I had a conversation a few days ago with someone in the legal department of a large company, and we discussed cybersquatting and the importance of buying potential typo domain names before a product launch, especially when the product is targeting children.
In our conversation, I mentioned that I am a domain investor. He stopped me me mid-sentence, and said something to the effect of, “I’ve had conversations with cybersquatters before who all claimed to be domain investors. With all due respect, how does what you do differ from cybersquatting?” In my opinion, it’s a very reasonable question, and I hope to be able to offer some clarity here, especially for people who found this site by way of a Google search for “what’s the difference between a domain investor and a cybersquatter?”
Domain Investing Definition:
Domain investors acquire many different types of domain names, and they either re-sell them (hoping) for a profit or monetize them with pay per click links, affiliate marketing, or web development. Domain investors actively buy, sell, or trade domain names that have these qualities: generic terms or phrases, made up terms or phrases, or trademarked terms or phrases.
Cybersquatter Definition:
Cybersquatting is the act of profiting from and/or monetizing domain names that either contain the trademarks or are typos of trademarks of known brands or famous people. Contrary to what some might believe, cybersquatting isn’t always clear and concise. In fact, more often than not, cybersquatting is a gray area that can really only be determined by a court, especially when a common term is trademarked by more than one company (Apple for example), or a domain name happens to contain a trademark but is unrelated to the trademark – like FurnitureBay.com for example.
Differences between Domain Investors and Cybersquatters:
Simply because cybersquatters would identify themselves as domain investors does NOT mean all domain investors are cybersquatters. Most domain investors I know choose to buy, sell, develop, or monetize generic domain names.
The business of investing in generic domain names is akin to buying real estate. Some people choose to buy land in an area they think will be developed in the future, rendering it much more valuable. They are content waiting for months or even years before selling. Others will buy property and build homes/apartments, and they will either sell or lease these dwellings, building a residual revenue stream.
One of the primary advantages of investing in domain names instead of real estate is that the carrying costs are much more minimal for domain names. In addition, there isn’t a MLS price guide, so domain investors with market knowledge have a distinct advantage when buying domain names privately.
The next time you think of a domain investor, don’t just assume that he or she is a cybersquatter. Domain investing is a legitimate business, and as with all industries, there are people who operate in gray areas.
In a $250,000 deal that took place on Sedo last week, Yahoo sold the domain name