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You need to know a little about the Domain Name Service (DNS), which gives names to computers on the Internet. When you send email to john.smith@gmail.com, the DNS system tells your email client which email server to send it to.
There's some more jargon. A client is a piece of software (a program) running on the computer on your desk or in your hand (your local machine) that connects across a network to a server to access whatever service that server offers. A web browser is a client, because it fetches web pages from web servers.
If your local machine is a smartphone, the client is called an app (short for application software) That's just a program by another name.
Strictly, you don't buy a domain, you rent it via one of many DNS providers. The sense in which you own it is that as long as you keep paying the annual renewal fees, nobody can take it from you. Also you can sell it to somebody else. Essentially you have a lease entitling you to use the domain, you have first refusal when it's due for renewal and you can sell it to somebody else. If you don't pay the rent, you lose the lease.
Only one organisation can use a particular domain. Ideally you want a short domain name that matches your organisation's name. If you are setting up a new organisation, I suggest finding a suitable domain name that nobody has already bought, then naming the organisation after it. Buying a new domain is cheap - $20 per year or less. Back in the 1990's, a few people made a lot of money by buying domains and then selling them on. As a result if you choose any word in the dictionaries of several languages and add ".com", that domain has already been bought by somebody, and they will try to charge you a lot of money for it. This is why we have websites with names like zettle.com and shopify.com - nobody else had thought of buying those names.
For a profit-making business, it's best to own a .com domain. A non-profit organisation can use a .org domain. Those are the main "international" domains. You have as much right to use them as anybody else. There are also equivalents for each country - here in the UK we have .co.uk and .org.uk domains. The problem with those is, people easily get confused. If you own the domain birdwatchers.org.uk and somebody else owns birdwatchers.org or birdwatcher.com, they will probably receive emails meant for you but not vice versa, Owning a .com or .org domains is always better. For similar reasons, if you buy a .org domain, it's best if you can buy the .com domain as well, if only to stop anybody else using it.
You have to be creative and flexible when choosing a domain name. Don't do it in a hurry. I wanted to set up an organisation called Accurate Location, so I wanted to buy the domains accuratelocation.org and accuratelocation.com. Somebody else had already bought them but accurateposition.org and accurateposition.com were available. I bought them and set up an organisation called Accurate Position.
To find out if a domain is available, go to your DNS provider's website and try to buy it. The first thing it does is to tell you if it's already taken and if it is, whether it's for sale. (If it's for sale and you can't easily see the price, this is probably the time to try another choice of name.)
Most DNS providers also provide hosting. If you follow the advice here, you will provide your own hosting. You need a DNS provider that allows you to do that. If you've already bought your domain and your DNS provider only allows you to use their hosting, you can transfer the domain to another provider for a small fee.
Throughout the rest of this document, I will assume that you own the domain example.com and you have full control over it. Wherever you see "example.com" below, replace that with the name of your domain.
Domain names are hierarchical. "com", "org" and "uk" are top-level domains. The domain example.com is a sub-domain of com. If you own it you can create further subdomains www.example.com, mail.example.com, and so on. There are some conventions but the subdomain names are your choice.
Each of your servers should have at least one name, but it can have more - one server could be called example.com, www.example.com and so on.
There are two common situations. One is that you are starting from scratch. You want to buy a domain and create a web server to house your website. You also want to send and receive email, so you need a mail server. To achieve all that, you buy the domain example.com (or whatever) and create subdomains www.example.com and mail.example.com. You call the machine running your web service "example.com" and "www.example.com".
The other common situation is that your web design company has bought the domain name for you and they control the domain records. This is VERY BAD because your entire public image depends on some other organisation staying in business and you have no way to insure that it does. You should get an account with a DNS service and demand that the design company releases the domain into your control. It's safe to let them provide hosting for your website, because that's easily changed, but only once you have control of the domain records.
A hosting service provides computers on the Internet for rent on which you can run your web server, email server or whatever. (Another potential confusion: the word server can mean a computer offering a service or the piece of software running on the computer which provides that service. Once you understand that, it's usually obvious which is meant from the context.)
Most DNS providers offer hosting, but the facilities can be limited. This document assumes that you are going to rent your own "cloud" computer, with which you can do anything you like.
This computer that you are going to rent is not real, by the way. As you will see, you can magic one into existence in a minute or so and remove it again just as quickly, which is a clue. There isn't a little man somewhere running around setting up and tearing down equipment for you. What's really going on is that the hosting provider has rooms full of very big computers which are pretending to be lots of smaller computers. What you are renting is a virtual server (or a cloud server, which is the same thing but sounds more impressive).
Lots of companies offer virtual servers, including the mighty Amazon. Digital Ocean offer a service which is especially suited to small organisations, and that's the one I use. They call their virtual computers "droplets". You can rent a droplet for as little as $5 per month and run a small website on it.Just to ram an important difference home: your hosting service provides a rented virtual computer (a machine) acting as a server connected to the Internet that you can use to provide services. Your DNS service tells the rest of the world where to find that machine so that they can access those services.
I use a DNS service called ionos.com, which is very easy to use but a little more expensive than some. I've also used namecheap.com, which is cheaper, but has a user interface that's a little more cranky. Many other DNS services are available.
(One thing about the Ionos service is cranky: if you go to the website www.ionos.com to buy a domain and their system detects that you are not in the USA, it will redirect your web browser to a regional website, in my case the UK site www.ionos.co.uk. Confusingly, the regional website holds your account, and www.ionos.com knows nothing about it. If you go back later to www.ionos.com and try to log in using the user name and password that you set up on your first visit, it won't recognise you. You have to go to your regional site and log in to that.)
Fees for domains vary between DNS providers. Beware of "special offers" on new domains. Check the renewal fees before buying. It may be cheaper in the long run to go elsewhere.
If you don't already own your domain, choose a DNS provider, choose a name and buy it. Once you've done that, you can rent a server.