Internet enthusiasts are buying domains to profit, but big gains require skill and patience

Reliance JioHotstar domain saga: Is domain flipping the next big online hustle to make quick bucks? Experts say domain flipping can be profitable if done right, but success requires skilled research and early trend-spotting, not blindly chasing popular domains. All you need to know about domain flipping

Have you ever purchased a promising piece of land or property with the hope of flipping it later for a tidy profit? It is a fairly common practice among real estate enthusiasts. A similar trend prevalent among eagle-eyed Internet enthusiasts is domain flipping. It refers to the practice of buying or registering an online domain name with the aim of reselling it to a business or entity at a much higher price later. But can you make money from this activity reliably?

Early bird gets the worm
Domains are like valuable online real estate. On the surface, it is a unique address that directs users to a particular website. However, if the domain is associated with a popular term or catchy word, it can command high value. Buying a potential high-demand domain early could allow you to flip it later for profit. “Like any investment or trade, it involves buying domain names at a low price with the aim of selling these at a higher price. This could involve generic names, brandable names and emerging trends or keywords,” says Gaurav Sahay, Practice Head, Technology & General Corporate, Fox Mandal & Associates LLP.

The most expensive domain ever, cars.com, sold for $872 million. Domain hunters capitalise on tech revolutions to secure valuable online real estate early. For instance, .ai domain registrations have surged recently, though.com domains still dominate. NameBio data shows chat.com topped sales in the past five years, fetching $15.5 million. Among .ai domain sales, you.ai, stack. ai, sound.ai have sold for $2,50,000 to $7,00,000.

Generic domains have sold for big sums

Domains can be purchased from ICANN-recognised registrars like GoDaddy, Namecheap, Squarespace, and Hostinger. Prices range from a few thousand rupees to several crores, depending on the domain’s value. For instance, on GoDaddy, the registered domain bazaar.ai is on sale for a mammoth Rs.3.37 crore. However, the nonregistered domain bzaar.ai is available for a starting price of Rs.4,660 for the first year, and Rs.12,287 for every year after that. Some domains are on sale for much lesser.

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Cybersquatting a bad word
Before you get hyped about domain flipping, there are some caveats. If not done in good faith, it can potentially land you in hot soup. “Domain flipping is generally a legally tenable activity,but its legality depends on how it is conducted,” points out Sahay. “Issues arise when the domain flipping is with respect to a prior registered trademark or name. Issues may also arise if the act of domain flipping is in bad faith and can be categorised as cybersquatting,” observes Abhay J.V., Partner, Shardul Amarchand Mangaldas & Co.

Cybersquatting involves purchasing domain names that are similar or identical to established trademarks and names with the intent to sell them at a higher price to the trademark owner or other interested parties. Aasish Somasi, Associate Partner at SNG Partners, Advocates & Solicitors, says, “Legally, domain names are protected under the aegis of trademark legislation in many jurisdictions. Courts worldwide have recognised that a domain name is more than just an Internet address; it identifies the website to users, much like a trademark identifies a company’s goods or services.”

.ai domains are getting popular

If an entity claims a domain is identical or similar to its trademark and was registered in bad faith without legitimate interests, it can file a dispute under the Domain Name Dispute Resolution Policy (UDRP) or the India Domain Name Dispute Resolution Policy (INDRP) in case of .in domains. If the complainant prevails, the registrar may be ordered to transfer or deregister the name. In cases involving legitimate use claims, disputes may escalate to court litigation. “Depending on the proof of actual damages by the proprietor or the nature of violation, the court may grant actual and/or compensatory damages,” points out Abhay J.V.

According to India Law Journal, the first case in India related to cybersquatting was Yahoo Inc versus Aakash Arora, where the defendant launched a website (yahooindia. com), nearly identical to the plaintiff’s renowned website, and also provided similar services. The court ruled in favour of Yahoo Inc, citing it as an effort to trade on the fame of Yahoo’s trademark. Recently, a Delhibased app developer, who had picked up the domain jiohotstar.com, riding on speculation surrounding the merger of Reliance Jio and Disney Hotstar last year, got his offer for resale turned down by Reliance. He later sold to it to Dubai-based siblings, who have since offered to transfer the domain to Reliance at no cost. “Registrants should exercise due diligence to ensure that the domains they acquire do not violate existing trademarks and are not registered in bad faith. Failure to do so can result in legal actions that not only negate any potential profit but also impose additional penalties,” exhorts Somasi.

Cracking the domain code
Experts say domain flipping can be profitable if done right, but success requires skilled research and early trend-spotting, not blindly chasing popular domains. “Domain investing or domain flipping can be a viable trade if approached strategically and with an understanding of market dynamics and legal obligations,” Sahay remarks.

Short or single keyword domains are more valuable as they are easy to type, remember, and market, but are also pricier. A good domain should be SEO-friendly, as traffic is key to its worth. Suresh Raghavan, CEO, nichejobs.com, asserts, “Ascertain the search volume for your chosen keyword on Google. The more actively searched the word or phrase is, the more valuable it will be.”

Some domain marketplaces offer keyword search tools for ideas, while online appraisal tools like domainindex.com estimate a domain’s value based on length, wording, and SEO. Domain flippers also target expired domains, or ‘drop catching’, snagging them cheaply for their established traffic history.

Domain extensions significantly impact value. Popular ones like .com and .net are pricier but easier to sell due to their trustworthiness. Emerging extensions, like .ai,.shop, or .digital, may offer untapped potential. Active domain flippers insist this is a numbers game. The chances of you hitting the jackpot with only one or two domains are very low. It is advisable to buy a portfolio of multiple domains. “Domain flipping is more viable if you spread the portfolio across several short, brandable domains, instead of putting the entire money on a single valuable domain,” explains Haris Mirza, Founder of Upclub, a digital marketing agency.

The Individuals who are into this trade warn that domain flipping is not a get-richquick scheme either. You may end up owning a domain for years before you get an offer for it. “It is not as easy to flip quickly, unless you get lucky amid rising interest specific to your domain extension,” says Raghavan.

“If you can predict the market right and get the domain for a good price, big gains are possible. However, the value may not get unlocked right away,” Mirza contends.

This story originally appeared on: India Times - Author:Faqs of Insurances