How one tiny hyphen destroyed our SEO efforts (2011)
blog.silktide.com
blog.silktide.com
It would be tricky to test this, because you need to use a domain with hyphens where the original doesn't exist (and then you introduce new variables into the mix)
The expression "The Exception that proves the rule" is just a wry way of saying "Well, that's not a perfect rule."
I'm sure there are plenty of sites that contain hyphens, that should be favoured (and probably are with all the other signals) over their hyphenless cousins, still seems unfair if there is a penalty though!
The sheer number of people doing it makes me wonder if at some point they'll implement it, if they haven't already.
http://example.com/something-about-something ?
Matt Cutts actually recommends using hyphens in this case:
Our own debate was whether to hyphenate a two word phrase in the directory structure: /kitchensink/whatever/ vs /kitchen-sink/whatever/. So we had to do a similar debate as the domain hyphen analysis. Spam signal/Google treatment vs. User Convenience vs. Does it really matter.
www.frictionlessowls.com
frictionless-owls.com
www.frictionlessowls.co.uk
So the takeaway I guess is that hyphens are bad but not as bad as having to use .co.uk :-)