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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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