A friend of mine received an anonymous offer for $120, via GoDaddy, for a domain he had owned for years called FuzzWire.com. He did not know the nature of the offer–that is, whether it was from a well-financed startup–but he at least knew that since it came from GoDaddy, and was not just some personalized plea sent by email, that he should test the offer’s limits. So my friend, an entrepreneur, matter-of-factly countered with $10,000. By the week’s end, the interested party agreed to the offer and moved $10,000 to escrow.
Such transactions are common in Silicon Valley, where the right domain name can still propel a startup’s chances of success. But given the increasing popularity of apps, there’s a question of whether owning the right domain name is as important as it was when the world was driven by dot-coms and browsers rather than iPhones and Android devices. In other words, if you launch an app today–say, Foursquare, for example–is it necessary to purchase Foursquare.com if the primary use of the service is through the mobile app, which does not require a web address?
According to venture capitalist Fred Wilson, a good domain name is still important to building a successful consumer product, even if it’s primarily a mobile app. Foursquare, a startup Wilson has invested in, decided to purchase Foursquare.com after launching with PlayFoursquare.com. Wilson advises companies to spend up to $50,000 for the right domain, a price that has dramatically risen in the past year, he says.
But at what point does the price outweigh a domain’s benefits? Color, Bill Nguyen’s mobile photo-sharing app, infamously purchased Color.com for $350,000, and Nguyen also purchased the UK-friendly Colour.com. Yet each of these sites is nothing more than a landing with links to the app store and a video demo.
“Prices in general [for domains] have actually not been going down with the boom of the app marketplaces,” says Paul Nicks, GoDaddy’s director of aftermarket services and auction product development. “There’ve been several seven-figure sales already this year–the value of a generic domain name is still on its way up, and as the Internet expands beyond some of the more developed countries, certainly prices will continue to skyrocket.”
Nicks believes domain names, especially generic ones, are still important for a startup’s branding, and that dot-com domains very much remain the industry’s standard. “It’s ingrained as the default–iPhones even had a ‘.com’ button,” he says. “A single character can still make a huge difference.”
