Geo Domain Names: No Longer the Internet’s Best Kept Secret

February, 2010

Copyright © 2010 By Gregory Paley

More country and city domains were sold in a six-month period in 2009 than at any time since those domains were first registered in the mid-1990’s.

In as many months, such notable brands as Russia.com, Rio.com, Brazil.com, Vietnam.com, Malaysia.com, GreatBritain.com, Indonesia.com and others were snapped up on the secondary market at prices mostly ranging from USD$400,000 to USD$1,500,000 with Russia.com being the second highest, all cash price ever paid for a Country.com domain name. Although the City.com Geo Name, Branson.com (located in Missouri) was reportedly sold for USD$1.6 million in 2006, no other segment of the domain industry has witnessed so many six to seven figure sales prices within such a short period of time.

Defining a Geo Name

Before examining some of the factors behind the recent surge in demand for Geo Names, one needs to understand that, for purposes of this article, we are talking about “.Com” Geo Names. These are domain names that fall into very specific categories: Country.com, State.com, City.com, or even a region, county or geographical area, each of which is followed by “.Com”. Some examples of these Geo Names include China.com, Vermont.com, Chicago.com, and Africa.com. We have omitted discussing other top-level country code extensions because there are no notable examples of Geo Name transactions in the secondary market outside of ".Com".

Historical Sales of Geo Names

The first publicly announced sale of a Geo Name occurred in 1999 when the domain name, Korea.com, was sold to South Korea’s leading telecoms for a purported $5 million cash. However, starting a few years before the sale of Korea.com and continuing through 2001, the secondary market for Geo Names saw some notable domains begin changing hands.

Between 1996 and 2001, buyers representing industries in Media, Software, Entertainment, Telecommunications, Travel, Tourism, and Government began quietly acquiring ".Com" Geo Names. A partial list of these buyers include the Irish Times (Ireland.com), China Telecom (China.com), Australia Tourism (Australia.com), Swiss Tourism (Switzerland.com), China Telecom (Taiwan.com), New Zealand Trade and Tourism (NewZealand.com) and CanWest (Canada.com). Recently, at least three more notable purchases of “.Com” Geo Names have been confirmed with the purchase of Hawaii.com by Gannett Co., Topeka.com by McClatchy Co., and the acquisition of Richmond.com by Media General in 2009.

It is widely believed that, with the sales between 1996 and 2001, each of the aforementioned transactions represented the first time that Geo Names had changed ownership after their initial registration. Interestingly, and without exception, almost all of those sales went largely unnoticed in part because the marketplace was not actively tracking sales of Geo Name transactions.

Competitive Advantages of Geo Names

While the sales prices of Geo Names has historically been treated as a closely guarded secret, the buyer's identities have not.

In fact, the early buyers of Geo Names shared some common characteristics and fit into three categories. These "buyers" categories included publicly traded concerns, well-funded privately held entities with access to significant capital, and public sector/quasi-governmental organizations. Each of the buyers was either located within the geographic territory that corresponded to the Geo Name or was discovered to have acquired the Geo Name as part of its business strategy within that local market.

After so many years of relative inactivity, why have so many Geo Domains recently changed ownership? The answer lays in understanding the competitive advantages of Geo Names themselves.

1. Scarcity. While two or more geographic locations may share the same name, there are no synonyms for countries, states, regions, cities or territories.

2. Diverse Industry Uses. Geo Names have been successfully deployed in a variety of commercial applications such as portals, directories, news resources, online communities, destination guides and travel platforms. Examples of the different ways that companies have used Geo Names can be found by examining sites like China.com, Hawaii.com, Ireland.com, Canada.com, NewZealand.com, and Australia.com.

3. World-Wide Brand Appeal. Geo Names have remarkable brand appeal and awareness around the world and within their local markets. Even though Geo Names such as China.com and Korea.com (which are owned by local companies within those countries) are in the English language, both sites are operated in their native local language as well as in English.

4. Brand Recognition. Unlike other domain names where multiple versions of the name may be differentiated by appending or removing a letter to create a “plural” or "singular" version of the word, or in some cases when a second word (either a noun or verb) is added to the domain name, a Geo Name is incapable of mistaken identity and is not easily confused.

5. Best Internet Address. Without question a “.Com” domain name is the Internet’s default address and when attached to a Geo Name offers the most widely recognized domain extension for international and domestic audiences.

Conclusion

In 2009, Geo Name sales prices reflected the growing demand for high quality, best of breed geographically descriptive domain names - many of which had not been previously offered for sale. Gauging the reactions following the recent sales, many industry insiders, investors, and domain experts agree that the recent demand for Geo Names has brought attention to what has been a quiet, often ignored and underappreciated niche market in the domain name industry.

If the recent six and seven figure transactions are any indication of pent-up demand in this space, the industry can expect Geo Names to continue setting the benchmark as a unique asset class and one that offers meaningful opportunities for entrepreneurs, developers and investors.

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