City land values have traditionally correlated to proximity to city centers. According to one economist, Internet real estate values similarly go up and down—based on how much you have to type.
In his recently published paper, “Monocentric Cyberspace: The Primary Market for Internet Domain Names,” University of Cambridge economist Dr. Thies Lindenthal argues that the economics of virtual domain name spaces can be understood by analogy to actual urban spaces.
For Lindenthal, having to type out a long URL is analogous to having a long commute. The more someone has to type, the less likely they are to go to the domain, a tendency that depresses the desirability of longer domain names.
To show that demand was lower for longer names, Lindenthal studied the use of popular U.S. surnames and city names as keywords within longer domain names, using examples such as smithfamily.com or newyorkpizza.com. Controlling for how common the surnames are, Lindenthal found that six-letter surnames were 24 percent more likely to appear in a domain name than seven-letter ones.
Lindenthal said the domain name market could be up to 25 percent larger if more high-quality domain names were available. New top-level domains may help bridge that gap, he said, but with a caveat. While they increase the number of shorter names available, they also introduce an additional keyword—the right-of-the-dot portion of the “notcom” domain—and adding keywords is only viable in the most crowded parts of the domain name space, he said.
Lindenthal didn’t look at the question of where domain registrants go when the name they want is unavailable. Do they buy a name in a less desirable part of the city—i.e., a longer name? Or do they rent a smaller, closer-in space—i.e., funneling their customers to something akin to a Facebook landing page?
Those questions are worth exploring. After all, when it comes to real estate, location is everything.
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