Why Are .ai Domains So Expensive?

With the increasing influence of artificial intelligence in the tech world, AI domains are on the rise. Since the release of ChatGPT, the interest in AI domains has gone through the roof, with the number of registered .ai domains increasing by about 250% since then. These domain names have become valuable assets to both start-ups and established businesses alike.

In this article, we’ll explore why AI domains are becoming so expensive and how they compare to classic domains like .com and .net.

What are .ai domains?

To determine what makes the .ai domains expensive, we need to first understand what .ai domains are. Originally, the intended use case for .ai domain names was to be used by entities connected with Anguilla, a British overseas territory in the Caribbean. Instead, it’s mainly used with companies working in the artificial intelligence industry. Because of this discrepancy, google’s ad targeting treats it as a generic top-level domain, so on the same level as .com domains.

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What makes .ai domains expensive?

The price of .ai domains is dictated by the Anguillan government since they are the ones managing the .ai domain registry. Because the .ai domains are so popular, the Anguillan government can set a high wholesale price for them. This ends up affecting the retail price for these domains, as retail registrars end up setting a high retail price because of the high wholesale price.

In fact, these domains are so popular that Anguilla earned $32 million from the sale of .ai domains last year, which accounted for over 10% of the island’s total GDP. With a business like that, it’s unlikely that prices of .ai domains will drop as long as the demand for them remains high. Whoever came up with the idea to monetize these .ai domains likely ended up with a high-end 6 figure salary.

The number of registered .ai domains skyrocketed after the release of ChatGPT in November 2022. (Source: originality.ai)

.ai vs .net and .com - What’s the difference?

When choosing a domain for your new website or project, it's important to understand the differences between popular options like .ai, .com, and .net. Each has its own advantages, depending on your business or website's goals. Let’s break down how these three extensions compare:

.ai domains:

• Originally designated for Anguilla, it is now popular with AI and tech companies due to the “AI” abbreviation.
• Growing rapidly in popularity due to the artificial intelligence boom.
• Seen as innovative and tech-forward, making it attractive for startups and AI-related ventures.
• Many times more expensive than .com and .net

.com domains:

• The most widely recognized and used domain extension globally, standing for "commercial."
• The default choice for businesses and websites across all industries.
• Considered reliable, established, and professional, though .com domains are often more expensive and harder to find due to high demand.

.net domains:

• Originally intended for network-based businesses like ISPs, but now used for a variety of websites.
• Less common than .com, often seen as an alternative when a .com is unavailable.
• Reliable but less prestigious than .com; sometimes viewed as second-tier in comparison.
• The cheapest option

Expensive, but worth it

We’ve established that .ai domains are much more expensive than the more common .com and .net options(though it’s not nearly the most expensive option available). But why would a company or a startup pay such a premium to register a .ai domain when they could save money with cheaper alternatives?

It all comes down to brand visibility. If a company offers an AI-related product, using .ai in their website name can make that point clearer to their audience. This is especially important because of the growing mainstream adoption of AI. With the growing demand for AI-based solutions, it's crucial for a company to position itself as an AI-focused brand to attract more traffic and engagement.

A company is also much more likely to get a desired domain since the list of available domains ending in .ai is much higher compared to .com or .net.

Perhaps the most important thing is that Google changed how .ai domains are treated, meaning the search engine sees it as a top-level domain, whereas previously, it was seen as a country code top-level domain(ccTLD).

The bottom line

Domain names are crucial for brand visibility. While .ai domains are more expensive than traditional options like .com and .net, they offer unique value for AI-focused businesses. With increasing demand for AI solutions, using a .ai domain can help companies stand out, improve brand recognition, and secure a relevant, memorable domain name. For businesses working in artificial intelligence, the investment in a .ai domain can be worth the cost to reinforce their identity and attract the right audience.

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