What is a Domain Name and What Does it Do?

Domain Names are host names that the Domain Name System (DNS) uses to identify and map to websites and other Internet Protocol (IP) resources. A good parallel would be to think of domain names as street names. Street names are important because they help people navigate. The IP addresses, on the other hand, are the geographical location of the streets themselves
The Domain Name System (DNS) is a hierarchical naming system that helps users find their way around the Internet. Each resource connected the Internet, such as a computer, has a unique address – just like a telephone number – that is a complicated string of numbers called an “IP address” (IP stands for “Internet Protocol” ). Because IP Addresses are difficult to remember, the DNS makes using the Internet easier by appropriating a string of letters (the “domain name”) to be used instead of complex IP address. So instead of typing 304.252.198.1, you can type www.domaintools.com. It is a “mnemonic” device that makes addresses easier to remember.
Domain names are organized via subdomains which are subordinate levels of the Domain Name System root domain. Top-level domains (TLDs) are the first-level set of domain names, and include generic top-level domains (gTLDs) such as .com, .net and .org as well as country code top-level domains (ccTLDs). The ccTLDs are noted to the right of the dot, such as .fr or .au in the examples google.fr and google.com.au. Under Top-level domains, there are second and third-level domain names in the DNS hierarchy, such as DomainTools or Google. These domains are typically available for end-users to reserve so they can run web sites, create publicly accessible Internet resources, and connect the Internet to local area networks. Second level domains typically provide the name of the organization and/or are descriptive of the service provided, while third level domains is typically used to refer to a specific server within an organization.
Domain Names are used for different purposes, including application-specific naming, addressing, and in various networking contexts to establish:
– Simple identification of hostnames and hosts.Hostnames appear as an element in Uniform Resource Locators (URLs) for Internet resources, such as web sites. For example, the www in www.google.com is a third level domain, and .com is a top level domain while google is a second level domain.
– Simple, easily memorable names.Domain names are useful because they are memorable. For example, books.com is easier to remember than the Internet Protocol (IP) address of 65.204.48.126.
To learn more about who manages the architecture and top-level development of the Internet domain name space, read our article on What is ICANN, and how Does it Relate to Registries and Registrars.

What is Whois Information and Why is it Valuable?

Whois is a widely used Internet record listing that identifies who owns a domain and how to get in contact with them. The Internet Corporation for Assigned Names and Numbers (ICANN) regulates domain name registration and ownership. Whois records have proven to be extremely useful and have developed into an essential resource for maintaining the integrity of the domain name registration and website ownership process.
What is in a Whois record?
A Whois record contains all of the contact information associated with the person, group, or company that registers a particular domain name. Typically, each Whois record will contain information such as the name and contact information of the Registrant (who owns the domain), the name and contact information of the registrar Registrar (the organization or commercial entity that registered the domain name), the registration dates, the name servers, the most recent update, and the expiration date. Whois records may also provide the administrative and technical contact information (which is often, but not always, the registrant).
Whois Thick and Thin Models
There are two different data models for storing Whois resource information:
Thin Model. Thin Whois lookup only gives the registrar, name servers and registration dates. To acquire additional information, a secondary lookup at the registrar on file is necessary to attain full information on domain name ownership.
Thick Model. A thick Whois provides useful additional details beyond what is contained in a thin Whois record. Typically, the additional details contain contact (registrant, administrative, and technical) information. A lookup, then, will supply all the necessary information on who owns the domain, where it is registered, what name servers it uses, when it was registered and when it may expire.
It takes a lot of effort to track down Whois information given the large number of registrars and Whois servers out there. DomainTools makes it easy to find Whois information in one spot. Our Whois Lookup is a great place to start.
The purpose and value of the data in the Whois system has evolved in a number of ways over time including:
– Reinforcing the stability and security of the Internet by providing network operators, computer incident response teams and ISPs with appropriate contacts
– Regulating the registration status of domain names
– Supporting law enforcement officials participating in national and international investigations.
– Assisting in the battle against abusive uses of information communication technology, including illegal and other acts motivated by racial discrimination, violence, hatred, xenophobia, and related intolerance, any form of child abuse, child pornography, pedophilia, and exploitation of and trafficking in humans.
– Supporting inquiries and necessary steps to carry out trademark clearances and to help expose intellectual property infringement, theft and misuse in accordance with applicable international treaties and national laws.
– Helping businesses and other users and organizations in fighting fraud and safeguarding public interest
– Upholding overall user confidence in the Internet as an efficient and reliable means of communication by helping users to identify which entities or persons are responsible for services and content online
– Tracking down spam or malicious behaviorists
Accuracy of Whois information. The information in a Whois record is initially provided when a domain name is registered. Over time, things change, and the information gets out of date. ICANN requires domain registrants have the ability to update their contact details. Each registrar has slightly different procedures for changing the information that appears on a Whois record. It generally involves accessing account information via the registrar’s website, or via a call center representative. Whois record changes may take a period of time (often in the vicinity of 24 hours) to take effect. Having accurate, up-to-date Whois data makes it easier to contact a registrant or administrator.
Whois Privacy. It is important to note that there is no way to hide the existence of a domain registration since anyone can check Whois to confirm the status of a domain. The Internet Corporation for Assigned Names and Numbers (ICANN) requires that the contact information of those who own and manage a domain name to be made publicly available via Whois directories. This includes mailing addresses, phone numbers and email addresses.
Some domain registrars offer private registration services (also known as proxy services) in which the registrar’s contact information is shown, and not that of the registrant. With this “private registration”, the organization providing the domain privacy service is the domain registrant and contact. It is also important to note that even if domain privacy services are leveraged, it is not necessarily a guarantee of true anonymity. Registrars may be bound by law to release private information.
There are even a few privacy caveats with certain domain extensions, such as .us and .ca domains. As of March 2005, the National Telecommunications and Information Administration (NTIA) declared that all owners of .us domains will not have the option to privatize their information, and that it must be made publicly available. Beginning in June of 2008, the Canadian Internet Registration Authority no longer posted details of domain registrants associated with .ca domains. However, corporations and organizations are still required to publicize information.

