Today, I saw an interesting article about the value of Internet domain names, especially as more mobile devices move to “apps” instead of Website–based services. The July 20, 2011, article was written by Austin Carr and appears in Fast Company magazine. The article suggests Internet domain names still have value—and a startup company might spend $50,000 or so to acquire the right name.
I’ve written several times about estate planning issues involving Internet domain names, including here and here. In a previous posting, I also mentioned that about 70 new Internet domain names are created every 60 seconds. Not all of these names will have financial value to third parties, but some of them could have surprising value, as mentioned in the article above.
For purposes of an inventory or estate tax return, it make sense for fiduciaries to get an appraisal of an incapacitated or deceased person’s Internet domain names from an appraisal service like Sedo or Afternic. But the best determination of value is still to auction or sell the domain name to a third party, if they are willing to part with it. The article above also links to a blog posting by Fred Wilson, a venture capitalist, and his posting makes some interesting additional points about how a startup company might value and acquire an Internet domain name.