For as long as I’ve been serious about investing in domain names, I’ve learned that there are many different business models domain investment companies utilize successfully. There are differing levels of risk and reward for varying business models, and while most people employ similar models to each other, I’ve found that mine is fairly different compared to most other companies who operate in a full time capacity.
Some people seem surprised when they hear I only own a few hundred domain names. Across the five domain registrar accounts I use, my two companies probably own fewer than 400 domain names at any given time, yet I make my living as a domain investor. My domain portfolio is a fraction of the size of most other professional domainers, and I’ll share some insight into how I operate and why having a more trim portfolio is helpful to my business model.
My focus has almost always been to buy domain names to re-sell to targeted businesses. Despite the lessening importance of an exact match domain name, I continue to find companies who are interested in owning their category defining domain name. For my business, I am less concerned about the traffic and revenue a domain name receives and more interested in evaluating whether or not I could see a company buying the domain name from my company for its business. With some domain names, I wait to receive offers, and with others, I am proactive about selling.
A few years ago, during the economic downturn that hurt the US and world economy, I found that the sale of my domain names slowed. As a result, I slowed my acquisition rate, and my business suffered. I decided to focus on having some of my domain names developed into websites, and I launched a number of properties. Despite initial successes with mini sites, most of those petered out or didn’t move the needle. Larger sites of mine, like this blog, have become financially successful. This has helped me significantly, as there are now two different revenue streams for my business.
I’ve found that most other domain investors own many hundreds or thousands of domain names. Some investors rely on monetization via domain parking or other means of monetization. PPC can still drive significant amounts of revenue, and there are plenty of people who do well with it. It’s not my forte, and I would rather focus on selling than monetizing for most of my assets. Other people own thousands of domain names and sell more passively. Others operate networks of inter-related websites and monetize them via different means. There are probably many other business models I am not even touching, like domain registrars, domain brokers, registry businesses, lawyers…etc.
One reason I like my business model is that it allows me to be flexible and make changes quickly. My overhead is fairly low, especially with domain name renewal fees, so I can invest where I see opportunity. Should .com take a hit in the short or long term with the new gTLD domain names, I will be in a position to make an investment. Should .com remain strong, I will continue to invest as I have been doing.
My opinion is that things may be changing, and there might be some good opportunities on the horizon. Should that be the case, my business model will allow me the flexibility to make changes on the fly.