Prices skyrocket for choice Internet real estate

Posted at 12:02 a.m. PST Friday, January 14, 2000

NEW YORK (AP) -- As the Internet continues to sprawl, virtual locations once available for a $70 registration fee now command thousands, even millions of dollars.

Expect to pay dearly for Web addresses that are easy to remember, choice real estate akin to New York's Madison Avenue or Beverly Hills' Rodeo Drive. Otherwise, go to the suburbs -- or farther.

Business.com went for a record $7.5 million in November. The asking price for America.com? $10 million.

Simply put, the best words are gone. There is a cottage industry buying and selling the domain names that precede ``.com,'' ``.net,'' and ``.org'' in Web addresses, and Internet regulators are already considering adding new categories, such as ``.info'' or ``.shop.''

``It's estimated that 97 percent of names in Webster's has been registered,'' said Tim Pluma, director of sales and marketing at name broker GreatDomains.com. ``The opportunity for a company to own their preferred or desired domain name is extremely limited.''

While some companies paid premiums to reclaim trademarks in the past, Pluma said the market for generic names has exploded in the last year or so.

WallStreet.com sold for $1 million in April. Autos.com went for $2.2 million last month. Scores of other names, including internet.com and tv.com, got five or six figures.

Speculators grabbed many of the names in years past. In other cases, owners setting up a real business found the name worth more than their venture. Kelly Britt, previous owner of Autos.com, said his auto referral service generated only $8,000 each month.

Steeped in ideals of equality and democracy, the Internet is viewed as a place where computer users can share knowledge without regard for status or location. Yet many of the traditional principles of competition reappear as virtual world meets real world.

``It was the land of opportunity, and then the opportunists came and seized on that opportunity,'' Britt said. ``A gold rush cannot last forever.''

Don Heath, president of the Internet Society, does not believe trading names is appropriate but acknowledges little can be done. His Virginia-based group is devoted to protecting the Internet's future.

``Free market forces are driving the Internet in its phenomenal growth,'' he said, ``and this trading in domain names is a byproduct of that environment.''

Some 100 Web sites now offer name brokering services, holding auctions or soliciting private bids for thousands of names.

Jake Winebaum, acting chief executive of business.com, was willing to pay $7.5 million for the right name now, figuring he could save on promotion and marketing costs later. He envisions business.com as a comprehensive site for business services and products.

Such prices are for addresses only, with the underlying businesses costing extra. It's like buying the land without the buildings.

Still, businesses can succeed without simple names that directly identify their products. Take Yahoo!, a leading Web site despite its ambiguous name. Or Amazon.com, a name with no hint of books, music or movies.

Computer users can still register new names, but they generally must combine two or more words, settle for an acronym or make up a word from scratch.

Network Solutions Inc., the leading name registration company, counted about 3.4 million names registered in the first nine months of last year -- equal to all past years combined. Network Solutions charges $70 per name for the first two years and $35 a year after that.

A simple name does not guarantee a windfall. Owners of Year2000.com, a Y2K Web site, are still seeking bids after $10 million offers turned out to be hoaxes. Journalist.org and its plural companion received no bid during a recent eBay auction despite a modest starting price of $4,000.

And a good name does not automatically mean good products, though the right domain name can help.

Want to buy a car? Many Web users will first try Autos.com, just to see if it works. So CarsDirect.com bought that name last month. Autos.com now brings visitors to CarsDirect.

Before owners of WallStreet.com sold the name, the empty site received up to 17,000 visits a day from people just typing ``wall street'' into a browser.

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