For years now, casual investors around the world have tried a novel kind of investing – domain name squatting, name squatting or what it’s most commonly know as, cybersquatting.
The strategy of these self proclaimed Einsteins would try to guess what Internet domain names would be in demand at some point in the future and buy them up cheaply. Then, they would wait for some successful or desperate business somewhere to turn up and offer millions for it.
Here are a few reasons why CyberSquatting is dumb and no longer profitable, and why you might consider something more fruitful, like Website Flipping or something.
You’re more likely to win the Lottery.
Cybersquatters have an interest in their business because when one hits it big, it can be a huge deal with a huge cash reward. Wikipedia lists some of the most expensive domain name deals ever, like VacationRentals.com at the top that sold at $35 million way back in 2007. In 2010 one lucky fellow banked 8.5 million because he had the foresight to buy up FB.com at some point.
The rewards in these cases seem quite substantial but if you stop at your local gas station any day of the week you can buy a Lotto ticket for half the cost of a domain and yet the reward, and odds of winning are about the same.
We’ve clearly missed the boat people.
Back in the 1990’s, and even before then, cybersquatters got the idea to go after popular acronyms, the names of celebrities, landmarks, country names and single-word names that businesses often needed. Two-letter names were popular, too. Wait. Let’s stop and do the math, there are only 676 two-letter names are possible with the 26 letters the English language. Squatters bought up every possible two-letter name long ago.
Single-word names were hot too. They described entire industries like Beer, Diamond, Pizza and Tobacco. Some dorks even got so excited about the idea that they accidentally bought miss spelled versions of the words like “Tabacco.com” (true story, he’s a close friend of mine).
Let’s face it people, most all these simple domains are either squatted on right now or have been in the past and have already been sold – we missed the boat!
Stop and think.
If you look closely at the fact a strange thing turns up, specifically on the Wikipedia list. That being that the most recent entry on that list is from 2010, when FB.com was sold. No squatter has made a killing on a domain name since then.
Cybersquatters have been racking their brains and finding millions of domain names to squat on, looking for those major profits to roll in yet there haven’t really been many takers.
What … No takers?
Heritage Auctions is a major international domain name auctioneer. Cybersquatters who have great names to sell often come to this auction service and put their wares on the block, hoping for millions.
Lately, Heritage has had trouble selling domain names that would have been a gold mine even five years ago. At one of their recent auctions, unbelievable names like DVDs.com, MutualFunds.com, Bicycle.com and LuxuryBags.com went unsold. These would have been guaranteed superstar names even a short time ago. They didn’t find a single bidder even with low, $50,000 reserve prices.
Search Engines have even helped.
Until a few years ago, people usually directly typed the name of the website that they needed into the address bar of their browser. These days, though, this isn’t common. No major browser now even needs you to type your searches into a separate search box. The search box and the address bar are the same. Search engines have improved – they can reliably point you to the right website with just a couple of clues.
This means that domain names are no longer important to businesses. Volkswagen had trouble getting VW.net. They simply let it go, though. They saw that it didn’t matter who had VW.net. When a searcher puts the letters VW into a search engine, he is always reliably pointed to the Volkswagen website. Search engines are intelligent enough guess what you want.
Oh, and it’s actually illegal in most countries too.
The US has a law called the Anticybersquatting Consumer Protection Act in place. If you need a domain name that a cybersquatter owns, you can file a lawsuit under the ACPA to retrieve it. The law can help if you can prove that the cybersquatter has no reason to own the name other than to resell it at a profit.
The law is ineffective, though, because it doesn’t have jurisdiction on cybersquatters in other countries. The actor Kevin Spacey, for instance, found that a cybersquatter had bought up KevinSpacey.com and wanted to make a killing on it. US law couldn’t help the actor, though, because the cybersquatter lived in Canada.
Cybersquatting, then, has continued for years as a lucrative, low-investment business opportunity. You only need $10 a year to buy up a domain name and squat on it, hoping for a buyer.
CyberSquatting, then, seem to have come to their natural end.
Governments have tried to control cyber-squatting by legislating against them. They weren’t very successful. Businesses simply don’t need the right names that badly anymore. They know that search engines are so advanced that everyone will find them, anyway.
Internet magazines are still writing plenty of advice articles on how to successfully cybersquat for profit. They are sadly behind the times, though. Unless you want to waste money on names that will most likely never sell and likely get you into trouble than this is a business that you should definitely stay away from.
If you want to make some real money … Try Website Flipping, or something that like it that actually requires a little work and some brain power too!