America.com, assumed to be one of the web's most valuble addresses, has disappointed its owner by failing to sell at auction, prompting fears that the property slump has spread to digital real estate.

Bidding last week reached only $1.71m, millions short of the seller's expectations. Prior to the auction some in the domain business had speculated that America.com would top the $12.5m paid for Sex.com.

The world record price for a domain was smashed last year by the sale of Business.com to a phone directory publisher for $350m.

The America.com auction was run by domain reseller Sedo for an unidentified owner. Nora Nanayakkara, the firm's director of business development said: "The fact America.com didn't hit its reserve price belies the fact bidding did reach a huge valuation but the seller understandably has very high expectations for that domain."

"However, sometimes it is just a case that the extent of the paperwork and due diligence required on the part of the most determined buyers is simply at odds with the time left to bid in the auction. Buying a multi-million dollar domain name is not quite so easy to reconcile on the spur of the moment as buying concert tickets on eBay, even when the business case is rock solid."

Others are wondering whether America.com's failure to hit target is the first sign of the global economic downturn hitting the domain business. ®

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