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The new Gold Rush

The American company Marchex has just purchased a portfolio with more than 100.000 domain names from the internet pioneer Yun Ye for USD 164 mi. This portfolio generates an income, through the Sponsored Links system, of USD 19 mi a month. This transaction illustrates the maturity of the American market regarding registry of domains and their monetization via Sponsored Links. The internet domain is becoming increasingly comparable to an asset, like a house, but instead of real estate it is virtual estate, an intangible asset that generates a monthly regular income.

This new perception of domain value created a new gold rush in the international market. We are living in this true gold rush, in which more and more people enter the market looking for new opportunities. This has been evidenced by the incredible growth rates of the domain registry market, 30% annually. The main players in this game are:

Domain owners: People or companies who register domains to make money from advertisements or reselling of addresses. The most common profile is the owner with a few relevant domain names.

Domain portfolio owner: A new profile has appeared; they register plenty of domains and make little money from each of them. The long term aim is to filter their portfolio and get rid of the less profitable addresses.

Domain parking service providers: These are companies who offer alternatives for making web addresses profitable. All it takes for a domain owner to start making money from his web address is hiring one of these companies, e.g. http://www.TrafficClub.com

Sponsored Links provider: These are companies who sell webspace to their clients and display their ads to the service providers. Google and Yahoo are in this category.

This business model has great advantages for the small and medium investor.

A small investor, being creative and able to spot good domain names that are still available, can register them and have a growing monthly income. This business model is ideal to be used as a side-business, for it does not require much money to start with, nor much time to manage once you start. The system is completely administered by the domain parking service providers.

As for the medium investor, he may start by purchasing a domain portfolio, then enhancing it and improving its average profitability, i.e. the aforementioned Marchex. This business model requires considerable investment and time to choose, through a statistics system, the domains that should be kept and the ones that should be discarded.