Did you ever consider domain investing as an investment tool? The concept could sound very new and complicated. Domain Investing requires knowledge, skills, strategies, and a deep understanding of the domains universe. There are, however, a handful of maverick domain investors with years of experience that have mastered the art of domain investing.

We recently spoke with ace domain investors at Cao Xiaoxia, who have 20 years of industry experience!

Read on!

Q.1 In a nutshell can you explain what domain investing is and who are domain investors?

Domain investing is actually Domain Names Investing, normally using money, knowledge, and internet techniques to register domain names or website names to make high profits by reselling them. Domain Investors are the persons who are partaking in domain investing.

Q.2 You have been in this industry for 20 years! What piqued your interest in exploring the domain industry? What led you into domain investing and what major changes do you think the industry went through over the years?

Cao Xiaoxia is the name of the team, from a team member. I’m just a consultant to this team. I began to understand and invest in domain names in 1999. At that time, I was engaged in foreign trade, mainly selling hats, gloves, scarves, etc. The original idea was to have an industry website. I was the founder of the first hat industry website in the world. Therefore, most of China’s domain name industry knows me as “hat brother” (maozige）.

Making big money from small investments in domain names, which is probably one of the reasons why many people invest in domain names. In 2001, a domain name I registered was traded for 250000 yuan（around USD 40k. Let me take a new look at the domain name investment industry. The process of domain name investment concentrates the capital, industry skills, interests and hobbies, and future layout of domain name investors, so as to make domain name investment a lifelong friend of domain name investors.

There are many significant changes in the domain name industry. I am more concerned about:

• The DNS domain name system was born in 1984. The significance of the domain name system is to give a pure digital IP address an easily recognizable name.

• In March 1985, symbolics registered its first. COM domain name in the world.

• On February 17, 1987, APPLE company registered apple.com.

• In 1993, NSI was the sole agent of. COM /. Net /.Org international top-level domain name registration right. At that time, there were only about 7000 domain names.

• In 1997, President Clinton entrusted the U.S. Department of Commerce to privatize the domain name system and introduce a competition mechanism. Domain name international participation officially began.

• In 1998, NSI has registered more than 1.2 million domain names, with .com suffixes accounting for 90% and a revenue of more than 60 million US dollars. The first batch of domain name investors in China was born.

• In 1999, a non-profit organization to monitor the distribution of domain names, the Internet domain name and number distribution organization (ICANN), established in October 1998, invited tenders for the first batch of five general top-level domain name registrants.

• In November 2000, ICANN approved seven new generic top-level domain names (gTLD), including. biz (for business only),. Info (open to all websites), .Name (personal registration), .Pro (for licensed occupations, including lawyers, doctors, and accountants), .Aero (for all websites related to air transmission) and. Museum (for museums) And. Coop (for cooperative enterprises). The seven new generic top-level domain names were selected by the organization from 40 alternative domain names.

• In 2001, influenced by the Internet bubble, a large number of.Com domain names were abandoned, and the catching of the dropped domain names was fashionable. Chinese domain name investors began to take the stage.

• From 2004 to 2007, the concept of “domain name parking” appeared to make money through traffic guidance.

• In 2007, the domain name trading industry was heating up, and each boutique .COM domain name could be sold for hundreds of thousands of dollars. The domain name industry has entered a period of healthy and orderly development.

• In 2008, the era of domain name personalization began, but .COM domain name still occupies a dominant position in the market. Internet Naming trends have officially changed, such as Facebook http://fb.me , WordPress http://wp.me , bitly’s http://bit.ly. However, old domain names such as .Com are still the focus of enterprises and individuals.

• On June 20, 2011, ICANN officially approved the new gTLD at the Singapore meeting. Any company or institution has the right to apply to ICANN for a new top-level domain name. By the end of 2014, more than 400 top-level domains have been opened successively, including highly personalized suffixes such as .Club (Club), .City (city), .Berlin (Berlin), .NYC (New York), creating possibilities for diversified network addresses in the future.

• In April 2012, Mike Mann, a domain name speculator, registered nearly 15000 domain names within 24 hours. The registered madman later explained: “I’m greedy. I want to have the world.” facts have proved that his choice is correct. Today’s Mike Mann is often exposed to sell domain names at low cost and high prices, making huge profits.

• In December 2013, whoAPI, an emerging enterprise focusing on domain name analysis, revealed that all 4 alphabetic.COM domain names have been registered. There are 456976 combinations from aaaa.com to zzzzz.com. The three-letter domain name was registered in 1997.

• In 2014, the DONUTS registry provided the world’s most personalized domain names. It opened the registration of top-level domain names such as .Bike, .Guru and .Clothing, and the new era of top-level domain names hasd officially arrived.

• In 2015, enterprises’ demand for brand domain names increased, and the era of All People’s domain name investment opened.

