This guide examines blue chip domain name characteristics and pricing. Blue chip domains, like blue chip Dow Jones Industrial Average (DJIA) stocks, have a long term history of positive growth (increase in market value) and income (recurring revenue: monthly ad income for domains or quarterly dividends for stocks.) More than 170 million domain names are currently registered, but less than 1% of them can be described as blue chips.

Characteristics of blue chip domains:

• Generic. Dictionary words, phrases, place names, products and services. No intellectual property infringement. Recommended reading: US Patent and Trademark Office website.
• Short and easy to spell. Less prone to typing errors and traffic loss.
• Dot com extension, the default choice of many users and browsers.
• High natural type-in traffic. Some users type domain names with extension directly into their search box or address bar, bypassing search engines. Keyword search frequency is a predictor of type-in traffic. KeywordDiscovery and Wordtracker are free tools offering keyword search frequency data.
• Keywords that attract high bids from advertisers. Adwords free keyword tool includes a cost-per-click (CPC) estimator.

Price:
A useful stock value metric is price/earnings (P/E) ratio, price divided by annual earnings per share. The DJIA trailing 12 month P/E ratio was 47.71 as of 29-may-2009. Unlike stocks, domain P/E data is often unavailable to the public, and the long term viability of domains is less certain. Domain risks include but are not limited to internet architecture DNS changes, overreaching infringement claims and lack of transparency within the pay-per-click (PPC) ad industry. These risk factors explain why investors pay a smaller premium of approximately 5 to 20 years earnings for blue chip domains.

Conclusion:
Blue chip domains are suitable for development but can also produce income with no website design, development or operations. The passive investor can simply park the domain with a PPC parking service and collect monthly income comparable to stock dividends or bond interest. Be extremely discriminating about quality and price when buying domains. Ninety-nine percent of domains offered for sale have no positive attributes and are unworthy of registration. Invest wisely, good luck!