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Making Money With Domain Names

written by John Chow on October 25, 2006

The Ultimate Online Profit Model

If you are a regular reader of this blog then you will know the name Markus Frind. He is the owner of Plenty Of Fish, the biggest free dating site on the Internet. Markus likes to point out the fact that he is a one-man operation and the biggest individual Google AdSense earner. However, there is another local Vancouverite who makes Markus’s online income look like pocket change. His name is Yun Ye.

Like Markus, Yun Ye is also a one-man operation. Both Frind and Ye make their incomes online. The difference is the size of the checks. While Markus claims to be pulling down over $10,000 a day, Yun Ye pulls down over $100,000 a day. While Markus makes many news headlines, Yun Ye avoids the press like the plague. That’s why you may have never heard of him.

Yun Ye is a “domainer.” He is, in fact, the world’s most successful domainer, a pioneer in a highly lucrative industry based on buying, selling and developing domain names. Ye holds over 100,000 domain names that was making him more than $20 million a year in revenues – $19 million in profits. Ye sold his domain empire in November 2004 to publicly traded Seattle-based Marchex for, get this, $164 million. Since then, Ye has never been heard from again.

In the mid ’90s, the domain market was all about speculation – buying desirable Web addresses, such as business.com, in the hopes that one day a big company would buy it for a huge amount. However, people like Ye soon discovered that almost any domain name could become a money maker thanks to PPC companies like Google and Yahoo.

How does a domainer make money? They rely on the 15% of web users who don’t use search engines but instead just type in a web address. A good domain name can make hundreds, even thousands of dollars per day for its owner. For example, Cellphones.com makes an average of $1,300 a day just from people typing in the URL. The money comes from park domain PPC services like Google AdSense for domains. Google doesn’t advertise their domain service much because domainers seem to operate in some kind of shadowy world.

I had a little chat with a domainer on my AIM list. He owns over 6,000 domain names that pulls in over 1 million unique visits per month. He pays $1,000 per month to host the domains across a half dozen different ISPs. He also pays over $50,000 to renew the domain names every year. Spending over $60,000 a year to run a one-man web business may seem high, but it’s peanuts compare to what those names bring in.

My AIM contact say owning domain names is the perfect web business model. Once the domain is purchased and the Google parked page is set up, there is nothing left to do except to collect the money. Some of his domains rake in over $20 eCPM. Very few websites and blogs can match that. And unlike a site/blog, a domain page never needs to be updated.

He does say the game is getting harder however. With the $164 million sale of Ye’s domains and other high dollar acquisitions, cost of buying new domain names have been skyrocketing. While the increasing cost of buying new names slows down his domain buying, it also increases the value of the domain names he currently holds.

Domainers are also a good reason you should have your domain names set to auto-renewal. Failure to do so may result in a domainer taking your name. I hold a few dozen domain names myself and right now, they just have a GoDaddy parked page on it. I think it’s time to switch them to Google AdSense for domains. If you wish to get into the domain business, then check out this Site Point article on how to find money-making domains.

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{ 57 comments }

Michael October 25, 2006 at 2:06 pm

This is one of the hardest ways to make money on the web. You’re at least five years too late for this party and if you don’t have incredibly deep pockets you haven’t got a chance.

John Chow October 25, 2006 at 2:13 pm

You’re probably right. My AIM contact did say it’s getting really hard to get new names because of rising prices. And most people have their domains set to auto-renewal so back ordering them is worthless now.

However, this doesn’t mean there is still no room left. There are still some deals out there. Like everything else, you just have to keep your eyes open.

Scott October 25, 2006 at 2:19 pm

Holf F*k that’ all I have to say. Another good article. I remember about 5 years ago working at a startup in Van and there was a kid who new nothing about we stuff who cobbled up domains because he read in Time magazine that the web might be big… he was house hunting while I was trying to make enough for student loan payments/rent.

I have a question who do you guys register with? I usually go with my webhost(dreamhost) which is around $10/year. Anything cheaper?

John Chow October 25, 2006 at 2:24 pm

I use GoDaddy.com $8.95 a year. Yahoo offers domains for $1.99 for the 1st year, then $9.95 after that.

vik October 25, 2006 at 2:49 pm

Wow, I bet that Yun Ye dude is at some island right now, smoking his cigar and watching his 100 or so hotties roll naked in the sand.

