Web Address Fetches a Record $7.5 Million

A well-heeled Internet start-up firm in Santa Monica said Tuesday it paid a record $7.5 million for the coveted Net address Business.com.

The buyer, Internet business incubator ECompanies, is betting that the hefty price tag for such a memorable Web address will help jump-start its newest venture, which will also be called Business.com. ECompanies bought the name from a Houston businessman who paid $150,000 for it three years ago.

The price tag far surpasses the $3.35 million that Compaq Computer paid a California technology firm last year to buy rights to the AltaVista.com name for its Internet search engine.

“I’d say it’s a bargain” for the Business.com name, said Joe Butt, director of consumer technology research for Forrester Research in Cambridge, Mass. “It sounds like a lot of money for a Web site, but that’s a classic [address].”

ECompanies co-founder Jake Winebaum, who used to lead Walt Disney Co.’s Internet unit, said he considered many names but had a hard time finding a memorable one that wasn’t already taken.

“We just kept coming back to Business.com,” he said. “We knew it would be expensive, but our rationale was instead of spending a lot of marketing dollars to explain what your brand means, you can spend the money on getting people to your site.”

The $7.5 million price tag seems downright cheap “when you’ve got companies you’ve never heard of buying 30-second spots for $2 million during the Super Bowl,” Winebaum added.

Internet names ending in “.com” or “.org” can be registered for only $70, but catchy names are changing hands with increasing frequency as companies launch all sorts of electronic commerce ventures. Wine.com, Bingo.com, and WallStreet.com all fetched at least $1 million on the burgeoning resale market.

Other than the name, Winebaum wasn’t ready to say much about Business.com. The company, to be launched early next year, will operate a Web site to keep track of the ever-expanding array of business-to-business e-commerce services that are available on the Internet.

The site will be run by a “large team of people” who can “catalog the Internet from a business point of view,” he said.

By acting as a sort of business-to-business Yellow Pages, Business.com could “help steer buyers and suppliers to each other, and that’s an important service,” said Jamie Friedman, an Internet analyst with Goldman Sachs in New York.

Winebaum hasn’t shared details of how Business.com plans to make money, but Friedman said he expects the company to sell advertising and charge either buyers or sellers for access to the site. Even with only sketchy details of the firm’s revenue model, he said, the company didn’t overpay for its name.

But Naseem Javed, president of ABC Namebank, a New York firm that helps companies select names for themselves and their products, said the name Business.com isn’t unusual enough to be worth $7.5 million.

“Tomorrow you could have ProBusiness.com, or Businesses.com, or Biz.com,” Javed said. “Whoever is buying is playing on very thin ice.”

ECompanies bought the name directly from Marc Ostrofsky, a Houston-based entrepreneur who bought the Business.com name three years ago. Since then, hundreds of people had expressed interest in buying the name, but only a few made serious offers.

“People back then said I was a fool for paying that kind of money,” said Ostrofsky, who will become an advisor to Business.com.

This isn’t the first time Ostrofsky has cashed in on an Internet name. In February, he sold the name Eflowers.com--which he had registered for $70--to a Tampa floral delivery firm for $25,000 plus a 50-cent commission on every order placed on the Web and a dozen long-stemmed roses for his wife every month for the rest of her life.

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High-Priced Domains

The $7.5 million that Santa Monica-based ECompanies paid for Business.com is the most that any company has ever paid for an Internet name. A look at some of the Web’s expensive names, along with their price tags:

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Name Price Business.com $7.5 million AltaVista.com 3.35 million Wine.com 3 million Bingo.com 1.1 million WallStreet.com 1 million Websites.com 975,000* Drugs.com 823,456

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* Sale pending

Source: Times Research