Friday, January 11, 2008

Domain Names: The Internet’s Real Estate Bonanza?

From the 1990’s “Dot Com” boom to the bubble bursting in 2000, are domain names the magic bullet that will restore investor confidence on the Web?


By: Ringo Bones and Vanessa Uy


Touted as the “Real Estate Market of the Future” in the middle of the 1990’s, domain names are now a billion-dollar industry, not only for the major search operators like Google and Yahoo but also to a new breed of Internet real estate developers. Domain names have since become the “bread and butter” of the on line marketing and on line advertising business. Having outgrown the “dot com” slump of 2000, domain name – the real estate of the web – have been delivering far greater returns compared to it’s real world counterpart as reported on CNN.com. For those of you who have the resources to invest in the domain name development business yet don’t know what it is, here’s a primer.

Domain name refers to the first part of a URL - (URL stands for Uniform Resource Locator – the unique address of any Web document that can be keyed in a typical browser’s OPEN or LOCATION / GO TO box to retrieve a document) – on to the first / where the domain and name of the host or SERVER computer are listed. This is usually arranged in reverse i.e. name first, then domain. The domain name gives you the information on who (the origin of) “published” the page i.e. made it public by putting that page on the Web.

In the 1990’s – when the Internet evolved from a mere “academic curiosity” to a telecommunications medium with a promising economic viability – the exclusive right to use Internet domain names became a highly contested issue. Enterprising individuals knew that there’s money to be made in these unique sequences of letters that are divided – by convention – into segments separated by periods that correspond to the numerical Internet Protocol Addresses that identify each of the millions of computers connected to the Internet. Because domain name labels enable packets of information to be sent to their specific destinations across the Internet, the commercial implications are not lost to the world’s various advertising agencies.

Domain name development profits does not only fill the coffers of unscrupulous entrepreneurs, but can also benefit an impoverished country because all countries are designated a top-level domain name on the Internet usually as a suffix to that country’s Internet Address. For example .be for Belgium, .hk for Hong Kong, .ph for the Philippines, .za for South Africa and so on. A number of these domain names have been featured on stamps. During the last few years of the 20th Century, a relatively poor Pacific Island nation of Tuvalu hit the jackpot when it received the .tv domain name, although initially Tuvalu’s citizens didn’t realize that they owned the most recognizable suffix of all, .tv.

Back in 1999, the .tv domain name gained “humanitarian / philanthropic” status when Jason Chapnik – a Canadian businessman- walked into a Tuvalu parliament meeting and pleaded his intentions to buy their domain name. After further negotiations, by the year 2000 Tuvalu decided to sign up with Chapnik to form a new company called Dot TV that’s currently based in Pasadena, California. Tuvalu owns 20% of Dot TV and received US$50 million from the lucrative deal which the country – via structured settlement – receives quarterly payments of US$1 million each over a period of 10 years. Tuvalu recently received a payment of US$18 million that instantly doubled the country’s GDP.

This sudden windfall of revenue allowed Tuvalu to achieve an economically independent status. Ever since gaining independence in 1978, Tuvalu could hardly afford the US$20,000 UN membership fee. It wasn’t until September 5, 2000 where Tuvalu could finally afford being UN’s 189th member nation. The domain name revenue enabled the various islands of Tuvalu the ability to upgrade their public infrastructure like roads, schools and water purification facilities. The upgrading of Tuvalu’s main airport to accommodate larger planes has allowed the country to export food for the first time in history.

Despite of the recently found wealth, the global community is now wondering whether Tuvalu can cope with the challenges of sea level rise due to global warming and the increased typhoons brought about by climate change with “dot com” funds alone. Is Tuvalu now in the front line for the global community’s battle against sea level rise?

2 comments:

Kim said...

I hope that Tuvalu's Domain Name earnings will trickle down to her most needy citizens because even if this tiny Pacific Island nation resembles for all intents and purposes a tropical paradise, the average Tuvalu citizen isn't that well-off compared to someone in the affluent West. Tuvalu's poor still needs basic medical care. Hopefully for free since they can't afford it. And there's still that threat about sea-level rise due to the excesses of the Industrialized World that caused our present global warming debacle.

Sherry Rashad said...

Has any of you read or heard about Essela Natano - one of the only two doctors on Tuvalu? He says he hasn't seen any of the millions earned by Tuvalu's "dot tv" domain name being plowed back into their country's ailing healthcare system. Yet Tuvalu has one of the highest child mortality rates in the Pacific. Tuvalu's lone hospital badly needs investment for new equipment and drugs. The welfare of Tuvalu's citizens should come first.