With the continuous growth and evolution of the digital market, an increasing number of individuals are putting their money into digital real estate. This form of investment does not necessitate a substantial upfront capital, and it is not associated with the immense risks commonly found in other markets.
If you are considering entering this market, here is the information you need to know about digital real estate and how to acquire a portion of it.
Digital Real Estate
Real estate investment is a concept that most people are acquainted with. Essentially, it involves the straightforward process of purchasing a house or plot of land with the intention of renting or selling it for financial gain. Digital real estate operates in a similar manner, wherein every domain name, website, and blog found online can be considered as internet property. These digital assets can be bought and sold in a comparable fashion to physical properties such as houses, apartments, and land.
There are individuals who exclusively earn their livelihood from buying and selling domain names and websites. Certain domain names are sold for millions of dollars, and websites are frequently acquired for significant sums of money. It is indeed possible to generate income through digital real estate as well.
How to invest in digital real estate
Many people avoid investing in websites because they think they need technical knowledge and web design experience to build and manage a website. However, the truth is that it does not require advanced skills in these areas.
Setting up a website and investing in digital real estate no longer requires any prior experience. The availability of new technologies and free software platforms, like WordPress, has greatly simplified this process for beginners. Nowadays, it only takes one click to establish a website.
There are two options available for investing in digital real estate: One is to create a website yourself starting from nothing, and the other is to purchase a pre-existing website.
Each strategy has its own advantages and disadvantages. When starting a website from scratch, it requires a small financial commitment, although significant effort is needed for its success, and it will be a considerable amount of time before you can sell it for profit. On the other hand, opting to purchase a website will involve high costs, but since the site is already generating profit, you can achieve a faster return on your investment.
It is possible to invest in digital real estate without prior experience. Setting up and operating a website takes only a matter of minutes with the help of website platforms.
Where to buy established websites
If you possess sufficient funds to purchase a pre-existing website, there are numerous marketplaces available to you, where you can explore and find websites that are up for sale.
One way to start your search is by using Flippa, a popular marketplace. This platform enables you to take part in website auctions and purchase websites that are already profitable. The listings on this marketplace display the monthly income generated by the site and the specific strategies it utilizes to earn revenue.
When purchasing websites, it is important to be cautious about the reliability of the listings. It is crucial to conduct thorough research to ensure that your investment does not become futile.
Before purchasing a website, it is advisable to analyze its SEO, backlinks, visitor count, and other statistics using tools such as SEMrush. Alternatively, you have the option to employ the services of a website brokerage firm like FE International to handle the exhaustive tasks for you and assist in identifying a suitable website for your investment.
Make sure to conduct your own research when purchasing a website to ensure that your digital investment is worthwhile.
The risks of digital real estate
You may have already identified a few fundamental issues regarding the “value” of digital real estate. However, let’s explicitly acknowledge them for clarity by placing them on the table.
1. No scarcity
Due to the limited land on earth, the availability of land for purchase is also limited. Consequently, the demand and value of real estate rise when more individuals acquire it. However, in the digital realm, anyone can create a duplicate of something without any restrictions.
If a world exhibits potential, it is possible to create a new server and reproduce the same thing. (However, it is common for individuals to prefer the original. Consider the numerous imitations of Angry Birds, yet the original version remains dominant.)
If a digital world gains popularity, one could argue that the scarcity lies in the opportunities present within this world. It is preferable to purchase property in the heart of the most popular area rather than in a less populated digital region. However, the laws of physics do not impose a definitive limit on the number of objects that can occupy a particular space.
In the physical world, it might be true that “this town ain’t big enough for the both of us,” but in the digital realm, we have the potential to accommodate countless identical experiences simultaneously.
2. No foot traffic
In the digital world, the attention of users is the scarce currency, rather than space. To illustrate, operating a liquor store on the Las Vegas strip would likely result in numerous sales solely from the passing pedestrians, whereas in the digital realm, the notion of navigating through adjacent platforms is nearly non-existent. The transience of user attention is evident in digital encounters – it can be obtained and lost rapidly.
If a user desires to have an experience, they can either insert a URL, select a link, or enter a location, and they will be taken directly to that experience. They don’t have to get into their car and drive back home, passing by your storefront continuously and being reminded of the quality of your product; they merely vanish.
3. The off button
All digital operations require a server to function, and at any given time, it is possible for someone to shut down that server, leaving you without any control over the situation.
