Reported High Prices Paid for Domain Names

It’s a matter of supply and demand. There are 30,000 words in a small
dictionary and 150,000+ words in a college dictionary, but not 10,000
businesses are willing to pay $4,000 for a domain name.
Since there are no comprehensive statistics on the prices of domain
names sales, a few reported sales can skew perceptions. These high
prices are from:

1. Dueling Trademarks. Many of the high prices paid for domain
names in the past were paid because trademark owners wanted the
domains. Trademark infringement, now known as cybersquatting, is
illegal, but if one legitimate trademark owner, such as Gateway
Computers, wanted a domain name (Gateway.com) from another
legitimate trademark owner (Gateway Consulting), they often had to
pay six figures. These high-priced sales reflect the value of the
preexisting brand and not the value of similar domain names.
2. Fake Auctions. Many of the reported sales and auctions are
fraudulent. In the 1970s, unique historic cars were auctioned off
several times to fake buyers, creating the impression that the cars were
worth many times their true value and obtaining publicity. Eventually a
victim became interested and purchased at an inflated price. Today, it’s
the same scam with domain names. Since scammers can bid on their
own auctions with multiple online names, it’s even easier online. It has
been my observation that over half of today’s domain name auctions
have fake bids by the seller or his friends.
3. The Top 100 Names and Sales for Stock. There are a very few
domain names that are worth six figures. There have been a few dozen
high-profile sales, but most of these were for stock, not cash. I might
even pay “$1 million” for Sex.com if they took near-worthless stock in
my private company.
4. Outright Hoaxes. Then there are outright hoaxes done just get in
the paper.
In short, the perceptions of many domain name speculators are warped
by some examples that don’t apply to them.