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The BBC's John Moylan
"Cybersquating. It's when individuals snap up well known brand names"
 real 28k

Thursday, 2 December, 1999, 19:25 GMT
The $7.5m net address
Internet names

The world record $7.5m paid to a Houston entrepreneur this week for the internet address business.com is expected to be topped in the near future.

Internet auction site Greatdomains.com says a higher offer has already been rejected for the america.com name.

It seems that businesses are more than willing to pay the vastly inflated values now put on what are seen as the most desirable and catchy web addresses.

Bids listed by Greatdomains.com
america.com: $10m
houses.com: $1m
taxes.com: $1.1m
RomanCatholics.com: $275,000
Drug.com: $500,000
Tolerant.com: $125,000
Funeral.com: $2.3m
Marc Ostrofsky sold business.com less than three years after reportedly paying a London-based internet service provider $150,000 for the address.

Mr Ostrofsky sold the name to eCompanies, the Santa Monica-based business development firm founded by former Disney internet chief, Jake Winebaum, and Earthlink founder, Sky Dayton.

It may seem hard to fathom now but the $150,000 paid three years ago was considered exorbitant at the time.

"Everyone thought I was a fool. People thought I was going out of my mind," Mr Ostrofsky said.

Mr Winebaum said the name was worth the price because it will save eCompanies millions of dollars in advertising costs.

"It's a choice piece of real estate and we've got a great service that we're building to go behind the brand," he said.

Amazon.com Companies may find it better to build brand names
"If you look at what companies are spending to build a brand, I think it's a prudent investment."

He plans to use the name for a new business devoted to helping other businesses tap into the world of electronic commerce.

The price paid was the highest so far for a domain name, said Jeff Tinsley, chief executive of Greatdomains.com

He said: "I think that's just the beginning of what's going to come. These names are going to command a significant price."

But brands may win out

The sale was not the first time that Mr Ostrofsky has hit the headlines after the sale of an internet address.

In February, Mr Ostrofsky sold the address eflowers.com to Florida-based Flowers Direct for a reported $38,790 plus 50 cent cut of all future transaction fees - and a complementary bunch of flowers sent to his wife each month.

But the long-term value of domain names was questioned by Alan Adamson, managing director of Landor Associates, an international brand and corporate identity consultant.

"We think owning domain names is a short-term play," he said.

"We think ultimately brand names will win. The smart money is on creating brands that stand for differentiated businesses you can protect."

The consultant said that historically companies have shied away from adopting generic names for their businesses and have invested in creating separate brand identities that can persevere over time.

He believes the current rage for "dot.com" addresses is a part of temporary technology transition and that as the internet economy matures, the supremacy of distinct brand names will return.

The price paid for business.com was 107,000 times the $70 cost of originally signing up an address with web registries.

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See also:
23 Nov 99 |  Sci/Tech
'Mortgages' for domain names
30 Jul 99 |  The Company File
EU Internet address inquiry
27 May 99 |  The Company File
Gaining a NetBenefit

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