In the event that the world you created is destroyed by someone pressing a button, everything you have built on it will disappear without a trace. Any expenses you have invested in it will go to waste. Your only option is to take legal action against the person responsible for pressing that button, but doing so is likely to be challenging as they have likely anticipated this consequence and planned ahead.
If Shopify were to shut down its servers or if Medium were to deactivate its site, everything created on them, including all content, accounts, and built audiences, would disappear completely. Although these brands have a certain level of responsibility and legal options for addressing such issues, the situation becomes more challenging in the vast and unregulated realm of the digital world. Hidden behind the anonymity of a keyboard, individuals can be extremely difficult to locate, if they can be found at all.
Mitigating the risks of digital real estate
Given the amount of risk involved, what is the potential opportunity?
1. Don’t buy, rent
You can reduce most of this risk by limiting the amount of time you spend in a digital world.
Instead of investing in something, it appears more like sponsoring when the creators of a digital world create the core experiences and benefit from the popularity of those experiences. By doing so, you can be present in the current user base, maintain involvement only while it remains valuable, and exit when it no longer offers potential.
If you believe that a digital world will continue to be a good investment opportunity, it might be wise to invest in a metaverse company as you would with a startup, rather than solely investing in their product which may not have a long-lasting presence. This approach provides you with legal protection and the potential for a stronger overall opportunity.
2. Think like a developer
If you want to exist in the digital world, it is necessary to generate a worthwhile experience in order to take advantage of your existence.
By thinking systematically, reword the following passage while retaining its original meaning. Do not introduce new information and do not omit any information. This entails generating or offering something within the digital realm that possesses inherent worth to those users. Analyze their preferences, sources of entertainment, motivations, and determine how you can deliver something that would genuinely add value to their experience.
It is possible that you will become a digital experience developer or utilize the skills of an existing developer network in the field you are working on. Merely investing money without careful consideration will not yield growth. It is essential to thoroughly evaluate the genuine possibilities associated with a particular location in this specific realm.
3. Take notes on what currently exists
The topic we are exploring might be difficult to comprehend as it is often linked to trendy terms like blockchain, VR, metaverse, which can be vague since they are relatively new. However, these concepts have little relevance to the actual definition of a digital property.
Consider Fortnite as an example. It is a highly popular digital game worldwide, known for occasionally organizing virtual concerts. During such events, your character gets transported to a designated island. Apart from featuring stages, this island also offers various games and experiences that are spread out across the area.
These events are frequently sponsored, such as a Monster Energy Target Shooting or Epic Games Flight School. They offer a meaningful experience at a specific location, catered exclusively to users present in that virtual world at that particular time.
In some cases where advertising is not the sole purpose, users in a specific location provide something that investors appreciate, creating a positive association for that brand and sometimes generating revenue.
How to profit from digital real estate
Once you have obtained or created your website, it is important to consistently produce content in order to attract visitors and generate traffic. Utilizing Google’s Keyword Planner can assist in generating ideas for your blog by incorporating words that are already being searched for by people.
If you are overwhelmed with writing blog posts and promoting your website, consider hiring freelancers who can create content for you. Affordable freelancers are available on platforms like Upwork. Once your website starts receiving sufficient traffic, you can earn money by monetizing it. Here are a few methods to generate revenue from your web traffic.
To generate revenue from website traffic, one can either sell ad space directly on the website or opt for an ad network like AdSense. Clicking on the ads allows you to earn income.
Affiliate marketing entails the promotion and sale of products made by other companies. When a product is purchased through your affiliate link, you receive a commission from the sale.
One option is to produce and offer your own products, such as e-books, online courses, and software, for sale on your website.
Sponsored content involves advertisers approaching you to sponsor blog posts that endorse their brands and products, which entails receiving payment for writing about their products on your blog.
Eventually, you might begin earning a profitable income from your website. At that point, you have the option to either sell it for a profit or continue expanding the site as a source of revenue. The decision is up to you.
You can invest in a website or a blog without having to open your checkbook or empty your bank account, which is a positive aspect.
The negative aspect is that, unlike the case with stock or real estate investments, the value of your digital real estate will not naturally appreciate if you do not take any action. It is essential to dedicate effort towards improving your website and boosting its worth. Ensure that you are willing to invest the necessary work before expecting a financial gain.
