Southern B.C. is the world’s Internet ownership capital
British Columbia’s domainers are the anonymous nouveau riche. They have none of the star power of their real-world brethren, the Donald Trumps and fellow billionaire property developers whose dealings the world follows with tabloid interest.But over the past decade, they have quietly made Southern B.C. into the world’s Internet ownership capital, a sort of virtual Manhattan that is home to some of earth’s most valuable addresses. One, who lives in Vancouver, owns god.com, a name so lucrative one fellow domainer said “everybody on Earth” will visit it at one time or another.
A Penticton man owns virus. com, whose value to both the pharmaceutical and software worlds makes it nearly as valuable as a Park Avenue penthouse in New York. Another owns a swollen bank account, after selling his portfolio of 100,000 addresses for US$164-million.
Altogether, B.C.’s Internet owners are worth at least US$1-billion, estimates Jay Westerdal, the president and chief executive of online research firm Name Intelligence Inc.
And that number is flying higher every year as the value of Internet addresses soars. The best now trade for eight figures: Witnesssex.com, which last year sold for about US$12-million; and poker.com, which is for sale for about US$20-million.
So what brings so many domainers to Vancouver? “I think it’s something in the water there,” Mr. Westerdal said.
Or “it might be just a fluke,” said Gary Chernoff, the man who owns virus.com, as well as jet. com and enough others he won’t admit to that allow him to afford four hectares of waterfront property on Lake Okanagan. “Or maybe it’s the longer seasons. We’re indoors more.”
Either way, he and a handful of other local domainers — so called because the names they own, such as virus.com, are called “domains” — have together been among the world’s lead prospectors in what has become an online advertising bonanza. Their control over some of the Internet’s best names also gives them extraordinary control over the online world, making them, in a sense, masters of the Internet.
The wealthiest of them all is a man named Kevin Ham, a medical doctor and devout Christian whose portfolio of 300,000 names — including god.com and satan. com — is estimated at US$300-million. He is the godfather of domainers, a controversial figure who is nonetheless revered for his virtually unparalleled knack at acquiring stellar names.
At the heart of a domainer’s profitability is the potency of generic, non-trademarked names. Take, for example, attorney.com or laptop.com — both owned by Dr. Ham’s company Reinvent Technology. An Internet user looking for one of those services — a lawyer or a new computer — might skip typing the term into a search engine and instead browse directly to one of Dr. Ham’s Web sites, which are bristling with ads. Every time a user clicks on one of those ads, Dr. Ham is paid.
Because domainers like him are paid by the click, the payoff — it can be anywhere from 25? per click to $70 — is closely tied to how much traffic the Web site gets. It’s much like real estate: some locations are far more popular than others. Simple generic domain names are like a storefront on Fifth Avenue: valuable because of the traffic they attract.
So valuable that Vancouver-based domain company Communicate. com actually uses cmnn.com for its corporate Web site; it sells ads on communicate. com. It also owns cricket.com, which pulls in $1,500 on a good day, company vice-president Adam Rabiner estimates. It costs about $8 a year to hold onto a domain name, so profit margins are huge. Dr. Ham has a portfolio so good, and so extensive, that his annual revenues were estimated at US$70-million in a recent profile in Business 2.0 magazine.
Direct-navigation marketing now accounts for 10% of all Internet advertising, and 15% of total revenues for companies such as Google and Yahoo! — numbers that are expected to increase as online advertising surges and domain auctions fetch ever higher prices. According to Internet research company Zetetic, aftermarket domain sales hit US$111-million last year as the average domain resale price leapt 13% over 2005. It grew 10% between 2004 and 2005.
Buyers are also increasingly willing to pay huge premiums for attractive names. Only one domain fetched more than $1-million in 2005; in 2006, that had grown to five. This year, the number is expected to go far higher: in two weeks, moniker.com is holding an auction in New York featuring at least 15 names — including auction.com, menopause. com and slots.com — expected to sell for more than $1-million.
All of which is good news for B.C.’s domainers, who came at their riches from all walks of life. Mr. Chernoff was a hospital electrician. Dr. Ham was trained as a doctor.
Dan Cera, another Vancouverite, was a federal tax investigator. His wife bought him a computer in the late 1990s and five days later he had bought a handful of domains. A few years later, after the dot-com crash delivered up a torrent of good names, he was doing it full-time. He now owns a suite of travel-themed names, including visittoronto.ca and visitcalgary.ca.
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