Listen to Alan Dunn talk about the many ways a domain name can be used and why no website doesn’t mean no value.

In today’s episode, Podcast Episode Number Three, I’m going to talk about acquiring a domain name that on the surface is not being used. Personally, I think the answer to why a domain isn’t being used is a critical answer any buyer needs to understand, and any broker should be able to explain. Let’s start by imagining you want to acquire the domain named swarm.com. Obviously a stellar domain. So you visit the site to see what is happening with the domain.

Alan Dunn: 01:19 A number of things can happen when you type in the letters swarm.com:

• First, a site could resolve. The site could be some big corporation’s homepage or it may belong to a small beekeeper in Indiana. That’s the great thing about the internet. Almost anyone can use the domain.
• Secondly, you type in the domain name and nothing happens. The URL times out, Google returns a 404 page, or something similar. Most people will automatically classify this as a domain name not in use.
• Thirdly, you type in the domain name and parked ads show. If you’re not familiar with domain name parking ads, they are basically sponsored links shown in the domain or in some cases a redirection to ads hosted on another domain. Some even have surveys, but let’s not go there.
• Fourth, you type in the domain name and get a for sale page, a reserved page, or some kind of minimal page with some information.

Alan Dunn: 02:17 Some of these pages often even have a way to inquire about the domain name. Let’s talk about the last two first. Would you consider the domain name in use if you saw ads on the page? How about a for sale page or reserved page? A lot of people do not define any of these scenarios as use. However, to the domain name owner, and this is something you really, really need to remember, this is how he or she wants to use the domain name. You see, use is not defined as whether or not the domain name has a big company on it. Domain name use is simply defined by how the domain name owner wants to use the domain. Let’s say that again, domain use is simply defined by how the domain name owner wants to use the domain. Maybe if you owned a killer domain name like love.com or mortgage.com you would do the same. I know I probably would.

Alan Dunn: 03:10 Now what about the second point I spoke about earlier? You type in the domain and nothing happens. The URL times out, Google returns a 404 page, or something similar. Most people will automatically classify this as a domain name not in use, but have you checked the history of the domain name or even the MX records? Many great domain names timeout. Maybe the domain was part of an acquisition. Maybe the brand just hasn’t got around to using it, or maybe there’s even a defensive value in not using it. There are numerous reasons why a domain name does not resolve. Again, the use of a domain name is not defined by whether or not a website resolves. The use is purely defined by the owner.

Alan Dunn: 03:52 What about email? Has somebody you know ever emailed from a domain that you didn’t recognize and you were curious, so you typed in the domain name and nothing showed. Not the spammers, of course. You don’t want to type in their names. But let’s say Uncle Billy emailed you from billy@homesweethome.com, and you are curious to see what Uncle Billy is doing now, typed in homesweethome.com and it simply timed out. The natural reaction is to say the domain name is not in use here. However, think about it. Uncle Billy just emailed you from the domain. So it is in use, for email. No one ever said you have to use a domain name for just a website. The email part is really important to understand, because for some people, especially legacy owners of great domains, they often have 10 or 20 years of email use tied to that domain name. So if they sell you the domain name, well that email is going to disappear really quick.

Alan Dunn: 04:52 I know because I’m like Uncle Billy. A personal email of mine has never had a website attached to it, but you can bet I’m not selling the domain for anything cheap. The time and headache just to update stuff is really not worth the money. Should you offer more or less if the domain name is not being used? See, this is a really good question. And now, you hopefully understand that a website is not the only way a domain name is used.

Let’s talk about whether or not this lack of a website affects the value of the domain name. I could go on forever here, but let’s put it this way. Most likely, no. Ask yourself, is a diamond ring of a divorcee worth less if she doesn’t wear it anymore? Visible or not it’s still worth plenty. What about the corner waterfront lot that has no home on it? Is it worth less because there’s no home standing? No, and in many cases, maybe even more.

Alan Dunn: 05:46 If a domain name does not resolve to a website, then my experience says look deeper. Try to understand why it doesn’t resolve, what other uses the domain name may have, and understand more about the owner and his or her relative value of money. I’d also give one piece of advice. If you enter into almost any domain name negotiation with an attitude that the domain name is worth less because it’s not in use, this will probably only backfire on you. The seller will get offended and probably think you’re a schmuck. The broker would likely even think you don’t know anything about domains, maybe even the whole internet. And quite frankly, you probably won’t get the domain or have a terrible experience doing so.

Open your eyes, be kind, and respect the value other people hold for domains. It will get you a lot closer to successful acquisition.

Listen to Alan Dunn, a 20-year domain name industry veteran, share domain name stories and talk with other experts and founders around the world. Go inside big and complex transactions, common domain name questions and more. Domain Stories available on Apple Podcasts, Google Podcasts, Spotify, Stitcher, Tunein and Pocket Casts.

Follow Alan Dunn on Twitter @alangdunn and @domainstories, and visit Namecorp.com for more information on buying or selling a domain name.