In its infancy, the Internet boasted serious competition in the business of buying and selling domain name. Lawsuits were thrown around and hefty checks were written to purchase well-known names. Today's market tells a different story. No longer a baby, the Internet poses new challenges in the domain name business.

If you are thinking about entering the domain name trade, or have already stepped foot in its icy cold waters, my advice will greatly help you. I will teach you the value of domain name purchases, and what to look for when buying and selling in the business.

Strategies in the Domain Game

Sedo.com, an international company that offers an online marketplace for buying and selling domain names and websites, reported over $80 million in revenue generated from the domain name business in 2009. On any given day, Sedo.com lists around 15 million domains for sale.

As an entrepreneur, you can no longer rely on buying and selling the highly touted single-name domains. Nike.com, Walmart.com, and others aren't exactly sitting at your fingertips.

So, you have to be clever, inventive, and consistent when working in this business. Success is simply a matter of seeing opportunity, going after it, and having a little extra wit when it comes to decision-making.

One thing is for certain: the domain business has consistently thrived during our economic downturn. The ability to produce a little sunshine through a cloudy economy will ensure success for years to come.

In an economy riddled with high unemployment rates and a sluggish market, getting into a business with a consistent 30% annual growth is probably one of the wisest decisions you can make.

It's in the Value

Typically, online property increases in value over time. Unlike stocks or real estate, you have the option to choose a product that is generic or descriptive enough to have an evergreen quality to it. Being evergreen in the online world is essential because your domain will exist forever if you choose wisely - constantly driving traffic over time.

If you invest wisely in the right online property, and sit on it long enough for the value to appreciate, you will see a serious return on your investment.

When searching for domain names to purchase, you need to keep a few things in mind. Find domains that are generic, defined by categories, and contain only 1 to 2 words if possible.

Create a list of all possibilities: hobbies, interests, niches, and vertical markets. If you really sat down and thought about it, your possibilities are endless.

Before you overwhelm yourself, stick with what you know. The better you understand a category, the easier it will be for you to choose a particular domain of interest because you will be able to think of something you would type in your browser.

Keep These Things in Mind

Don't limit yourself to dot-coms. Though dot-coms have a sustained dominance over other domains, alternative extensions hold great value. The same goes for foreign country domains. They're also priced discernibly lower than dot-coms. You may end up paying 3 times less.

Some great domain ending choices are:.net,.info,.biz,.tv, and your origin endings like.ca or.uk. Not only will they help define your business, but they will also provide great SEO, or search engine optimization, benefits.

If you purchase unique domain names, then your annual cost is around $10 to maintain it. That is why you find so many dead-end domains out there. Savvy businesspersons buy the domain and hold onto them because it costs so little to do so.

If the domain is clever enough, you can even bring in a small income from advertisers hoping to reap some benefit from an accidental click. If you have quality pricing for ads on your domain, then you can certainly make a good profit from its sale.

Knowing the Market

When you are in the market for purchasing domain names, you need to know how much traffic the name gets and how it ranks in search engines. Find out who the original registrant is. If the seller isn't the original registrant, you will want to know how many others have handled the domain name and what was posted on it in the past.

If the site had shady or unethical content previously, run the other way. You can research domains at Archive.org.

Once you buy a domain, you need to figure out what to do with it. Like any investment property, you want to add value to it. Determine what your budget is and how you can improve your purchase. Give the website a unique identity that invites a recurring audience. Provide content above and beyond the advertisements on the site.

Things to Consider

Remember that anything you add to the domains and site you purchase will add value. The longer you hold onto it, the greater the increase of search engine rankings, and the larger will be your audience.

Find sites that don't cost too much to maintain over the course of several years. This will allow you ample time to boost rankings, grow your audience, and add valuable content. When it comes time to sell, you will have quite an asset to offer.

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