The Great Internet Land Grab

It was going to make them all rich.

It was the late 1990’s and this “internet” thing was finally starting to take off. Some of the visionary companies could see a day where we would shop online. And look up movie times on line. And a whole bunch of other stuff that we didn’t even know yet!

And everyone wanted to figure out how to make money. AOL, figured out how to make money getting people hooked up to the Internet. Netscape figured out how to make money by selling people an internet browser so they could get around.

And then there were companies trying to own the cool addresses, addresses that people would pay big money for. They were essentially speculating on virtual real estate. And like physical real estate, for a time the prices went up.

For example in 1999 capital.com sold for $750,000. Not bad considering someone bought it for about $10. Other noteworthy sales in 1999 were:

$824,000 drugs.com
$1,000,000 britain.com
$1,100,000 bingo.com
$1,500,000 fly.com
$2,000,000 england.com
$2,200,000 autos.com
$2,500,000 tom.com

The model was so simple it was scary: find a word that people will want to use and snap it up yourself and later sell it to someone for big bucks! The trick of course, was to figure out which word was the valuable one. Some companies just started hedging their bets. They literally went to a dictionary and started scooping up names.

One such company was Mail.com. They had hundreds of thousands of words registered.

I knew a guy, Robert, who worked for a company called Allegro who made anti spam software. They were the first company to figure out how to scan companies email without having to host the email. They redirected the customer’s email to their site. (This was accomplished by changing the DNS MX records.) Then they scanned the email and forwarded it on to the company.

It was very innovative for its time and Robert was the one who invented it. What does this have to do with domain names? Well, Mail.com was scooping up all the names they could find and they were also scooping up companies. They came courting Allegro. The problem for Robert was that he wasn’t an owner. The company was entirely owned by one particular family. They all got huge stock grants from Mail.com

What about Robert? He had to settle for a cash payment of $500,000. Six months later it became clear that out of all of them Robert had clearly gotten the best deal.

Your grandfather probably told you to buy land because “they don’t make any more of it.” This concept didnt’ translate well to the web. Because they DID make more of it. And while Mail.com was busy trying to scoop up all the names in the dictionary, people figured out that while sometimes a single word might be valuable, more often people either found a company via a search engine, in which case it literally didn’t matter what the domain name was, or they used a sentence mypony.com is probably just as good as pony.com.

Oh sure, there are still some big money domain names. Just a few years ago sex.com sold for $14M. And in 2007 the most expensive domain name ever vacationrentals.com sold for $35,000,000.

But, for every vactionrentals.com or sex.com or even drugs.com, there are literally thousands of names that someone bought and never managed to sell. So, Mail.com lost a ton of money. They are still a company at mail.com. I don’t know if it’s the same guys from the 1990s.

Yesterday, I talked about the changes coming to the internet top level domains (Everything You Knew About Internet Addressing Changed Yesterday.)

I think a similar land rush will occur as we saw in the 1990s. Companies will spend hundreds of thousands of dollars to snatch up attractive names and top level domains.

But a friend suggested that if a domain name doesn’t end in .com, .org or .net that the average user will be confused and those new addresses won’t necessarily catch on.

With thousands of new TLDs it very much looks like the TLD may simply take the place of the old domain names. You will see people run out and spend a bunch of money for TLDs. But, a year from now, you’ll still be visiting .com, .net and .org addresses.

Rodney M Bliss is an author, columnist and IT Consultant. He lives in Pleasant Grove, UT with his lovely wife and thirteen children.

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