First of all, many of the truly great domain names are already taken. Second, the dot com bust took some of the wind out of inflated domain name prices. (If you sell your domain name for millions of dollars worth of stock in a publicly traded dot com flop, what is the name really worth?)

The cybersquatter buys domain names totally on speculation. Sometimes he will register names of famous brands, companies, or individuals. Time and again, these domain name speculators learn the hard way that they must respect intellectual property rights. They hope that some large corporation will pay big bucks to them for the use of the company`s own (already trademarked) name. Instead, they end up with threatening letters from a law firm for their attempts at extortion.

However, you can still make money from domain names if you are sensible in your approach. Here are some suggestions on ways to profit.

1. Affiliate Programs: Use your domain name to promote an appropriate affiliate program. Either redirect to the affiliate site or write a review that links to them.

2. Informational Sites: Create content and then profit from it by earning advertising revenue through Google AdSense or a similar program.

3. Redirect to Your Own Site: Some reasons you might want to do this include preventing competitors from using a particular domain name and benefiting from searches some users perform by domain name. (For example, if they wanted to order flowers, they might just type "flowers.com" in their web browser. You could get some traffic and sales this way.)

4. Product Sites: Create your own or sell someone else`s product appropriate to your domain name.

5. Park Your Domain Names: You might feel that your name has real potential for resale value. There are companies that will allow you to park your domain on their servers, advertise that your name is for sale, and split advertising revenue with you.

The trick is to generate traffic for your domain name. That traffic in turn will create revenue. Then, when you go to sell your domain name, you will have a few things going for you.

First, you will have a fully developed website. A fully constructed building on a piece of land increases the value of the real estate property. Similarly, the value of your domain name is enhanced by a complete and operating website.

Second, you have traffic. Just as a shopping mall with no traffic results in no sales, so a website must have traffic to generate income.

Third, you have income. An income property, such as an apartment building, can be appraised on the basis of its income (as well as other factors). Similarly, the gross income, net profits and cashflow of a website have value. For example, if someone offered you $1,000 for your domain name and website when it was generating $10,000 per day in profits, you would likely laugh at him.

You really can profit from your domain name investments by adding value and properly developing your web properties.