Domain names have become a mainstream investment vehicle. A New York Times article on February 1, 2008 announced to the world what domain name professionals have known for some time: domain names are valuable, and the right name can be a good investment.

Any combination of letters and numbers can be a domain name. So, how can something with an virtually unlimited supply be so valuable? Simple -- some domain names are better than others. I can register the domain name "reallylongandhardtorememberdomainname.com," but that's not the sort of tag that will drive business to me. There are too many things wrong with this name: it's too long, it's too hard to remember, and there are too many other similar names that can be created.

Despite what you've just read, someone may very well decide to register that defective name. If this blog becomes popular, that alone might make the name valuable. That's one of the beauties of the domain name market: value can be created.

How many domain names are there? The supply of domain names is not truly unlimited, but it's unlikely that we'll ever run out. A domain name be up to 63 characters long. That does not include the extension (such as .com, net, .org, etc.) The total for each extension is approximately 6 with 98 zeroes after it. And there are several hundred extensions. In addition to the extensions everyone knows about, there's one for every country (.us, .uk, and so on), for regions (for example, .asia), and political groupings (like .eu), and more are being created all the time.

According to Verisign, Inc., a leading Internet infrastructure company, there were approximately 146 million domain names in existence in 2007. That number was out of date as soon as it was issued. Which of those names is worth anything as an investment? It's hard to say. Who would have thought that "google.com" would be so valuable. That name became valuable because it is associated with an enormously powerful and profitable company. And, if you create the next Internet giant, your domain name will become valuable, also. But some domain names are inherently valuable, even if there's no profitable company behind it. What are those names?

If I asked you to tell me a domain name, you're likely to give me something that ends in ".com." Why? Because most of the well-known domain names are dotcoms. So, the most obvious indicator of domain name value is the .com extension or top level domain (TLD). The .net TLD is a distant second. This is not to say that .org, .edu, .name, .biz, .info, .mobi, etc. can't be valuable but, if you're looking for investment property, stick with .com and .net. Think about it. If your domain name is "whateverdomain.uz" (.uz is the TLD for Uzbekistan), how many of the people looking for your site are going to type "whateverdomain.com" instead.

English language words, or clever variations of them, will also make a name valuable. Imagine what the domain "money.com" (owned by Time Magazine) is probably worth. Compare it to "sdjkfhsdk.com," which is impossible to pronounce or remember. Most, if not all, English language words are already taken in the .com TLD.

Domain name length also matters. People are much more likely to remember (and visit) abc.com (owned by the ABC television network) than "americanbroadcastingcompany.com" (which the network apparently does not own).

Aside from ease of use, there's another reason short .com names are valuable. They're rare. We're going to consider only English language characters (A-Z, 0-9, and the hyphen), although some international characters can now be used in a domain name. The hyphen cannot be the first or last character, so this gives us 37 possible characters, but only 36 can be used at the beginning or the end. Here are the total number of .com domain names available with five or fewer characters:

5 characters: 65,646,288 (not a small number)
5 letters: 11,881,376 (a smaller number, but hardly rare)
5 numbers: 100,000 (fairly difficult to get)

4 characters: 1,774,224 (still not a small number, but there's value here)
4 letters: 456,976 (good value here)
4 numbers: 10,000 (valuable, and hard to get)

3 characters: 47,952 (a small number with a big price tag)
3 letters: 17,576 (a smaller number with an even bigger price tag)
3 numbers: 1,000 (very hard to get or pay for)

2 characters: 1,296 (almost impossible to get or pay for)
2 letters: 676 (almost impossible to get or pay for)
2 numbers: 100 (almost impossible to get or pay for)

Feel free to contact us if you have any questions. Please remember that we sell domain names, so you may want to get some independent advice before you buy anything.