Domain name real estate soars higher than ever

This week, US Net entrepreneur Marc Ostrofsky sold the domain name 'business.com' for a cool $7.5 million. People said he was mad when he paid $150,000 for it three years ago.

Yet another example of why you might kick yourself for not having bought domain names when they were going cheap - this week, Houston-based Net entrepreneur Marc Ostrofsky sold the domain name "business.com" for a cool $7.5 million, the most ever paid for an Internet address. The buyer was eCompanies, an incubator for Internet startups.

Stories about the sale underlined the high stakes involved in the Web's linguistic real estate. CBS MarketWatch's Frank Barnako quoted eCompanies founder Jake Winebaum: "If somebody bought a bunch of land a year ago in Los Angeles, they'd have paid very little for it then. Now we have a second industrial revolution. This domain is a prime piece of real estate." Winebaum insisted that his huge purchase made sense, considering the amount other Web companies are spending on TV advertising to make their names known. But the New York Times' Andrew Pollack quoted Allen Adamson, described as "a leading consultant on branding," to the effect that the name wasn't worth the money. "It's a huge amount of money for something that might be a commodity in six months," Adamson said. "Owning generic domain names will not be a long-term play in branding and marketing."

But it's certainly an excellent short-term play, if you can get the names cheap. As the AP reported, Ostrofsky bought Business.com for $150,000 three years ago - and people told him he was crazy. In an interview with AP reporter Michael White, he said, "Everyone thought I was a fool. People thought I was going out of my mind. I had to just ignore them because I knew the market better than they did."

While the $7.5 million price tag set a record, the AP speculated that it's not likely to last. According to White, the domain auction site Greatdomains.com has already received a bid for higher than $7.5 million for America.com. The seller rejected it. Remember the folks who thought the Net would undermine the power of words?

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