Domain Squatter Tries New Business: Running Websites
alleyinsider.com
alleyinsider.com
These short, generic domain names (like perfume.com) had some value 10 years ago, when Internet search was still much more of a chaotic crapshoot.
Today, you could practically run a thriving ecommerce site from just a static IP if you spent a little bit of time on SEO. People go to google, type in "perfume" or "buy perfume" and go off to either the text-ad sites, or the top organic results.
Users have been trained on the idea that "domain guessing" is hopeless, and more than likely to land you on a pr0n site or ad site (like those domains are currently configured).
Also, for many of these e-commerce related sites, there is a large percentage of people who are looking to buy perfume+something else. If your site is so tightly optimized around 1 product class, I think you'll lose a lot of business to people who want to buy 3 products from 1 vendor, not 3 products from 3 vendors.
IMO, the majority of these domain squatters have so thoroughly skewed or ruined how people find products of interest that they have no hope of suddenly turning things around by turning these domains into what they should have done from the beginning.
These domains ARE valuable - both for income generation and resale potential.
http://www.usatoday.com/tech/news/2006-05-09-domainers_x.htm
The "value" is perceived, often by people who have no idea what they're doing (much like the examples in your USA Today article).
This is a lot like the "value" of various antiques, where antique dealers constantly buy and sell pieces amongst themselves. Did you hear the joke about the 3 antique dealers trapped on an island with a single King Louie VIII chair? They all managed to make a living...
My personal non-scientific experience is that users who are so internet-clueless are also e-commerce-phobic... They won't put their credit card and personal data "into the intarweb". So, the value to a retailer of this group of folks that can't master ANY search engine is probably much less than the cost of developing and promoting these sites based on such great domain names.
I think the Plenty of Fish model (lots of traffic, high priced sponsorship ads and affiliate links to more targeted or efficient sites) is a better bet for high value domain names, given that characteristic that you pointed out about the people unable to find a search engine. They might not know what they're doing, but you can be darn sure they click on ads!
Monetization techniques are improving (Auctomatic might be the next step?) but even just with AdSense they still bring in a lot of money. Factor in the minimal effort required to milk them for cash and increasing resale values and they become very attractive investments.
Those domains are still quite valuable.
Does "Amazon" equate to a massive multi-product marketplace somehow? How about "ebay"? "Flickr" is so much like "photo hosting" that you can see why they're such a popular search result. And so on.
Having key search terms in your domain name lends a tiny bit of weight to the overall result ranking. The link text, page title and H1 tags will do more for you though. So will text in the url itself (www.foo.com/these-are-my-keywords).
One thing I would point out is that everything else being equal a good domain name will generally get more clicks. The higher CTR will eventually lead to higher results in both the natural and paid results. A good domain name is also important for branding and other forms of advertising.
I am not going to remember an IP address unless my dork quota hasn't been met that week.
p.s. Congrats - to Auctomatic...