Why invest in domains?
Domains are often called virtual real estate because of the many similarities with buying properties and selling them off with a major profit. Domain investing has a much lower threshold though. To register a new domain today costs less than $8. Of course not all domains will increase in value, the best ones are already taken. But that does not mean there aren't any good names left. You have to be creative and have an understanding of what will become valuable - being trend sensitive. What will be the tomorrows hit, what's the next big thing? Keeping an eye on trends and acting quickly can get you some really decent names which you can sell shortly after for thousands of dollars.Direct Navigation
Direct Navigation, also called type-ins is when someone is typing the domain name directly in the browser without taking a detour through a search engine. If you are looking for hotels, wouldn't it make sense to enter hotels.com directly in your browser? Of course, you will not always get what your looking for, some domains will point you to a parking page and you will be disappointed.Premium Domains
What distinguishes a premium domain is often a one word keyword domain (often .com) that generates a lot of traffic, see Direct Navigation above. The traffic is of very high quality and has a high conversion rate into sales if offering the visitors what they are looking for. Quality has a price though, these domains usually costs hundreds of thousands of dollars, and sometimes even millions of dollars. But if you take into consideration how expensive it is to advertise your business in magazines etc. then you may get a better return on investment buying a premium domain. Don't be fooled though, there are many people claiming they are selling Premium domains which in fact they are not, these domains are very rare.Typos
Typos are a form of Direct Navigation, but with misspelled domain names. Unfortunately they are often typos of trademarked domains like facebok.com hogmail.com etc. However, it doesn't have to be, the domain Voyuer.com went for $112,000 in 2005. These names obviously aren't any good names building a business around so they are often parked somewhere only showing a page full of ads.Trademarks
There are some things you need to have in mind. Be careful with trademark protected names. That doesn't mean you can't register any domain containing a trademarked word, a domain name is not the same thing as a trademark. As an example, PaypalSucks.com won a dispute with Paypal.com due to free speech. There are some exceptions to trademark and copyright laws regarding this (Satire, criticism, parody, news gathering & social commentary value, etc.). Also if you are a reseller of Blue Widgets, there are major advantages having those words in the domain name for SEO purposes, and what manufacturer anyway would be against you selling more of their stuff?“The domain name is the most important factor for ranking in a search engine.”
-Vaibhav Arya, CTO, Skenzo
“Yellow Page usage amongst people below 50,will drop to near zero over the next five years"
-Bill Gates, Microsoft