• Email
• iPod-friendly
• Print

How much is a name worth?

On the Internet, at least, the answer is: a lot less than it used to be.

Witness Procter & Gamble Co., which last week announced it sold the Internet domain name www.flu.com for an undisclosed sum. The sale made headlines, but lesser known is the fact that the domain, along with 99 other names the Cincinnati-based consumer products giant put up for sale, had been on the market since June with no takers until last week.

The "dot-bomb" phenomenon is rippling through the once white-hot market for domain names.

"These days, saying you're a 'dot-com' basically makes people run screaming in the other direction," said Mark Radcliffe, an intellectual property lawyer in Palo Alto, Calif.

P&G said the price paid for www.flu.com more than recouped the roughly $350,000 expense of maintaining the company's 2,000-plus domains for the past five years, but executives acknowledge that they may have arrived at the dot-com party just when the punchbowl was running dry.

"A number of Internet companies have since dissolved, and those that are left have less free cash to spend now than they would have before," said Erik Roberts, P&G finance manager.

In 1995, recognizing the name grab ahead, a fast-typing P&G employee registered more than 2,000 domain names related to P&G products. Those included product names such as www.Crest.com, www.Pampers.com, www.Tide.com and www.Pringles.com.

The employee, whom P&G says it cannot locate, also registered generic domains such as www.diarrhea.com, www.headache.com, www.pimples.com.

By acting early, P&G managed to dodge the domain disputes that emerged from a free-for-all that ensued in the late 1990s. The melee peaked a year ago when www.business.com was sold by a Texas businessman for $7.5 million, a record that holds today.

P&G avoided having to fork over a king's ransom for its domains by registering everything it could think of in 1995, long before most cyber-squatters made their claims. The company pays about $70,000 a year to maintain about 2,000 names it has registered with NetworkSolutions Inc., the company that keeps the master list of domain monikers.

For P&G, which pulls in close to $40 billion in revenue a year, this is small change. But that didn't stop the sharp minds in P&G's global licensing group from re-evaluating their strategy on Internet domains.

"In 1995, we went out and registered everything we thought would be potentially useful to us as a company," Roberts said. "We have a large beauty-care business, so we purchased beautiful.com. Since then our strategy has been to use specific brand names for online marketing, like CoverGirl.com. Things that are more generic, like beautiful.com, we've chosen not to use. But clearly, a domain like beautiful.com is valuable, and we have chosen to extract that value through this program."

The program involved putting 100 generic domains on the market, including www.flu.com, which was advertised for $1.4 million before it was sold last week to a pharmaceutical company whose name P&G did not disclose. If all P&G domains sell for the asking price, the company will ring up about $10.8 million, Roberts said.

Had P&G put the domain names on the market a year ago, it could have sold them much faster and fetched 35 percent more, according to Stewart Reynolds, chief executive of EchoArts, an independent appraiser of domain names based in Toronto.

Another problem, Radcliffe notes, is a radical shift away from generic domains to brand names.

"People are beginning to understand that generic domains are not valuable," Radcliffe said. "You can't build up brand value in them ... They want something they can trademark and protect."