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False Hopes and Internet Domain Name Brokers

I was listening to the radio yesterday and heard an ad that was upsetting.  It was a domain registration company that was trying to convince people of the riches in domain name brokering.  If you register a domain from them you could get paid millions of dollars.  There are very few people that have made millions by selling a domain outright. What are the chances? You honestly have a better chance of getting hit by lightening on a clear day.

Companies shouldn't advertise online get rich schemes.  In my book that is completely irresponsible. If a domain name/web site is sold for a large dollar amount it's usually because of web traffic and advertising dollars. Other high valued web sites generate revenue from products or service. Throughout this article I'll use "domain name" and "web site" in an analogous manner.

A Bit of Realism
None of my friends or close associates have become rich off selling a domain name.  In many cases they spent hundreds and some cases thousands of dollars on domain names.  A business mentor of mine jumped on domain name band wagon years ago.  Again, he bought hundreds of domain names and spent thousands of dollars.  To this day I think he only has made a few dollars off all the domains he once owned. Unfortunately he bought into empty hopes and promises.

The Only Domain Name Success Story
There is one person I knew who sold his web site for millions of dollars.  It was during the dot-com revolution.  The company that bought the web site consolidated the domain into one of their own web sites.  Why did this person get paid millions of dollars for his web site? The web site generated "more than 40,000 downloads per day and more than 10 million page views per month."  A web site like that has massive value. This person positioned himself in the right place at the right time. It was a different time and I don't see that ever happening again. 

A Little Domain Name Valuation
The value of a domain has a vast number of metrics.  There are a variety of algorithms, each taking something different into account.  When it comes to valuing domains the financial geek in me takes over.  Show me a balance sheet and income statement for your web site.  As they say "Money Talks." If you don't have that information you can make some safe assumptions based on research.  If a web site sells millions of dollars in products or services, it definitely has good value.  Or if the domain gets so much traffic that it's plastered with banner ads and Adsense, the domain probably has value.
My bottom line on value is based on content and utility.

Be Careful Out There
My lesson for the day is don't get shammed by people who claim instant online riches.   I do believe that the Internet can make people very wealthy.  There are systems out there that can help you generate additional revenue streams, but this isn't something that happens over night. Make sure you do your homework on any offer that sounds too good to be true.

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