What is ICANN, and How is it Related to Registries and Registrars?

Created in 1988, the Internet Corporation for Assigned Names and Numbers (ICANN) is a not-for-profit, public benefit corporation that helps to keep the Internet secure, stable and interoperable. It serves as the authority on domain names and on a series of Internet-related tasks. The rationale behind the creation of this group was that it was important to establish a central figure which could not only determine but also enforce Internet and Internet domain rules, regulations, and policies. ICANN has played, and continues to play, an essential role in the creation and maintenance of the Internet.
ICANN is managed by a Board of Directors, which is composed of representatives of the Supporting Organizations, sub-groups that focus on specific sections of the policies under ICANN’s realm, independent representatives of the general public interest that are selected through a nominating committee in which all of the constituencies of ICANN are represented; and finally the President and CEO, appointed by the rest of the Board.
Currently, there are three Supporting Organizations: 1) The Generic Names Supporting Organization (GNSO) that focuses on policy making on generic top top-level domains (gTLDs), 2) The Country Code Names Supporting Organization (CCNSO) which deals with policy regarding country code top-level domains (ccTLD), and 3) The Address Supporting Organization (ASO) which deals with policy on IP addresses.
ICANN also relies on advisory committees to balance advice on the interest and needs of stakeholders that do not participate directly with the Supporting Organizations, including: 1) The Government Advisory Committee (GAC), comprised of representatives of a large number of national governments from across the globe, 2) The At-Large Advisory Committee (ALAC), comprised of representatives from organizations of individual Internet users from around the world, 3) The Root Server System Advisory Committee (RSSAC) which provides advice on the operation of the DNS root server system, 4) The Security and Stability Advisory Committee (SSAC), comprised of Internet experts who study security issues related to ICANN’s mandate and 5) The Technical Liaison Group (TLG), comprised of representatives of other international technical organizations that focus in part on the Internet 6) The Internet Engineering Task Force (IETF), comprised of individuals who help to make the Internet work better by producing high quality, relevant technical documents that influence the way people design, use, and manage the Internet.
The duties of ICANN are broad and variable. They include the regulation of larger scale issues involving the general structure and design of the Internet, something that is important to keeping the system working smoothly and efficiently, and involvement in the regulation of seemingly smaller details, such as issues with specific domain names as well as specific registrars. Many have described ICANN as serving the roles of both the Better Business Bureau and the Federal Communications Commission all in one, as they both keep track of the businesses involved in registration as well as the function of the Internet itself.
One of the primary responsibilities of ICANN is the regulation of the domain hierarchies, particularly in relation to the management of top level domains (TLDs). ICANN has long regulated the use of top level domains including .com, .net, and .org. In addition to these mainstays, ICANN has played an integral role in determining the newer TLDs that have been created as of this date. This long and ever growing list includes TLDs such as .gov (reserved for governmental offices), .info (intended to be used by informational websites), and .mil (reserved for use by military offices). ICANN also regulates country-specific TLDs such as .uk (for the United Kingdom), .us (the United States), .fr (France), and .br (Brazil).
ICANN works in concert with with the Internet Assigned Numbers Authority (IANA), who is responsible for allocating and maintaining unique codes and numbering systems that are used in the technical standards (‘protocols’) that drive the Internet, such as DNS Root, IP addressing, and other Internet protocol resources. ARIN (American Registry for Internet Numbers)is the US regional Internet registry that manages the technical coordination and management of the Internet., and IANA (Internet Assigned Numbers Authority) controls numbers for protocols, the Country Code Top Level Domains and maintains the IP Address allotments. So while ICANN works with aspects of domain name creation and regulation, IANA and ARIN work with the numbering and IP address assignment. The assignment of IP addresses is critical, and serves as the backbone of the Internet. These sequences of numbers are far more important to the ability of the Internet to function than domain names themselves, which help with ease of navigation. A good parallel would be to think of domain names as street names. Street names are important because they help people navigate. The IP addresses, on the other hand, are the geographical location of the streets themselves.
Another key responsibility of ICANN is accreditation and supervision of domain name registrars. There are too many domain names being registered, re-registered, and expired for ICANN to manage this process itself. As a result, ICANN has authorized and accredited a number of independent organizations and companies with the task of serving as the parties who actually facilitate the domain name registration process for Internet end-users. These groups are known as domain name registrars, and some well known ones are Go Daddy, eNom, Tucows, Network Solutions and Euro DNS. In accrediting a registrar, ICANN confirms that the registrar is trusted to be used by individuals looking to register domain names.
Once an Internet end-user registers a domain name with a domain registrar, the necessary domain name information is sent to a domain name registry (a domain name registry is often defined as a database of top level domain names that have been registered.) who in turn enters the information into the centralized Registry database. A registry operator, also known as a Network Information Center (NIC), also plays an important part in the DNS of the Internet. Their role is to generate the zone files necessary to convert domain names into IP addresses. Each NIC is an organization in charge of registering domain names within the top-level domain names for which it is responsible, governing the policies of domain name allocation, and operating the technical end of its top-level domain. Verisign is the most well known of all registries and is the authoritative registry operator for two of the Internet’s most critical top-level domains (.com and .net).

