Cybersquatters

Domain Name Investors are not Cybersquatters

The term “Cyberquatter” is commonly misused.

Have you ever wanted to buy a domain name and found that it was taken but not used? Well, unfortunately all the valuable domain names have been registered and traded on the aftermarket for many years.

A common misconception is that owners of unused domain names are “cybersquatters”. However, the reality is very different. Cybersquatting is in fact “registering, trafficking, or using an internet domain name with the bad faith intent of profiting from a trademark belonging to someone else.”

On the other hand, domain investment and reselling domain names on the aftermarket is a bona fide offering of goods or services that has been practiced and accepted for several years.

Domain Names are like digital real estate

Domain names are very similar to real estate in a variety of different ways. There is a wide disparity in value for both traditional real estate and digital real estate. Some domain names are worth 7 and 8 figure sums, while others may be worth significantly less.

The bottom line is that the value of property is dependent on many underlining factors including: Traffic, popularity, demand, scarcity, desire, need, circumstance and many other variables. Investors that purchase domain names are doing so for the same reasons that investors purchase land and physical property.

Big companies invest in premium domain names

You may not realize that many household brands have invested heavily in domain names for a long time. Companies like CBS own Kids.com, Chat.com, News.com and many more. Recently a publicly traded company called MicroStrategy Inc, sold one of their domain investments for $30 million USD (voice.com). A statement from the CMO said:

 

“MicroStrategy holds more than a dozen evocative and powerful domain names. While our focus continues to be on our core analytics and mobility business, we are open to leveraging these domain names in equity or other strategic transactions with well-funded parties,”

 

The true value of domain names

Many entrepreneurs and business owners recognize that quality domain names play a very important role in the success of a business. Commerce is moving online and traditional brick & mortar businesses are shutting down faster than ever before.  While it was once a massive advantage to have a storefront on Fifth Avenue, New York it is now more advantageous to invest in reaching a global audience through the internet.

In essence, a domain name is now a digital storefront and when compared to traditional advertising and marketing costs, domain names are very undervalued.

Good investors recognize value

While the general public are still catching up with the internet and the impact it’s having on global markets, investors are recognizing the true value of digital real estate. Thousands of investors and businesses are buying domain names on the aftermarket for 5, 6 and 7 figure sums without necessarily having development plans.

When buying a domain name, consider that it may have sold in the past for more than you’re offering. However, if you’re able to acquire the domain name of your choice it should be considered a blessing, as many domain names are already off the market completely.

Conclusion

Domain investors are not cybersquatters, and although there are misinformed individuals that may be “squatting” on a trademarked name, they are not to be confused with bona fide investments. If a name is not trademarked or it’s a generic term that can be used in a variety of different ways, the reality is that whoever owns the preferred (.com) domain name, likely owns it as a good faith investment and probably paid a hefty sum to acquire it.