrics. Many auctions require domain transfers to their registrar.

Domainers often use their own parking pages or services. This is when you land on a website that says the domain is for sale and offers the option to contact the owner. Or they use services where the pages also contain ads, providing passive income, so to speak.

I often see domainers creating services on their own domains. Directories, blogs, forums—anything that can be filled with information, attract search engine traffic, and recoup the cost of domain renewals through advertising. Sometimes these sites become businesses, which doesn't change the fact that the owner can still sell the domain, just for a higher price.

There are well-known domainers who list domains for sale on social media. Word of mouth spreads, and everyone knows that this person has a domain for any topic.

What do we have in the end?

The domain market is growing. New zones are emerging where registry operators create lists of premium domains in advance, assigning each name an individual price; the more attractive it is, the more expensive it is. And such domains will never be cheap again.

The situation in Ukraine is also changing, not without the help of quarantines and the mass transition to online service provision. E-commerce has been breaking records over the past two years, and the number of websites and services is growing.