Hot Properties

What's the one thing almost every entrepreneur needs these days? A domain name. Here's a closer look at the business of buying and selling domains.

It"s the 21st century, and every business needs a place to park on the Net. "It's virtual real estate," says Mike Magolnick, co-founder of SolutionHome.com, a domain name auction and appraisal site. Magolnick, 30, got into the domain name game when he was offered $1,500 for ventureconsulting.com, a domain he registered for his venture consulting business. Realizing he could gain serious profits from registering names and selling them to the highest bidder, he founded SolutionHome.com with his brother Joel, 37. Mike registered 400 names, planning to sell them-now most of the names listed on his site are owned by his clients-to the tune of more than 1 million domains up for grabs.

Trafficking so many domain names can be perilous when skirting cybersquatting issues, and Mike is very aware of the risks. "We don't touch anything that would be remotely related to a trademark," he says. "The last thing you want to do is play around with something like that-there are fines up to $100,000 for taking someone else's name and attempting to sell it. There is definitely no room to play in this industry."

Name Your Price
If domain names are the new real estate, check out how much these million-dollar dream homes went for:

AltaVista.com..............$3.3 million
AsSeenOnTV.com.......$5 million
Business.com..............$7.5 million
Korea.com..................$5 million
Loans.com..................$3 million
WallStreet.com...........$1 million
Wine.com...................$3.3 million

Especially not with watchdogs like the Internet Corporation for Assigned Names and Numbers' (ICANN) dispute reso-lution policy and the Anti-Cybersquatting Consumer Protection Act (ACPA), both of which offer avenues for exploring a domain dispute. For a successful cyber-squatting case to be won, the plaintiff has to prove the domain name was registered in bad faith. "Bad faith and similarity [to the trademarked name] are the key," says John L. Hines Jr., an attorney with Sachnoff & Weaver Ltd. in Chicago. "These factors relate to whether the defendent is making fair use and/or had bad motives."

Cybersquatting aside, there are many entrepreneurs who simply don't want to pay hundreds, thousands or even millions of dollars for a domain name. Says Duane Harris, 35, co-founder and president of Web design firm ScreamDesign.com in Draper, Utah, "On the one hand, they're entrepreneurs, and it's a wonderful money-making opportunity. On the other, they're playing around with the bricks and foundations of the Web, it becomes difficult to get a domain name, and it raises the prices beyond the means of a lot of small companies."

According to Mike, though, the value of a domain name can be determined by related factors like the number of hits on the site and recognizability of the name. Matt Coffin, 32, founder and CEO of LowerMyBills.com in Hollywood, California, bought a complementary site, LowerYourBills.com, to help direct people to his site-and he says it was more than worth the $5,000 he shelled out. Says Coffin: "It brought peace of mind to my investors."

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This article was originally published in the January 2001 print edition of Entrepreneur with the headline: Hot Properties.

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