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Domaining – Business or Investment?

Posted on 16 February 2013 by Andrei

Well, it can be both.

On the one hand, you can treat domains like any other investment (stocks, precious metals, you name it). You derive income from your main activity or activities (business, job or something else) and invest in domains among other things.

On the other hand, maybe you’re a flipper for example. In that case, domaining all of a sudden becomes a business. You start caring more about how much inventory you’re moving, about things like your replacement cost and so on.

Which option represents the best choice?

Not sure there’s an answer to that question.

A dentist/lawyer/whatever who invested let’s say $10k in domains 8-9 years ago did pretty well and has all of the reasons in the world to be satisfied. His domain investments probably generated a higher return than his other investments, good for him.

A flipper who started with $10k 8-9 years ago probably earned more than our dentist from domains but he had to also invest considerably more time and energy. Also, you need certain skills in order to be a good flipper (some people are talented at domain flipping, while others might be talented at something else), while as an investor, you can simply invest in domains like you’d invest in an index fund (so instead of only investing in a specific category of domains, you invest in pretty much all categories: a few short domains, a few keyword domains and so on).

That way, if the domain market as a whole does well, your portfolio does well.

Or, of course, domaining can represent both things for you.

Maybe you’re a flipper but each year, you buy a few domains with the intention of holding them.

The sky is the limit, do whatever works best for you and a few years down the road, I hope you’ll look back and congratulate yourself for the decisions you’ve made in 2013!

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1 Comments For This Post

  1. Jeff Schneider Says:

    Hello Andrei,

    There are no clear cut definitive answers on how you derive the Highest and Best use of a Domain Foundation. I call them Virtual Business Foundations because they are a very diverse quality Asset.

    Virtual Business Foundations can have so many meanings and interpretations because they are as complex as the words that comprise them. If your domain Brand words speak to the masses then you have a completely different marketing Strategy to follow as opposed to an industry classification type Domain.

    Domains are simply and at the same time complexly emotion driving words. Words cause vibration frequencies that in turn cause consumers to react. They are truly ingenius Marketing Tools that are still underated Mass Marketing Assets, for the time being, that is.

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

 
 
         
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