Domain name sales are red-hot-dot-com

By Adam Goldman

updated 8:21 p.m. ET July 22, 2007

NEW YORK - Inside a midtown hotel, Larry Fischer is on his cell phone with a financial backer as his partner Ari Goldberger does quick research on a laptop computer. They are bidding furiously at this auction of Internet domain names, with hopes of snagging megayachts.com. The duo won't be deterred. They want this name.

"$110,000, yes or no? Quick," Fischer barks at Eli, the investor at the end of the phone.

Someone else makes a bid for $120,000. Fischer and Goldberger up the ante, and then again. Going once, going twice ... sold to Fischer and Goldberger for $150,000. "You got it," a smiling Fischer tells Eli. Mazel tovs are exchanged.

These are boom times in an estimated $2 billion industry that involves the buying and selling of domain names. When people type the generic names into their Web browser's address field, sites that generate pay-per-click advertising revenue appear. Such "direct navigation" bypasses search engines.

"This industry is like the wild, wild West right now and people have no idea how fast it's growing," said Jerry Nolte, managing partner of Domainer's Magazine, a new trade publication devoted to this little-known world.

Some believe the industry's market value could reach $4 billion by 2010 as people continue to purchase approximately 90,000 names a day and the number of domain registrars swells.

At the end of first quarter 2007, at least 128 million domain names had been registered worldwide, a 31 percent increase over the previous year, according to VeriSign Inc., which runs some of the core domain name directories for the Internet.

"It's not about words," said Monte Cahn, founder and CEO of Moniker.com, a company that specializes in domain asset management and held the Manhattan auction. "It's like real estate. This industry is only about a decade old. People looked at domain names as a commodity. It's a piece of real estate on the Web that can't be replaced. It's your stake in the ground, your stake in the Internet."

Creditcheck and sex.com
At the Manhattan auction, Fischer and Goldberger snatched up four names for more than $1.2 million and a fifth for a client, representing only a handful of the names sold for a total of $12.4 million during both the live and silent auction.

The auctions were held during a domain conference in June that attracts some of the biggest players in this niche business.

One name — creditcheck.com — went for $3 million but paled in comparison to the sale of sex.com, which sold for $12 million last year, according to Cahn, who knew the site's buyer and seller.

Fischer, 44, of Brooklyn, N.Y., and Goldberger, 46, of Cherry Hill, N.J., figured there was money to be made early.

The making of a name-broker
Goldberger's entry into the business was unorthodox to say the least. In 1996, the Hearst Corp. sued him, alleging trademark infringement after Goldberger registered esqwire.com, which resembles one of the company's magazines.

The two sides eventually settled and Goldberger, a lawyer, was allowed to keep the name. Word got out that Goldberger knew something about the thorny legal issues involving Internet domain names, and people began approaching him for advice.

Goldberger's fascination with the burgeoning industry was sealed.

"I was an entrepreneur strapped into this suit-and-tie job," Goldberger said. "Kind of a square peg in a round whole, and this lawsuit just kind of changed everything for me."

He eventually left the respected Philadelphia law firm where he worked in 1997 and joined a small startup in Manhattan called mail.com, which was buying up domain names.

Goldberger began collaborating with Fischer in 2001, building their portfolio of domain names. Together, they became a formidable yet quirky team (imagine George Costanza and Jerry Seinfeld with the pioneering spirit of Lewis and Clark).

Two years later, they created a company called smartname.com, which they sold earlier this year. The company took names and provided content and links for owners, getting a cut of the advertising revenue. At one point, smartname.com represented 150 owners with about 150,000 domain names, generating 50 million unique visitors a month.

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