• In 2016, the new gTLD achieved great success in global popularity. General top-level domain names such as .Com, .Org, .Edu, etc. have been recognized by the public. However, in order to cope with the geometric growth of the new website, the domain name management organization has added more than 100 new Gtlds （general top-level domain names）.

• From 2016 to now, domain names are the foundation of the era of social media and artificial intelligence. Small businesses are not only required to have websites, shop, but also do all kinds of small programs (such as WeChat, Baidu, Alipay, etc.), wechat ID, Toutiao ID, Baidu ID, penguin ID and so on. However, an independent domain name is still a must for enterprise websites; Social media portal; Brand attachment; the base to get rid of the big platform control.

The development of domain names in China has gone from:

1. The only entrance in the era of the rise of industry websites (mainly from 1997 to 2002) to 
2. One of the main channels of search social interaction (mainly from 2002 to 2015), and then to… 
3. The independent foundation of the era of social media and artificial intelligence (2016 to now) and the indispensable necessity of brand promotion!

Q.3 What benefits do you see in domain investing and what strategies or key points should one keep in mind before investing in domains?

Domain name investment as long as the investment is proper, the investment is small, the return on investment is high, and the investment risk is relatively low. Compared with stock investment, cryptocurrency investment and real estate investment, domain name investment has many advantages; Domain name investment does not need to focus on the market like stock investment, and the market is relatively stable; Compared with cryptocurrency investment, there is little legal risk; Compared with real estate investment, it belongs to light asset investment and so on.

Before investing in a domain name, you must check the investment varieties (English words, Pinyin, digits, etc.), investment scope (old Gtlds, country domain name, new Gtlds, etc.), investment target customers (end customers, domestic market, international market, etc.), cash flow control of investment (renewal cost and cycle, etc.) and sales channels (Sedo, GoDaddy, Dan, etc.) Do enough research. Don’t invest heavily. Gradually increase investment from learning and experience and lessons. Do a good job in investment evaluation. Finding the right investment is the best investment.

Q.4 What are the opportunities and advantages for someone who wants to enter the domain investing business?

I personally think the new gTLDs and domain names are good investment opportunities. However, due to the gradual warming of the market, the investment cost is steadily increasing, and the preemptive bidding is rising; To invest in old domain names, you need to find the right investment direction according to your financial resources, and there are still many opportunities. 

For example, the ShortDot Registry has just opened the preferential registration of .Bond to the Chinese market (363.hk, i.e. West.CN), with a registration fee of 9 yuan and a renewal fee of 38 yuan. My consulting team has registered more than 100 .bond names, such as 365.bond / movie.bond / lady. Bond, etc. i.Bond, I’m.bond, all very recognizable and brandable names!

Q.5 What are your thoughts on investing in names with new domain extensions?

The number of new gTLD domain names is too large. Your investment scope, investment variety and the market must be clear. In addition, the investment cost must also be considered.

Investing in new domain extensions is a double-edged sword for new investors; On the one hand, when old investors disdain to invest in new domain names, you are an original stock investor and are at the same starting line as old investors; On the other hand, the investment risk of new domain names is also great, because for many people, what is a valuable new domain name? Different people have different opinions, and it takes time to test.

There are several experiences in investing in new domain names for reference:

1. English words are a better investment direction because the overseas market is basically stable

2. For new domain names, if prefixes fit suffixes well, don’t worry that no one wants them. For example, international.trade.

3. Suffixes with large and stable investment registration are relatively less risky.

4. Track future hot spots and layouts in advance, so that when the market is windy, you can seize opportunities, such as NFT, metaverse, BTC, ETH, etc.

Q.6 What risk factors should one keep in mind before investing in domains? 

In investment, risk and return are two sides of the same coin; Low risk usually means low expected return, while the high return is usually accompanied by high risk.

Domain name investment actually requires a long-term investment strategy. For example, the transaction probability of the domain name is basically 1-2% per year. Therefore, the cost of domain name renewal is a great expense, which affects the return on investment of the domain name and whether the domain name can be owned for a long time. Otherwise, if a good domain name is lost, the investment will fail.

Cash flow is crucial. Without a long-term cash flow guarantee, the investment cannot continue. We should reserve enough money for domain name renewal, such as double 11 (Nov.11 promotion) and double 12 (Dec.12 promotion). In addition, the price of the domain name should be moderate, neither too high nor too low. This requires a comprehensive consideration of factors such as market research and investment experience.

Q.7 How do you picture the future of domain investing?

Domain name investment can be expected in the future. The domain name must be moved from the era of domain name portals to today’s traffic to social media, apps, etc., which cannot change the status of the Internet infrastructure of the domain name.

At the same time, the brand value of the domain name is getting higher and higher. Because the uniqueness and scarcity of top-quality domain names and high-quality domain names will be further pursued by the market.

However, the value of common domain names and domain names that cannot match the market terminals is also decreasing.