Smart Net address nets $150,000 profit

We all know that people will pay a lot for a good address, but a London-based company has just made a profit of $150,000 (pounds 94,000) by selling a location which has no physical existence - and which in a few months' time could be worthless.

The location in question is not a piece of reclaimed Florida swampland, but an Internet site. Specifically, it's the address (or "domain") business.com.

Its initial owner, London-based Business Systems International (BSI), announced last week that it had sold the domain for $150,000 via an intermediate, to an unnamed company in Texas. Because it cost BSI just $100 to claim the business.com name when it "registered" it world-wide four years ago, and just pounds 12 per month to keep it afterwards, the transaction is almost pure profit. "They approached us, and we set the price," said Daniel Goodman, a director at BSI, which sells trading-floor systems for brokers. "We were quite surprised that it had so much interest."

But one of the people who brokered the deal insists that prices can only go up. "I wouldn't be surprised if we see domain names being sold for four or five times this price," said Pinky Brand, a vice-president of Houston-based Internet Domain Names, also known as idNames. His company contacted BSI on behalf of the eventual buyer. "A million-dollar deal? In the future, sure - why not?"

The deal was actually completed in April, and BSI was allowed six months' grace to vacate the site. From September, the Texans will have the rights to every address ending in business.com - including the Web site www.business.com and any address within it, such as sales@business.com.

The motive of the Texan company (whose identity Mr Brand says he cannot reveal under the agreement) is not simple vanity. The "browser" software commonly used to surf the Web assumes that any address it is given ends in .com: so if a newcomer to the Net just types the word "business" or "sex" or "internet" into their program, it will automatically go to www. business.com, www.sex.com, or www.internet.com.

For that reason the publishing and conference company Mecklermedia paid $100,000 in May for the internet.com domain, which now advertises its various conferences and magazines. With electronic commerce via the Net expected to run into hundreds of millions or even billions by the millennium, it could turn out to be a wise move.

But it might just be an illustration of a different saying: that fools rush in. Plans now being considered by the organisers of the Internet's "domain registration" systems could mean that from the autumn the number and variety of domains will expand enormously. Presently there are just six main ones - for companies (.com), government (.gov), the military (.mil), non-profit groups (.org), educational institutions (.edu), and network suppliers (.net).

The new proposals would open that up to include .firm, .web and even .co.us. At BSI, Mr Goodman said: "That really will be first come, first served. Being on the Web has helped us. But we might go up again as bsi.com... or maybe business2.com. That would be cheeky, wouldn't it? Really, they're just like car number-plates."

However, Mr Brand insists that even if the floodgates of domain names are opened up, the value of the .com suffix will remain. "I think it will remain preeminent," he said. "It's like any sort of property. There are a lot of physical addresses that you can live in, but people still want to be in certain ones: 5th Avenue in Manhattan, or, um, Bond Street in London, I guess."