Domain names are big business. For the past several years, domain names, the “real estate of the Internet,” have generated substantial returns for savvy investors, who often refer to themselves as “domainers.” Prior to the rise of pay-per-click advertising, domain name speculators would acquire desirable or trademarked domain names and then simply sit on them, hoping that they could sell them later on for a profit.

Today, a domain name holder can display pay-per-click advertising on a website, and sit-back and let the money roll in while Internet users click on those ads. A single domain name can bring in hundreds of dollars a day, and many domain name holders have thousands or even millions of domain names.

The ability of a domain name to generate money through pay-per-click advertising depends on the likelihood that users will type in that domain name. As such, a domain that is a common word or phrase, or which incorporates a well known trademark, can draw in a constant stream of Internet users. In order to make money from a domain name, only a fraction of the Internet users who type in a domain name need to click on an ad. Each click can bring in anywhere from a few cents to a few dollars.

As a result of this business model, the value of desirable domain names has skyrocketed. Domain names can routinely fetch five or six figures. And in 2007, the domain name porn.com, reportedly sold for $9.5 million. The following domain names also reportedly fetched over a million dollars: business.com, asseenontv.com, altavista.com, wine.com, creditcards.com, and autos.com.

An entire secondary industry has developed around the buying and selling of domain names, including a vibrant online auction process for domain names. Several companies now offer appraisal services for domain names; the appraisal can cost anywhere from $10 to $100. Companies like Sedo and SnapNames hold domain name auctions, and serve as conduits for the sale of domain names, and enjoy a hefty commission for their assistance.

“Domaining” is big business, and cybersquatting is not a petty crime. Rather, cybersquatting can involve substantial money and serious legal claims. Accordingly, trademark owners must be proactive in policing the misuse of their trademarks by cybersquatters. The failure to do so could result in substantial losses, as the above numbers reveal.