"Domaining" and "internet real estate" is business out of nothing: another internet bubble?

Two articles that I came across, one old and one new, point to a new trend of "caching in on the internet".

The first article is one year old, and it came to my attention via an acquaintance (an MBA!) who wanted to copycat this idea. He read about it in Forbes, went ahead and bought some 50+ domain names and wants me to do "internet real estate development" with him. The second article is from the New York Times today.

Obviously, I refused to do that work due to my aversion to content free sites that have only ads on them.

User ignorance and browser behavior

The idea, if there is one, centers around buying as many domains as possible with common words. When non-technical users type the domain name directly in the browser, rather than using a search engine. For example, someone looking for thingamajig would not start Google then type that word in it, but rather would type thingamajig.com directly in the browser's address bar.

The most popular browsers, when not given a domain name or valid URL, will try to append .com to the word(s) the user typed and then redirect to that.

The concept is known as type-in traffic.

Some domains are subtle misspellings of popular domain names too, a practice called "typosquatting".

Those so called internet real estate developers just cache in on that aspect of the internet (user ignorance and default browser behavior). Once the user lands on one of their "properties", a few ad impressions are showed and a few cents are gained.

Branching in "developing" domains

So far all the domains are basically content free, apart from a few ads.

Some of those operations take a few choice domains and "develop" them, by adding some articles to them, drawing traffic to the site.

When a site has grown a bit in traffic it is them sold as a "developed" domain/site.

Large scale operations, venture capital and IPOs

The big operations in this field not only buy domains, but they buy out entire outfits who have lots of domains (squatters and speculators). They even have other domain owners outsource the monetization of domains to them, for a cut.

We are talking about hundreds of thousands of domains!

Even the venture capital firms are pouring money into these operations, and there is talk about them being the next IPO.

Even the top level domains

Some entrepreneur sealed a deal with the Cameroon to use their .cm top level domain (TLD) suffix. This is because of all the typos that people make .com, the most common TLD, to .cm.

All this stuff is not only frivolous, but is also leeching. I hope all these domains stay out of the search engines and not pollute search results for genuine content. The sad and scary part is how much cash is being injected into these companies, and all the hype about IPOs to cash in on the frenzy.

Resources

• Forbes: May 23, 2006: A chat with Typo.com.
• New York Times: May 28, 2007: Millions of Addresses and Thousands of Sites, All Leading to One.