Ted October 25, 2006 at 3:10 pm

If I only knew then what I knew now, 5 years ago I used to have over 100 domains, all with some sort of site on them. I let most of them go because they weren’t paying their way.

I kept a handful of them, which have been making some pocket money from parking, and I sold what I thought was an average one for $1000 earlier in the year.

Robert McIntosh October 25, 2006 at 3:16 pm

The sad thing is though that people can’t get a domain name that relates to their business anymore. I know, I tried a couple weeks ago to get one for a project I was thinking about and roughly 90% of the domain names that were remotely related to what I wanted to do were taken by one of these guys. The other 10%? taken by legitimate sites.

I’m all for making money, even serious money, but this seems like cyber squatting.

TOFUmonkey October 25, 2006 at 5:10 pm

I’m paying for about $8.20 (After CAN) at namesecure.com
i think it’s pretty good. no confusing adverts whenever i buy it.

hey Robert, I share the same experience with ya. Was thinking of a very good domain for my online biz. but darn, gettting a domain name can be so hard!

sigh.

Al Davies October 25, 2006 at 5:13 pm

Funny I had just recently read an article about this guy. His system for grabbing up new/forgotten urls was amazing. My question is: Where did he raise the initial capital to do what he did?

Josh October 25, 2006 at 5:24 pm

I had the same problem with my company, the .com was taken by some random, plain text site with a download link on it, no idea. I just took the .net, still works for me!

mark October 25, 2006 at 5:28 pm

Wow! If only I knew about this stuff way back then :(

Yun Ye October 25, 2006 at 5:38 pm

Mo’ money, mo’ problems, bros!

Bill E October 25, 2006 at 6:25 pm

There are still plenty of opportunities to make money with domain names.

Every day, hundreds of quality, commerce friendly domain names become available to investors who know what to look for and how to find them.

Expired domains with traffic are just one of many different methods to make money within the domain industry.

This week Moniker is hosting a live domain auction at the Traffic Conference and expects to sell 5 million dollars worth of domain names in 1 day.

It’s not too late, far from it.

Wow October 25, 2006 at 6:45 pm

I can’t believe it. I read every article on this site about money and have come to the conclusion that the saying “a fool and his money part every day” is true in your case.

Sure, in some instances this can make tons of money. Just like some of your other schemes. But they are full of incomplete & incorrent analysis, and they too often hinge things working out in a way that’s not damn likely. Otherwise everyone would be doing it.

Know why your “make millions of dollar” strategies never really work, John? It’s because if they were true, real and consistent, everyone would flock to them, therefore driving down the profitability and resulting in some minor and marginal profit. This article inadvertently makes the point.

Marco October 25, 2006 at 7:00 pm

You can get domain names on the cheap at GoDaddy – just search Google for some discount coupons so you can save a few more dollars…

Wow! If only I knew about this stuff way back then –mark

It’s always like that isn’t it? I think a better way to think is… what is going to be the next hit? ;)

Jason Drohn October 25, 2006 at 7:20 pm

Yun Ye is definitely every domainers idol. If what I read is correct, he wrote the first version of a ‘drop catcher’ in the mid 90′s. What those do is snatch up domains that are not renewed on time. Then, the rest is history.

I own about 300 domains which I park or develop. I have close to 270 of them parked between two services and about 30 developed, just to provide fresh content. I must admit though, I have sold a couple to end users that paid for each of those domain purchases about 3 times over. It is definitely worthwhile to get into.

Jerry October 25, 2006 at 7:45 pm

This guy has gobbled up all of the generic domain look alikes. He uses them for pay per click campaigns and organic search listings. Wonder if it will fly.

omi October 25, 2006 at 8:01 pm

Netfirms is great as well, but their hosting is horrible.
Domains are $5

Anthony Lieuallen October 25, 2006 at 8:22 pm

About cheap domains: I use 1and1, six bucks a year, and private registration is included in that cost.

