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Sex.com goes on auction block March 18; Domain Names Not Such Great Investments Any More

from www.cbc.ca – Sex.com, a popular domain name on the internet, will be auctioned off in New York this month after its owners defaulted on debt payments.

Boston-based Escom purchased the name in 2006 for a record $14 million US, but the name is not expected to fetch anywhere near that price when it goes on the auction block March 18.

Online bidding for the name starts at $1 million, according to the auction site David R. Maltz and Co. Inc., based in New York.

“We expect to have a very productive auction,” Scott Matthews, the lawyer handling the auction, told the New York Post.

But CBC business commentator Kevin O’Leary predicts the name will likely go for between $2 million and $4 million because of several issues that have helped to depress the price of domain names in general.

“In the last two years, domain name values have decreased dramatically so people who have squatted on domain names — some people have thousands of them — they’re not such great investments,” O’Leary said in an interview with CBC News.

“There’s the maintenance costs, and the prices have continued to decline because there are so many new extensions available now. For example, ‘.TV’ is an extension,” he said.

Sex.com has been controversial nearly from the beginning of its existence, and not just because of content.
Name regained

The site was registered by a Stanford University scholar Gary Kreman in 1994 and stolen by conman Stephen Cohen a year later, according to the 2007 book, Sex.com, by journalist Kieren McCarthy. His book was one of two written about the domain-name theft.

Kreman regained the name after a five-year court battle and later sold it to Escom. Cohen fled to Mexico after a $65-million judgment was levied against him.

According to McCarthy’s book, sex.com was highly profitable in its first five years, receiving five million hits a day and generating revenue of $100 million a year.

O’Leary said anyone who buys the name will have to figure out how to negotiate laws in the U.S. that limit the distribution of hardcore pornography.

But he adds that there is still value in the name because the porn industry has taken a new turn.

“If you look at the internet, the biggest cash-flow businesses with the highest margins right now are live sex sites. Most pornography is now available for free, up to two or three snippets from old films made in the ’70s and ’80s, but the new model is live sex that you pay for — up to $2 a minute. These businesses are exploding,” said O’Leary.

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