Domain parking is an extremely inexpensive way to secure a domain for later development, redirection of Web traffic, or re-sale. Domain registrants, or sellers, commonly offer domain parking free with domain registration, as there is virtually no cost involved with domain parking.
A parked domain includes one simple page. If the site is intended for development, the page will indicate it is under construction or coming soon. Domain parking can be renewed annually, and there is no deadline as to when a site need be developed. You might find you don’t have time, or you might decide to let the domain expire at the end of the contract, typically one year. In this case, the only investment lost is a few dollars.
If you decide to develop your domain, you will need to pay for hosting services at that point. The right hosting service will provide enough space for your website and any special scripts or services you require. Once the domain is being hosted, it is no longer parked.
If you already have a successful site, another use of domain parking is to secure addresses similar to your main website and redirect traffic there - an inexpensive way to protect your website. For example, wiseGEEK.net redirects traffic to the proper site, wiseGEEK.com. The first domain is parked. The parked domain need not reside on the same host server as the main website.
Some people use domain parking for the sole purpose of ‘re-selling’ the address - transferring ownership to a buyer for a fee. This occurred more in the early days of the Internet, when major companies had yet to arrive and were willing to pay a high price for their trademark names. Laws were eventually enacted to protect trademarks, but a parked page can still advertise the sale of a domain.
If interested in domain parking, keep in mind a few considerations. Most domain registrants offer hosting services, but you may or may not want the domain seller to host the domain once it is no longer parked. Be sure to check that the domain seller does not retain any rights to the domain. The buyer should have the power to control the domain’s registration information, and most importantly, the ability to transfer the domain to an independent hosting service when and if desired. Check to see whether a fee is associated with transferring the domain.
Domain registration once cost over 60 US Dollars (USD) per year, but today a domain can be had for as little as 5.99 USD annually or less. Hence, domain parking is an attractive proposition.