TOFUmonkey October 25, 2006 at 8:24 pm

hey mark, it isn’t too late…
there’s always the next youtube, the next google, the next plentyoffish.

money is just an idea. :)

dude October 25, 2006 at 8:44 pm

I hate the way you say “domainer” it like trying to sprinkle sugar over cowdung to make it look like a chocolate cake. domain squatter would be a more appropriate word. And its one of the dirtiest business on the internet. no wonder the jerk never showed his face people would have sued his ass off. So why am I sounding so negative. Its because I faced a similar situation where some jerk registered a domain and I had to get legal help to get it back.

Shane October 25, 2006 at 9:11 pm

I like 1and1 at $5.99 – GoDaddy is nice because they have a suggestion tool which gives you different prefixes, suffixes, and synonyms.

Carl October 25, 2006 at 9:36 pm

This really is the second worst type of person on the net, right next to spammers.

Stefan Juhl October 25, 2006 at 10:17 pm

I use OnlineNIC for domains which are $6.69 for com, net and org. Other tld’s varies a bit.

There’s still good money in domains but don’t look for the obvious intl. .com domains – they’re taken 99% of the time. And don’t believe you’ll be able to get a bunch of high-value domains.

Consider country specific tld’s instead. I have had decent success with grabbing deleted domains which has been used before so they have inbound links. Most often I can get like $0.50-$1 a day from those domains just by putting up a small page with a little related text and adsense. Traffic comes from either type-ins, search engines or old links.

Jan October 25, 2006 at 10:30 pm

re: people posting hate comments

you guys are nitwits if you have a “hatred” towards these type of domain owners….you have no clue what you are talking about…..most pro domainers don’t mess around with trademarks and the like.

Seems like the ones that harbor these feelings are pissed off and bitter that you never got in when you could.

And saying that your mad that these domains aren’t developed, stop being so uptight and get over it….big freakin’ deal.

Markus October 25, 2006 at 11:07 pm

I know who he is.. There are a lot of internet millionaires in vancouver. Vast majority of them are in Porn/ adware/ domains though. But all of these guys are peanuts… The real king of all these web would be Conru from aff, he makes over 1 billion a year. Largest company no one talks about. More signups per day then msypace.

Fezbucks October 26, 2006 at 1:03 am

Does seem like > 5 years ago would’ve been a better time to get into this.

mr tze October 26, 2006 at 2:22 am

Bah. Stupid article. What else is not new?

MK October 26, 2006 at 7:50 am

One important fact was left out. In order to use Google Adsence for domains, you have to have a minimum amount of, and here’s the catch, existing traffic.

Which means you have to invest out-of-pocket to buy and establish your domains. Not until you can verify the traffic can you actually qualify to use Google Adsence for domains. Ans that can be expensive.

If someone knows a work-around for this Catch-22, I’d love to know about it.

Alex October 26, 2006 at 9:30 am

There are millions of people making money in Markus way. And how many people make money Yun Ye way?

What I mean is that opportunities for adsense earnings are much bigger.

Mark October 26, 2006 at 9:31 am

Just another click fraud scamster dirtying up the internet. I look forward to the day google gets it’s act together and stops paying these worthless farm sites. But then again…they have no incentive to do so..

My New Choice October 26, 2006 at 9:32 am

I’ve got a couple of domains that I had registered awhile back for business ventures that never went anywhere. These domains are currently sitting idle with a generic parked page from the registrar so I might put these on a host with some ads to see if anything comes of it.

HMTKSteve October 26, 2006 at 9:35 am

I have had a few times where I got a great idea for a website and then found it parked by someone else.

The idea dies right there because I’m not going to pay $2K or more for the name… I’ll just try a different name instead.

Webomatica October 26, 2006 at 11:31 am

Makes sense that the people who create “splogs” would be into getting an appropriate domain name as well. I also notice a lot of sites based on slight misspellings of known brands or companies.

Derrich October 26, 2006 at 1:43 pm

Good article, John. I’m not sure if you rememeber my email to you about a month ago regarding this very topic. But I’m glad to see you decided to write about it. I’ve been contemplating doing the same on my blog.

I own several dozen domains as well; about 2/3 of those are typos, which are my best performers to date. I park my domains using sedo.com, which is free of charge. And they also feature several tools you can use to beef up your parked domain including an aftermarket sales campaign. Their fee, I believe, is 10% of the sale price or $50, whichever is greater.

