Home / Domain Names / Weird stories behind costly domain names
Marc Ostrofsky, a domainer, once said, “domain names and web sites are the real estate of the Internet“. And quite like real estate, several domain names deals have fetched tens of millions of dollars. And Marc knows this very well. He has earned millions in the domain name business.
More often than not, something which is so costly has a controversial or an interesting story behind it. Here are a few such weird ones. They detail how people have earned a lot of money from domain names.
In 1994, Marcelo Siero got loans.com domain name for free. Six years later, in 2000, he sold it to Bank of America for $3 million!
The stories of these domain names are similar.
iCloud.com was originally owned by a Swedish company, Xcerion, who had their own cloud service. Apple shelled out $4.5 million to acquire the domain name in 2011. Some years earlier, Apple had also bought iPhone.com for seven figures which is strange because Apple doesn’t even own the iPhone trademark!
Vodafone sold 360.com to Qihoo in 2015. The Chinese company already had 360.cn. They bought the dot-com for a staggering $17 million after deciding to go global.
Facebook probably had their eyes on FB.com for a long time. In 2010, they bought the domain name from the American Farm Bureau Federation for $8.5 million! And how to they use it now? Apparently, FB.com hosts the email addresses of Facebook employees! Incidentally, in August of 2005, when the popular social site was running on thefacebook.com, they had purchased facebook.com for a mere $200,000.
In 1999, a Hong Kong based company bought Tom.com from Tom Meyer for $2.5 million. Tom had probably registered the domain name for personal use. Anyway, you’ll agree that, in 1999, $2.5 million was a lot of money.
In 1998, Andrew Miller and Michael Zapolin together bought the domain name beer.com for $80,000. In less than a year, they had sold it for $7.5 million. Take a step back and just think – $3.5 million each for just sitting on a prime domain name for a year!
By the way, Beer.com is also famous for hosting one of the most magnificent viral campaigns of all time, “Virtual Bartender”.
A Jewish American named Joel Friedman bought Israel.com in 1994. His main intention was not to profit from the catchy domain name but to protect it from being misused. More than a decade later in 2008, he sold it to an anonymous buyer for $5.88 million! He did a good deed and became a millionaire!
Marc Ostrofsky sold business.com in 1999 for $7.5 million. He had purchased it for only $150,000 a few years back! It was the biggest domain name sale of that time and was all over the news.
What happened after that? Jake Winebaum (Chairman Walt Disney Internet Group) and Sky Dayton (Founder of Earthlink) made Business.com into a business search engine. In 2007, they sold the costly domain name and the associated web site to to RH Donnelly, Yellow Pages publishers, for $345 million.
In 2007, HomeAway bought VacationRentals.com for $35 million! And pray, why such a large amount for such a long domain name? Because as per Brian Sharples, the CEO of HomeAway, he didn’t want the domain name to be owned by Expedia. This is one of the biggest domain name sales ever!
A domain name of the initials of a government department? That would always be controversial, right? Yes!
As per a 1994 law, it is illegal to use the name of the Treasury and Internal Revenue Service, its initials, logos and other related symbols to solicit business. The law also clearly states that carrying a disclaimer will not work as a defence against civil or criminal action.
However, the domain was bought by Intersearch in 2007 for $12.5 million. The “About Us” page of the present web site mentions that “IRS.com is not associated or endorsed by the US government department. It is a non-governmental, privately owned website, operated by Banks.com, Inc.”
So how can Banks.com get away with a disclaimer? Apparently, as per the company attorneys, the law doesn’t hold for domain names!
By the way, the government web site is at irs.gov.
This adult oriented domain name was sold by domainer Rick Schwartz to a Prague based business in 2015 for $8,888,888. But this is just the “ending” of the story. The domain name sale netted him millions… yes! But he had made much more before that.
Way back in 1997, Rick bought the domain name from a college student for only $42,000. Incidentally, The student had purchased the domain just a week back for $5,000.
Being an astute online businessman, Rick Schwartz had put the domain name to work. In the 18 years it was with him, he earned over $10 million via parking and redirects. This means, the domain name had netted Rick Schwartz close to $20 million!
The most interesting story by far is of sex.com domain name. So much so, that journalist Kieren McCarthy wrote a book about it in 2007!
It all started in 1995 when Gary Kremen registered the domain at Networksolutions.com. Gary, for those who want to know more, is the founder of the popular Match.com dating web site.
Enter Stephen M. Cohen an unscrupulous, conniving character whose machinations are incomparable and have become online lore. [I know I’ve made it sound very dramatic.]
To cut the long story short, Cohen had had his “designs” on the domain name for a long time. He started contacting Networksolutions.com and providing them with false ownership information. He finally got through by sending across a fax and speaking over phone to an employee. Very soon Sex.com was transferred to him.
Cohen then created an advertising rich web site on the domain name which got him close to $500K (half-a-million dollars) per month!!!!! [I need to put more exclamation marks I suppose].
Gary Kremen realised what had happened and sued. There was a long legal battle and Kremen won. Hooray!
The court ordered Cohen to pay $65 million. He bolted off to Mexico but was soon caught and handed over to the authorities.
Another interesting fact about sex.com domain name – it has been resold twice for millions. The first time in 2006 to Escom LLC for $14 million and later, in 2010, to Clover Holdings LTD for $13 million via a Sedo auction.
In 2014, Gannett Company, Inc. who owned a significant portion of Cars.com bought out the remaining stake for $1.8 billion. The company was, thus, valued at $2.5 billion and the domain name at $872 million. This makes it cars.com the most expensive domain name in the world.
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