It's a sadly familiar story from the high-flying market of the past few years: Speculator thinks values will continue to go up, up, up. Overbids for a hot property. Can't keep up with the payments. Lender is forced to foreclose.
Only this isn't about real estate — it's about the most expensive domain name in the history of the internet: Sex.com.
Like a lady of the evening whose been around the block a few times, Sex.com has more than a few tales to tell — and also can't seem to get off the streets. Purchased for a few bucks in 1994, this million-dollar-babe is up for sale in an auction March 18, put on the block by the New Jersey lender who backed its purchase four years ago for a reported $14 million.
Opening bid: $1 million.
Sex.com was originally purchased by entrepreneur Gary Kremen, founder of match.com, in 1994. He did nothing with it. But a year later Network Solutions was tricked into transferring ownership to Stephen M. Cohen. After a five-year legal battle, ownership was restored to Kremen, who then sold it to to Escom LLC for what is thought to be the most ever paid for a domain. Escom was backed by DOM Partners LLC, which acquired it by default and now peddling it to the highest bidder.
The value of internet domain names that are coinages of common nouns would seem to be a shrewd investment, at some price. In the earliest days of domain registration speculators bought up lots of them for the basic price of about $10 that every unique name goes for. But when you get into the millions, the business model based on traffic that would surf spontaneously to an obvious name is questionable.
Certainly in the Era of Search the inherent worth of any name would seem secondary to the site's content and search engine optimization. Many of these noun.com sites are just referrers for ads — go to "fireplace.com" and see if you think that's the best place to find one. In fact, go to Sex.com and see if that's the best place on the internet to find porn.
Porn.com is actually another of the top-five most expensive domains and may also not live up to its, er, promise. In a report last year about the five — sex.com, fund.com, porn.com, poker.com and business.com — CNET appropriately asked: "How many have you visited in the last week?"
But Israel.com sold in 2008 for $5.88 million — a windfall for Joel Noel Friedman, who (like Kremen) purchased the name in 1994 for peanuts. (Friedman said his motive wasn't profit, but to ensure the site didn't fall into hands that would use it to embarrass the State of Israel.)
While we don't know what would make Sex.com's owner whole, the auctioneer of the property says there is considerable interest in the asset.
"We don't know who's serious and who's not, but prospective bidders need a $1 million certified check," Reuters quoted auctioneer Richard Maltz as saying. "It should be interesting."