By Doug Isenberg
Question: How much is a domain name worth?
Answer: Whatever someone is willing to pay for it.
Really, I’m not being facetious. I’ve told clients and others the same thing many times. Because, unlike almost every other type of property and asset, domain names are unique, and their resale prices vary wildly.
So, one of the most difficult things to know in the sale of any domain name is what a prospective buyer is really willing to pay.
Take, for example, the recent sale of the domain name <internet.org>. According to a Bloomberg news article, the domain name was sold by a Denver entrepreneur who had registered it in 1993 — forever ago.
Only after the sale, which apparently was made via a domain name broker, did the seller find out that the buyer is a partnership of top Internet companies led by Facebook’s Mark Zuckerberg, whose net worth was recently estimated by Forbes at $16.1 billion.
So, how much did the previous owner of <internet.org> get for the domain name? He only told Bloomberg that it was “far less than $1 million.”
Had the seller known that the buyer was backed by a multi-billionaire, perhaps the price would have been much higher.
On the other hand, knowing when to sell a domain name reminds me of that timeless advice about knowing when to sell a stock: “Bulls make money, bears make money, pigs get slaughtered.”
Still, in many high-priced domain name transactions, a seller should conduct due diligence about a buyer, because the true value of a domain name cannot be ascertained in the abstract. Well-known buyers in such transactions, however, will understandably do their best to conceal their identity.
So, what’s the best way to figure out what a domain name is really worth? If you’re a seller, sell it. If you’re a buyer, buy it.
(Update: “The Domains” blog has more details about how the <internet.org> domain name transaction occurred, “Internet.org Acquired By Zuckberberg From Domain Investor After He Owned It For Just One Month“.)