Domain Names: The New Real Estate

These are boom times in an estimated $2 billion industry that involves the buying and selling of domain names. When people type the generic names into their browser's address field, sites that generate pay-per-click ads appear. Such "direct navigation" bypasses search engines. "This industry is like the wild, wild West," said Jerry Nolte.

Inside a midtown hotel, Larry Fischer is on his cell phone with a financial backer as his partner Ari Goldberger does quick research on a laptop computer. They are bidding furiously at this auction of Internet domain names, with hopes of snagging megayachts.com. The duo won't be deterred. They want this name.

"$110,000, yes or no? Quick," Fischer barks at Eli, the investor at the end of the phone.

Someone else makes a bid for $120,000. Fischer and Goldberger up the ante, and then again.

Going once, going twice ... sold to Fischer and Goldberger for $150,000.

"You got it," a smiling Fischer tells Eli. Mazel tovs are exchanged.

These are boom times in an estimated $2 billion industry that involves the buying and selling of domain names. When people type the generic names into their Web browser's address field, sites that generate pay-per-click advertising revenue appear. Such "direct navigation" bypasses search engines.

"This industry is like the wild, wild West right now and people have no idea how fast it's growing," said Jerry Nolte, managing partner of Domainer's Magazine, a new trade publication devoted to this little-known world.

Some believe the industry's market value could reach $4 billion by 2010 as people continue to purchase approximately 90,000 names a day and the number of domain registrars swells.

At the end of first quarter 2007, at least 128 million domain names had been registered worldwide, a 31 percent increase over the previous year, according to VeriSign Inc., which runs some of the core domain name directories for the Internet.

"It's not about words," said Monte Cahn, founder and CEO of Moniker.com, a company that specializes in domain asset management and held the Manhattan auction. "It's like real estate. This industry is only about a decade old. People looked at domain names as a commodity. It's a piece of real estate on the Web that can't be replaced. It's your stake in the ground, your stake in the Internet."

At the Manhattan auction, Fischer and Goldberger snatched up four names for more than $1.2 million and a fifth for a client, representing only a handful of the names sold for a total of $12.4 million during both the live and silent auction.

The auctions were held during a domain conference in June that attracts some of the biggest players in this niche business.

One name -- creditcheck.com -- went for $3 million but paled in comparison to the sale of sex.com, which sold for $12 million last year, according to Cahn, who knew the site's buyer and seller.