DOMAINS > Domain Parking's New Tack

REDHERRING.COM: Companies are dressing up unused domains with cheap content for profit.

When you type a web address directly into your browser, there’s no guarantee you’ll find what you were looking for. Using a search engine or following a link from another site gives you much better odds. But a growing number of companies are finding profits in showing visitors a good time as long as they’ve stumbled in. It’s nothing fancy or time-consuming—a list of related links, a search engine. Tarting up “parked domains” may become a billion-dollar industry, both for paid search operators like Google and Yahoo as well as a new breed of Internet real estate developers.

Los Angeles-based Demand Media burst out of stealth mode last week, announcing that it had raised $120 million and bought domain name registrar eNom and content provider eHow. Demand Media CEO Richard Rosenblatt says his plan is to put up low-cost content on the 150,000 domains he has acquired—sites like beautifulhomes.com and mobilephone.com—driving up their number of visitors (already 25 million per month) and collecting click-through dollars for sending them to real destination sites. Similarly, Waltham, Massachusetts-based YesDirect, which was formed last year in a buyout of BuyDomains, says it has 650,000 sites with 24 million monthly visitors and tens of millions in revenue.

The companies face the challenge of eliminating trademarks from their growing portfolios of domains, as approximations of brand names often end up in collections after search engine marketing speculators try them out and drop them. “Cybersquatting” brings its operators millions every month, but it’s being increasingly cracked down on. The World Intellectual Property Organization said in January that cybersquatting disputes over domains such as internetexplorer.com and google.ir rose 20 percent last year, to 1,456 cases, and 84 percent were found in favor of the accusers.

On the other hand, what Demand Media, YesDirect, and publicly traded Marchex want to do—drive up the value of the estimated 5 percent of Internet traffic that comes through direct navigation—isn’t illegal. The industry could be worth a little under a $1 billion.
“It’s a little mercenary,” admits Steven Marder, the CEO of Eurekster, a San Francisco-based startup that makes customizable search engines and has seen revenue streaming in from initial tests with domain farms. “But it’s a really nice sandbox to play in.” Nicesandbox.com anyone?