DomainTools Blog

“Dictionary.com’s success is built on its unique, descriptive domain name and simple, straightforward interface,” explained Bruce D. Smith, Chief Strategic Officer of Answers.com. The sale involves three built out domain names, Dictionary.com, Reference.com, and Thesaurus.com. These properties attracted 11.5 million unique monthly users in the U.S. during the month of June 2007 according to comScore. They generated revenues of $7 million, EBITDA of $2.9 million and net income of $2.8 million in 2006. Buying these three domains is a huge victory for Answers.com.

I recall that Google linked to Dictionary.com for definitions of words in the upper right corner of every search page. Then one day Google linked to Answers.com instead. It seemed like a huge victory for Answers.com that they got featured instead of Dictionary.com. I don’t know the back story but I am sure people inside of Google were tired of all the pop-ups on Dictionary.com and they just linked to a better place. The built in dictionary on Google.com is a huge source of traffic. If a word is spelled correctly then Google links people over to the dictionary definition, but if it is not spelled correctly then no hyperlink is applied to the word. I use these feature all the time to spell check things. I am ashamed to say it, but I don’t think I could spell tongue twisters without Google. When Microsoft Word fails I know Google will solve my spelling error. Who says a Search Engine is only good for find documents on the Internet. I use it as a dictionary too.

The sale of Dictionary.com to Answers.com represents a sale of Generic domain names with some elbow grease thrown in to make them sparkle. When you find a diamond in the wild it has a wholesale price, but when you take that exact same diamond to a cutter, you can make it sparkle and shine. The diamond gets a new wholesale price. Finally, a jeweler buys the diamond and mounts it on a ring or necklace and the value goes up again. This is what we have seen happen to Dictionary.com. A Generic domain name is valuable but not as valuable as when a team of programmers sits down and polishes it up. When the generic domain name perfectly converts visitors and leaves no doubt that anyone else could do a better job in that sector, this is when you know the domain name is worth selling at the multiples you see in this deal.