Porn sells; Satinpanties too

The basics of the business are what they were years ago, when Web search engines started charging advertisers to display their ads next to computer users' search results. After such keyword advertising spread to include listings on tens of thousands of sites, domainers realized they could put up just the rudiments of a website and earn hundreds of dollars monthly from ads.

"Squatting" on a Web address related to a trademarked name belonging to a company or brand is risky business, often triggering an expensive lawsuit. But a high-quality generic name, such as Tools.com, can get loads of traffic from people who simply enter "tools.com" into their Internet browser's address line instead of searching for the term on Google or Yahoo.

A secretive industry has emerged, with some practitioners buying up names for the ad income and others counting on flipping the online property to businesses looking for a strong Web presence.

Many domainers now complain that it has gotten harder to get rich either way. Less ad money is flowing to lower-quality sites, and a lot of the low-hanging fruit -- a simple word, or even pair of words, with a .com ending -- has been plucked.

At the top of the historic sales list is Sex.com, now an adult content directory, which sold for more than $12 million in 2006. Not far behind is the similarly oriented Porn.com, which sold last year for more than $9 million. Diamond.com, Beer.com and Business.com have all changed hands for at least $7 million.

Schilling said he too had believed the easiest money was gone -- except that he kept running into people who had made millions in the last three years.

"I just met a guy who bought Birthdaycakes, plural, and Weddingcake, singular, for $40,000," Schilling said in an interview. "I would have thought that was fully valued. But he resold the pair for $300,000 14 months later, so that's an opportunity I would have missed."

A philosophical divide is emerging about whether building on a site or leaving it bare draws more traffic.

It might seem logical that more relevant content would bring in more Web surfers, who would then click on more ads, sending more money to a domainer's account.

That's the approach of companies including Demand Media, a Santa Monica-based firm headed by Richard Rosenblatt, the man who sold MySpace to News Corp. Rosenblatt, who has raised $320 million for his new company, adorns many of his domains with articles and online videos, aiming to make them into bona fide destinations for hobbyists.