There was an interesting article by Thomas Claburn at InformationWeek yesterday about the increased market demand for cyber real estate, while traditional real estate markets are experiencing a market depression.
In the first quarter of 2008, $38,029,543 in domain sales were reported, a 78% increase over the $21,253,105 in domain sales reported for the first quarter of 2007, said Ron Jackson, editor and publisher of DN Journal, in an e-mail.
Values of generic domains are being driven up because domain names are now considered to be key brand assets and the market continues to provide more ways to monetize the traffic arriving at these centralized web addresses. Although nobody really knows for sure, the theory is that generic domain names are given higher relevance ranking for semantically related keyword searches by search engines like Google, Yahoo, and MSN.
The opportunity for domain investors can be best understood by a recent Yankee Group study that points to the gap between current media consumption (20% via Internet) and advertising spending (7% via Internet). As more and more advertising dollars flow to online markets, the value of generic domain names will most probably continue to rise.