Domain Valuation: How do I Value a Domain Name?

Domain valuation is a combination of both art and science. In many cases, domain names have specific and measurable data or attributes on which to base a valuation. Examples would include amount of traffic a domain gets, is it a popular word and correctly spelled, is it on the .com TLD or another less valuable TLD, etc. This is the science part.
However, beauty is in the eye of the beholder and in many cases a domain is worth what someone is willing to pay for it. The classic example is name domains. I might not pay $10 for [yourname].com but I bet you would pay a lot of money to get your exact match .com name domain that you could use as an email account, as a homepage for your personal website, or for other purpose.
So how much is it really worth? How do you write an algorithm to take that into account? There are countless examples like this. Any scientific algorithm will break down at the margin, with margins being examples like name domains, premium generic domains, trademark domains, number domains, etc. This is where the art comes in.
The value of a domain name is the sum of its generic value and the value of its traffic. Traffic is the easier one. Traffic comes from type-ins (direct input into a browser URL), links/bookmarks, and search. Assuming you can estimate how much each unique visitor is worth (based on how you monetize the traffic) you can then come up with a simple formula which calculates the amount of revenue or value you get from the domain’s inherent web traffic each year (to learn more about web analytics, read Wikipedia’s article here. The current market might place a 3-5 year multiple on that ‘revenue’, similar to how companies are often valued at 1-2x Sales, or 5-7x cashflow.
Generic value is a more complex animal. Here are some things you look at when you are trying to estimate the value of a generic domain: uniqueness, length, word count, singular or plural, any dashes or numbers, TLD, industry vertical or keyword value, correctly spelled, substitute words, possible uses, etc. etc. This is where experience and industry knowledge often trumps data.
In addition, you can use this list as a reference of what appraisers might take into account:
– Top-level domain—the most valuable domains are .com domains.
– Meaning—domain names referring to popular subjects are worth more than those referring to niche subjects, e.g. moviesvs. entomology.
– Suitability for commercialization—if the domain name is relevant to specific specific service or product keywords, it will be more attractive for commercial development purposes.
– Memorability—relative from person to person, but this also ties in with length.
– Number of words—domains that comprise fewer words generally have a larger market.
– Number of searches—performed for the domain name or its component words in recent history can indicate its value for search engine optimization.
– Length—shorter names are more convenient for users, being faster to type and less prone to typing errors.
– Pronounceability—a domain whose proper spelling is clear when spoken is generally more valuable than one which is ambiguous.
– Added numbers—usually lower estimation (e.g., Example24.com would be rated as less valuable than Example.com).
– Typographical errors or misspellings—Domain names resembling other domains except for a typographical error can be valued by those seeking to use them for advertising or competitive activities, but can also run afoul of local trademark laws. (e.g. flickr is an example of a purposeful typo).
– Age—a long-established domain tends to be more valuable.
– Singular and plural domains—may differ in their pricing (e.g. books.com would be valued more than book.com since people are much more likely to search for ‘books’).
– Recent traffic—how much inherent web traffic the domain name generates each year (see section above).
– Selling price of previous similar domains—can suggest the current market value of a domain name.
If you do not have the experience or knowledge, there are brokers and companies available to assist you. Luckily there is another useful data set relevant to generic domain valuation: comparable domain sales. If you can locate the records of other domain sales of similar type (industry vertical and matching attributes), you can at least bracket the likely generic value of the target domain. You can go to the sales history on DomainTools to look up this information.
Clearly there is no ‘right’ answer to domain valuation. However, the information above should give you a head start on thinking about how to approach this challenging endeavor. In addition, if you have already decided you want to sell a domain, you can simply put it up for auction at any of the many domain industry auction platforms and the ‘market’ will tell you what it’s worth.