Sells for $1.1 Million: Bubble in the Domain Market?

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The domain market, like any other market, is susceptible to bubbles -- especially given how many speculators are flipping properties at any given time.

There's been talk of a bubble in the domain market since 2007 -- when sold for a mind-warping $345 million -- but the market has held up pretty well over the last three years.

Case in point: sold to on Wednesday for $1.1 million. Although it seems like a rich sum to pay for a common noun, to put that number in perspective, reportedly sold for $1.7 million last year. CEO Mark Horne expects to make at least $12,000 per year off the purchase.

"If you had a million dollars in cash right now, you'd make $12,000 a year in interest on that money [if you stuck it in the bank.] To put it into an asset like this where I know the business well, it was a no-brainer," Horne told Presumably, Horne is familiar with the domain's traffic given that he had been leasing it from the previous owner.

Recession Hasn't Slowed Big-Ticket Domain Sales

While there isn't a domain price index or a precise way of measuring median domain sales prices, there's been no shortage of big-ticket sales over the last two years. Among the top-ten most expensive domain names, several sold after the recession started., for example, sold for $10 million in 2008; sold to Toys "R" Us for $5.1 million last year; and also last year, sold for $16 million.

One possible reason for resilient sales prices? In recessionary times, the Internet has proven to be one of the most cost-effective means of growing sales, and domain names could play a key role in this growth.

During past recessions, advertisers typically ditched brand-based glossy ads in favor of direct marketing campaigns. And the only difference in this recession is that search-based ads have replaced snail-mail fliers. How else can anyone explain Google's raging ad business while other ad-dependent businesses -- like television networks and magazine publishers -- have seen ad sales plummet in recent years?