Interland’s decision also reflects the increasingly prominent role of domain names in business strategy and the Internet economy. In announcing the name change, Interland President and CEO Jeff Stibel noted “significant direct navigation traffic” from Web.com as a primary benefit – meaning that Interland hopes to capture hosting business from web users who type “web.com” into their browser. Interland paid $4.8 million for Web Internet LLC, which will add about $75,000 a month in hosting revenues. A transaction at two times annual revenues ($2.4 million) would place nearly half the deal’s value in the domain name itself. Investment bankers have said shared hosting providers typically are acquired at 1.25 times revenue, and sometime less.
Web Internet LLC is an accredited ICANN registrar, which may offer opportunities for Interland to develop new business, and could also make it cheaper for the company to use discount domains for customer acquisition. Web.com has been selling domains for $6.95 a year, while Interland recently lowered its pricing to $7.95 a year. Current Web.com CEO Will Pemble will become an Executive Vice President at Interland and “focus on building Web.com’s consumer and registrar business.”
A domain trivia note: While web.com has become associated with hosting, it initially was used on a web site for a laundromat.