The still seems to be a good market out there for this. It IS harder as you alluded to, but with a little dedication, you can find some good ones available. In just about 2 months of parking, I’ve paid for all of the domains I bought…well…just 2 months ago. I have to say, though, that about 10% of my domains are unproductive; the rest carry the load as far as traffic/revenues.

The one beef I have is against those domainers that “taste” domains. Sure, it’s legal, and a way to get ahead of the game. But those “tasters” simply register a domain for a few days (I believe 5 is the maximum holding period before they aren’t charged for the domain name), measure the traffic to determine whether or not its worthwhile, and then either release or purchase the domain at that time. For example, I backordered my blog domain, derrich.com, on GoDaddy for about 19 bucks. These guys had it for 4 days paid nothing for it. I guess I just proved that the greater fool theory is in fact true. =( Either way, I think something should be done about this to keep people on their toes. This makes things too easy.

Nomar October 26, 2006 at 2:55 pm

oh my god, that guy never has to work again.. and cellphones.com –> $ 1200 a month.. by doing nothing.. thats amazing to……. good lord

Thomas October 26, 2006 at 3:15 pm

I can recommend new book “Virtual Real Estate”for domainers:

http://www.dnbook.biz

Jon October 26, 2006 at 6:11 pm

Funny that you blogged about this now. My company is actually in the final stages of acquiring over 3,000 domains. Yeah I know, it’s a lot. And just adding privacy status and renewal fees will be over $25k a year. But it’s well worth it, because altogether, the soon to be former owner didn’t even monetize it. He just kinda let the default godaddy page appear and let them make all of the money. I only found out about it through a trusted insider asset over at Godaddy. Will we make our money back? I sure as hell hope so! If we don’t, well, sucks for us then! Heh.

Great post nonetheless.

umberto romano October 26, 2006 at 10:54 pm

For those that think that this business model is not good.
Let’s do some math:
100.000 domains
Let’s say they cost 600.000$ to register.
100.000 x 6$ = 600.000$
If for each domain we earn 0,05 cent a day on average
this will be for each day 5000$
100.000 x 0,05 = 5000$
in one year 1.825.000
5000 x 365 = 1.825.000

Well in this situation you need 600.000$ to start, but you can become a registrar with this money and save a lot more on getting domains and use a lot more than 100.000 domains.

John Chow October 27, 2006 at 1:49 am

Well we already know 100,000 domain names can make more than $1.825 million. Just ask Yue Ye! :) He made $20 million a year with them and it only cost $1 million to run.

Joe Smithson October 27, 2006 at 10:41 am

oh, c’mon. the “domainers” gaming the system are very few and far between, and becoming fewer daily. this has been reported in almost every techy magazine and newspaper i’ve read.

the “equation” for making money doesn’t really work. at all. a few (a FEW) guys have gotten lucky and gamed the system. this isn’t a simple “put in capital and get out profit” system.

plus, Google reports less than 1% of Adsense users, for example, make more than $50/month.

Emperor October 27, 2006 at 10:49 am

Very interesting article you have written. I currently own a few parked domains and did not know I could make a few bucks from them.

Gustav Mörtberg October 27, 2006 at 11:28 am

Im interested in the legality of parking domain names of misspellings (such as http://www.thinkgek.com) and on it, create an almost similar page to the original but instead of having the original content having adsense advertisement?

Is ‘smart’ domaining, rather than just farming sites, better income sheeps?

umberto romano October 27, 2006 at 4:32 pm

Sure John,
My calculation was made to show that there’s huge profit margin in this business even with a very low income for each domain.

0.05$ can grow to 0,1$ or 0,15$ and with some good domain like cellphones.com can grow to 0,5$ for each domain.

someone can think that this is an unethical way to earn money, but for what I know it’s legal money.

I think that I will start with 6000$ to buy 1000 domains and see what happens.
I have 60 domains and most of them are not developed, I spend 600$ year to maintain, I think that I will try to diversify in this direction.

thanks for this post, as usual your blog it’s worth the time I spend everyday to read it.

Jerry October 28, 2006 at 1:58 am

Q: How do I enroll in AdSense for domains?
A: AdSense for domains is currently available to LARGE domain portfolio owners.

doh!

