Domainers and the Business of Domaining

I came across an interesting article on CNN Money yesterday. I found it interesting for two reasons: 1) There's the potential to make a lot of money on the Internet and 2) SEO, SEM, and affiliate marketing aren't the be all and end all of monetizing the web. The proof comes from Kevin Ham who has amassed a $300 million portfolio of domains.

So what does Kevin do? He buys domains that are likely to receive direct traffic i.e. people who type in URLs directly in to a browser's address bar skipping search engines entirely. What kind of money does Kevin drop during a shopping spree? Apparently $650,000 is not all that unusual — $10,000 for Weddingcatering.com, $350,000 for, and $31,000 for Christianrock.com are examples. These domains, for the most part, are monetized by placing relevant ads from the likes the of Google and Yahoo. The beauty of this business is that it scales. Sure you can blog and make money, but eventually you'll hit a wall as there is only so much you can write on your own. But buying a domain adds little in terms of additional overhead when you already own a bunch.

Some other impressive stats about Kevin:

• Since 2000 he has pulled together a portfolio of 300,000 domains.
• Combined with several other ventures, Kevin's business generates an estimated $70 million a year in revenue.
• He wrote software to snag expiring names on the cheap.
• He was one of the first to take advantage of a loophole that allows people to register a name and return it without cost after a free trial allowing him to test the potential at no cost.
• Is working with the government of Cameroon to reroute traffic to .cm domains that no one owns to his servers where ads are displayed. Why? To take advantage of the inevitable typos people make when typing in .com.
• During one six-month period starting in late 2000, Ham registered more than 10,000 names.
• Weddingshoes.com brings in $9,000 a year. It cost $8 to register and $7 a year to maintain.