What is Internet Real Estate?

Internet real estate is a phrase that usually refers to the marketable space of the Internet, including domain names and Websites. This “real estate” mimics real estate in the tangible world, in that it is actively marketable, can be developed and sold, and frequently appreciates. People can buy domain names to build a Website much as they can buy land and build a house. Less commonly, “Internet real estate” can also mean the practice of using Internet tools to advertise or market an existing real estate business. Most of the time, however, the phrase relates to the sale and monetization of Internet domain names.

Domain names are to Websites what street addresses are to businesses and houses: they identify the location in space. Typing a domain name is what pulls up a specific Website. When the Internet was just beginning to grow in popularity in the early 1990s, there were not very many Internet domain names. The names were initially sold through what is referred to as a “land grab,” a process through which investors purchased names they hoped they could one day monetize with Web content.

The sale of domain names is managed by entities known as domain name registrars. Registrars maintain databases of available names, and either sell or auction those names to the public. Most registrars are only able to sell names within a specific domain, for instance, .com or .org. Some domains, including country code top-level domains such as .uk, .au, .ca, and .eu, are highly restricted, and registrants generally must meet certain requirements in order to obtain Internet real estate there.

The Internet real estate business remains viable in part because of the nearly inexhaustible number of possible domain names, and also because existing names frequently re-enter the market. Domain registration contracts give registrants rights to use a domain name and build out a corresponding Website, but only for a finite period of time. Domain registrations must be constantly renewed, usually annually. If a registrant forgets to renew, or otherwise fails to renew a domain name, that name lapses back into the common pool, and can be sold to anyone who notices.

Domain names can also be bought out from under existing owners. If a highly desirable domain name has already been registered, as many were during the initial land grab, it is off the market — but any owner is free to reassign his rights to another. Domain brokers make their living negotiating deals between domain owners and prospective buyers, and for the right name, the deals can involve quite a bit of money.

Some real estate agents in residential and commercial real estate also use the term “Internet real estate” to describe the ways in which they market business online. In this context, Internet real estate means using search engine advertisements, social networking sites, and new media portals like blogs to promote real estate based on user location and search history. This kind of Internet real estate seeks to leverage Internet communication and marketing tools to advance offline business, and to put people in touch with local real estate agents.