Domain Speculation
There is no doubt that the work of domain name speculators has been a major contributing factor in the development of the secondary market.
Just in the same way that people and businesses invest and speculate in the offline world (real estate is a good comparison), there are individuals and businesses worldwide who actively seek the acquisition of potentially good domain names for investments and resale.
People often lose sight of the fact that a good domain name is akin to having an easy to recall phone number, a prime location retail store, plus prime time exposure with measurable brand recognition all rolled into one. It's impact on e-business should not be underestimated.
Large businesses worldwide run the risk of having to spend large sums of money to “acquire” domain names that they wished they had registered in the first place.
In New Zealand, Telecom NZ paid an undisclosed sum tipped to exceed NZ$1.2 million to buy the domain name ferrit.com from a US based Registrant. Telecom NZ wanted to redirect this domain name to its New Zealand website ferrit.co.nz and avoid losing any traffic. Small business may not be prepared to pay such large sums of money, which means they risk missing out on website traffic that the preferred domain name would have potentially generated.
The emergence of the secondary market means that businesses and individuals may have an opportunity to obtain a domain name even when their desired name is already taken, by purchasing the domain from its existing registrant. The involvement of leading portfolio holders in the secondary market has helped to establish an industry where buyers and sellers can operate confidently, without the risk of becoming victims of scams.
