Domain Names: 21st Century Real Estate

Internet business partners Ari Goldberger, left, and Larry Fischer, demonstrate how they search and buy domain names on the Internet, an estimated $2 billion industry, in New York, Tuesday July 3 , 2007. Over the years, Goldberger and Fischer have sharpened their formula for acquiring domain names and developing the sites, relying on research, savvy and plenty of instinct. "You either know it or don't by hearing the name," Fischer says. (AP Photo/Bebeto Matthews) (Bebeto Matthews - AP)

"They make their money in two ways," Parsons said. "One way is through the traffic they get and the other is the appreciation of the name."

Parson didn't think there was anything wrong with the practice as long as those involved weren't using names trademarked by others.

"Domain names are becoming 21st century real estate," Parsons said. "Just owning a domain name as an investment, I don't see a problem with that."

Anthony Malutta, a lawyer who specializes in trademark law at a San Francisco law firm, sees fewer trademark infringement cases thanks to improved laws.

"Trademark law involving domain laws is much clearer and much easier to understand," he said. "It's pretty clear that registering a domain name that corresponds to somebody's trademark is actionable. As to generics, they're just hoping to capture traffic. You're just counting on people typing in generic names instead of using a search engine like Google."

Malutta said domainers like Goldberger and Fischer are not "gaming the system" which in his opinion would mean registering domain names and then cybersquatting _ driving revenue off somebody else's trademarked name like Coca-Cola.

Over the years, Goldberger and Fischer have sharpened their formula for acquiring domain names and developing the sites using a fairly simple template, relying on research, savvy and plenty of instinct.

"You either know it or don't by hearing the name," Fischer says.

They look for names that hit the "sweet spot" _ short words that describe a high-value product or services related to it. Words that allow them to own a category such as bald.com and cardiology.com, two of the domain names they bought at the auction.

To help figure out a word's potential value, they see how many hits it will produce using Google. They also troll lists of names with domain registrations set to expire, enabling them to get a jump on buying it.

They don't bother with dot-nets or the others.

"Dot-com is king," Goldberger said. "Dot-net is worthless."