Domain Name Factor

BusinessWeek: Startups scrambling for domain names—the shorter and catchier, the better—find themselves in negotiations with owners of desirable Web addresses. Andrew Frame had several criteria for the name of his VoIP (Voice over Internet Protocol) startup. It had to be universally pronounceable, memorable, and short—ideally, no more than four letters and two syllables. Of course, the dot-com domain name also had to be available.
Some of these quirkily named young startups—Bebo, the social-networking site, and Etsy, the online crafts marketplace, for example—have caught on. Yet the naming trend has also drawn considerable eye-rolling among Web denizens, inspiring tongue-in-cheek pages like Web 2.0 Name Generator and the quiz “Web 2.0 or Star Wars Character?”
Among these domain-name buyers is Steve Luo, a hardware engineer from California. Luo started buying up four-letter domains early last year after he noticed that the relative scarcity of four-letter domains meant that even random combinations like rmnd.com were selling for many times the $9 or so they cost to register. Luo now owns several thousand four-letter domains, which as of recently included peeb.com ($4,000), qurr.com ($400), and wwuw.com ($900).
The idea that shorter domain names are more memorable, more “brandable,” and therefore more valuable has become so widely accepted that many entrepreneurs take it for granted. Domain-name reseller Sedo advises buyers that “a shorter domain means reduced risk of typo errors, easier memorability, faster type-ins, and more flexibility in promoting the domain. For these reasons, most businesses who can afford it buy a domain of five characters or less.” But are those businesses really getting what they pay for?
Does Success Hinge on a Domain Name? [BusinessWeek]