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Finding the value of virtual real estate

Exploring the Economics of Internet Domain Names
To begin assessing the market for the impending flood of new domain names, MIT postdoc Thies Lindenthal analyzed the records of about 250,000 sales of existing domains over the past eight years.
Caption:
To begin assessing the market for the impending flood of new domain names, MIT postdoc Thies Lindenthal analyzed the records of about 250,000 sales of existing domains over the past eight years.
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Image: Wing Ngan/Center for Real Estate

Current research at the MIT School of Architecture and Planning's Center for Real Estate is investigating the economics of virtual real estate, using techniques customarily used for bricks-and-mortar. While the Internet has always been thought of in terms of real estate — homepage, website, domain name — this project is thought to be the first time real-world evaluation techniques have been applied to the world of Internet domain names.

The arrival of this approach is timely: The Internet is currently host to 22 top-level domains, such as .com, .gov, .org, etc. — not including country‐specific extensions, such as .com.uk — but consumers soon will be able to choose from nearly 1,000 new domains for their online presence.

In anticipation of this massive explosion of supply — unparalleled in both virtual and traditional space — Thies Lindenthal, a postdoc fellow from the Netherlands’ Maastricht University, is developing ways to assess the potential value of that new real estate.

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