Andrew October 30, 2006 at 4:03 am

John,
Interesting, though I’m not sure how you got those numbers. What’s your source?

To everyone else,
Yes, the numbers seem good, but assumptions are being thrown around. I want to see proof. It may take a lot of visitors to even pull in a few cents, and who says domain names good enough to snag the occasional direct hit exist anymore for a decent price? If this is one of those things where its a definite 3%, well then that’s great… if you have a ton of money. Otherwise it doesn’t get you very far.

I have time and money to spare, and I’m curious enough to run an experiment on some parking. I’d share my results on my blog, but if Google doesn’t do small clients, then does anyone have any other recommendation?

jean October 30, 2006 at 10:23 pm

domain names is of much intrest to me. for one thing i know it does get you a lot of money if you buy over 100,000 names.

TLD October 31, 2006 at 7:44 pm

Well it´s true. There are guys making millions a month with domain parking. And others making NOTHING.

It took me some time to learn how to make money the easy way with domain parking.

There are many “known secrets” here.

For example: Buying Expired Domains with traffic.

There´s nothing like buying expired domains with traffic (lots of pages indexed at the SE´s).

But…if those pages are not anymore in your domain…you gonna get deindexed in a some
weeks/days… right???? Yes. Stupid Purchase.

There many domainers with problems like this.

Just as an example, a great thing i´ve discovered
was how to recreate all of those indexed pages
with content in less than 10 inutes.

Yes. Give me any expired domain with 500 or 500,000
indexed pages and in 10 minutes you´ll have all those
pages online again (and with content),keeping the
pages indexed at the search engines.

Andrew November 1, 2006 at 8:16 pm

Can’t that turn into copy right infringement? Cause you are just ripping off the content and passing it off under the same name.

Andrew November 1, 2006 at 8:29 pm

For those of you that are curious, I dug up some information on where John’s figures came from and I provided a little extra insight on my blog. http://andrew311.blogspot.com/

John Chow November 1, 2006 at 10:21 pm

Andrew – I think you mis-understand what a copyright is. A copyright protects the very words that is written. So if another site write about domainers, as long as they don’t copy what I write word for word, it’s not a copyright infringement.

When writing a story, I use many difference sources to get my information. They can range for other websites to people on my IM list. I don’t have to reveal my sources if I don’t want to.

Andrew November 1, 2006 at 10:31 pm

John – I think you mis-understood my previous comment.

In my previous comment, I wasn’t referring to you when I was talking about copyright. I was referring to the post from TLD directly before my post.

If you are referring to something else I may have say regarding your article specifically, I have not accused you of anything and I don’t intend to. I’m aware of the concept of paraphrasing. It’s the web, you don’t need to cite balony. Still, I’m just saying, for those of us who are curious, it’s nice to see where you are getting information from if it’s something as simple as a web site.

No hard feelings, k?

John Chow November 1, 2006 at 10:35 pm

Andrew – Oh! Doh! LOL I see now. :)

What you don’t know about that TLD guy is he is trying to sell an eBook but I removed the link to it.

TechNut November 4, 2006 at 8:49 am

oh.. it’s too late for this business. i think.. the market is not that crazy now.

Travs December 1, 2006 at 11:42 pm

are there any other good PPC search engines? AdSense for domains is currently available to large domain portfolio owners only :(

Nomar January 17, 2007 at 12:18 am

lot of links back to this one.. great link bait

Arelle February 5, 2007 at 4:02 am

I met a domainer a few months ago and got encouraged. I thought of some domains but since I didnt know how to purchase, i asked a collegue who know how to acquire do it. She purchased it in her name. I co-own a Media Company with her so I didnt bother to have them transferred to me. Later, we decided that I should get started with a blog, and so I used one of the domains.

Later when I gave up my stake in the company, i wanted to reimburse them for the domains. But for the one I used, I am being billed 88x the cost. Apparently for the advertising she has given it which is a link in her blog.

Later I learned that b5Media was purchasing it (or maybe purchased by now). I was given first refusal(to buy the domain i though of and put content on), but since its beyond my budget, I let it go.

I wonder if B5media purchased it for its name or its PR5(which is what Im being billed for).

Lesson? Purchase domains in your name. Yes, I know how to now, and own a few dozen.