At the beginning of 2009, America’s number one toy retailer, ToysRUs, survived the bidding battle over the domain Toys.com and anted up $5.1 million for it. Some people were flabbergasted, wondering why on earth anyone would pay that kind of money for a domain name. Leaving off the dot-com part, that is more than a million dollars per letter. Does this sale represent some sort of new dot-com mania, or is it a rational business decision and investment? A brief background in domain names will help clear this up.

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