Why AI Companies Buy 10 Million Dollars Domain Names

Do you know that when you type ai.com into your browser, you’re going straight to ChatGPT? Right, this domain belongs to none other than OpenAI, and that’s not a coincidence. There’s something about short, memorable, and punchy domain names that make them absolute gems in the digital real estate world. But, how far are companies willing to go for the perfect domain name? The answer could be millions. Why do AI companies buy 10 Million Dollars domain names again? That’s what I want to talk about in this post. 

Domains are more valuable than you thought

Imagine the world in the late 1800s during the Gold Rush. People were staking claims to physical land in hopes of striking it rich. Fast-forward to 2024, and companies are staking claims to digital land. Only this time, the gold comes in the form of premium domain names.

Take Friend.com, for example. An AI companion startup named Friend just spent a staggering $1.8 million to secure that domain. That’s right! For a single web address ( aka domain name ), they dished out more than some people make in a lifetime. It raises a pretty interesting question: What makes these domains so valuable, and is it really worth paying such a fortune for branding?

How does branding infiltrate the consumer’s mind?

Let’s rewind a bit and look at one of the most iconic domain acquisitions of all time. You might have heard of Tesla.com, but did you know that it took 10 years and $10 million for Elon Musk to finally secure that domain? Yeah, Tesla.com didn’t just land in his lap like one of his rocket boosters returning to Earth. He had to chase it down with persistence (and of course a lot of cash).

This makes me think. Tesla didn’t have to buy that domain, did they? They could have operated under a different name or domain, right? Sure, by following the name of one of the most famous and talented inventors in history, Nikola Tesla, who is also a futurist like Elon Musk himself, what they really bought was something far more valuable: trust, memorability, and instant brand recognition.  When you hear Tesla.com, most people don’t just think of a car. It also brought the whole back story together with it, it’s a brand of innovation, clean electric power, and a greener future. This what you get by buying when you pay $10 million for a domain and what invaded into the consumer’s mind.

Build a Unique company brand

Speaking of Elon Musk, he’s also a firm believer in the power of domain names. Remember when he bought X.com? Elon would argue that it’s the best domain on the planet, and he may be right. It’s short, memorable, and, in true Musk fashion, mysterious.

Musk is so attached to X.com that he revived it for his Twitter rebranding. Now, I guess we can officially call Twitter employees XMen (see what I did there?).. But in all seriousness, the obsession with perfect domains isn’t just about cool factor; it’s about brand control. Acquiring a premium domain like X.com or Tesla.com gives a company a sense of uniqueness and prestige in this digital world, and this is true even for early-stage startups.

For instance, a mortgage startup called Better just acquired a domain called Better.com for $1.8 million. I guess the message here is that a mortgage with them is, well, “better.” It is better to have a mortgage than not, right?

But does the name really matter that much for a mortgage company? It turns out, yes, it does. Think about it: would you trust BetterMortgage.com as much as you trust Better.com? Probably not. Simplicity and credibility are king in the digital world, and shorter domains tend to convey more authority.

The Perfect .com or else

In 2024,  why is everyone still after .com domains? Aren’t there plenty of new options like .ai, .tech, or even .io? Well, while it’s true that new domain extensions are on the rise, .com remains the gold standard of online trustworthiness. It’s familiar, and more importantly, it’s universally recognized.

But, if you’re telling me that .com is still the king of domains in 2024, you’re probably right. Most companies know that .com still carries weight in the minds of most consumers. 

.AI vs .Tech are the Rising Stars of Domain Wars

Now, what about the trendy .ai domains? With artificial intelligence dominating the tech scene, you’d think .ai domains are becoming the new gold mine, right? Well, not so fast. The hash reality about .ai domains has certainly gained popularity, but they can be tricky. For one, they’re often more expensive than their .com counterparts. To make matters worse, some countries or organizations might restrict or even block .ai domains, which could limit a company’s reach.

Enter the .tech domain, the rising star of the digital domain universe. More and more tech startups are choosing .tech as their go-to extension.

According to web.com, the .tech domain is what they call ‘the ideal for technology businesses’. There’s a rising trend that tech startups are finding value in this domain. It is a domain that shows “cool factor” for younger startup founders and their innovation-driven companies who want to stand out in this super-crowded tech landscape.

A Domain is More Than what you think it is

At this point, you might be wondering : what’s the real value of these domain names? Do they bring something more valuable to the table? Here’s the thing: a domain name isn’t just a way for your online audience to find you online. It’s a brand in itself.

When a company spends millions on a domain, they’re buying into a whole package, including trust, authority, SEO benefits, and instant recognizability.

In a digital world, the attention economy is flourishing. Nowadays, our GenZ and even regular consumers have shorter and shorter attention spans: a memorable domain could make a difference between a potential niche customer choosing you over your competitor. And it does make a difference when it comes to helping your online audience find your brand when it cooperates with the right SEO strategy.

For instance, the following domain is called cvisiona.com. It is shown as ‘C’ and ‘visionary’. It show how the brand is serving the C-suite members at the startups, and their online content is related to the strategy and brand. The domain name is not only a web address, an SEO statement that draws targetted traffic, but: How do you see your business in this vast digital universe? So, I personally can totally understand why some companies are willing to drop big cash for the perfect domain name for their heart’s desire. They are not aiming for a web address but for a statement and the whole package after it. 

Is it worth it to spend millions on domain names? 

Now, back to this million-dollar question: Is it worth paying millions for a domain name? 

In some cases, this does make sense. For instance, when the domain name is the perfect match to the brand, it can amplify the company’s presence online and build instant trust with consumers. As the example at the beginning of our post shows, the domain name ai.com sells itself as a domain serving dominance in the AI world, which is why it drew Open AI’s attention in the first place.

But things play out differently if you’re a smaller startup, particularly when you’re still struggling to get funding. It is definitely not wise to spend the cash to get the luxury, but there’s always something simple, memorable, and relevant to your business. After all, it’s not just about the name. It’s about what you do with it.

Looking forward

If you enjoy similar topics, you can follow me here on Medium or sign up for my Medium updates and stay tuned to my newsletter. I have lots of content about AI startups to come because I’m really passionate about this topic, and I’m writing weekly to train my tech entrepreneurship muscle! Leave your thoughts in the comments below because I’m curious, do you think AI ventures are overhyped? Stay tuned, and see you in the next one!