I have an idea, and would like to pursue it. Whether or not it becomes big enough to create a startup from it I don't know yet.
I have search for other web sites that provide the same service, and have not found one. But I have struggled to come up with a name for the service that also has a free web domain (most of them have squatters sitting on them and they can just go do one). Then I came up with one, checked it online, and found that the .com version was the only one that was taken. But the .com version had a website with "coming soon" (since 2008) on it, and you can sign up for alpha testing when it becomes free.
That's a lot of blah blah, so here's my two questions:
All other additional thoughts and comments are most welcome.
Keep in mind that you can have a domain name that doesn't exactly map to the product name. Look at the products by 37signals. Their domain name for Basecamp is basecamphq.com, Campfire is campfirenow.com, and Backpack is backpackit.com.
I would say try to come up with a domain that you can get a .com for. This is because when it comes to marketing people often do not remember that its example.net instead of example.com. They will see that it is under construction and leave.
There is almost no idea that does not already have at least 1 site already semi accomplishing the goal. I would not let this deter you from moving forward.
It sounds like they're dead, but you never know.
The biggest danger is that if you get invested in what you're doing, then they come to market with their product, technically they have a prior right to use that name and worst case you might have to change names, undoing any marketing you may have done up to that point.
Pick something different and witty, get the .com, and be original.
Just be original. I'm afraid you will HATE yourself for going the .net route down the line.
This may be your worst problem: potential customers will accidentally email the .com and not the .net, and since the competitor may be at the .com, they'll be getting your inquiries. Ouch.
A note about your competition, if they are still 'coming soon in 2008' don't worry as much. Google them, search the guys on whois, chances are something has gone wrong.
Don't rule out the "domain after-market" (e.g. SEDO.COM, Afternic.COM). In this economy, the owners of domains that aren't developed are often quite willing to make a deal. You may be able to get the perfect domain for less than you think. Depending on your budget, the right (memorable, short, .COM) domain name is totally worth it.
Also my site, HotNameList.com will help you search for available COM domains for free.
I also made a StackExchange site, AskAboutDomains.com, for helping people with domain issues. :)
First: Branding is important, but don't get too hung up on it at first, or nothing will get done. If you are married to your name, I would suggest 3 approaches:
Facebook.com was purchased for $200,000 after the company was incorporated (and after substantial funds were raised.) If you ask me, it was a $200k well spent because thefacebook.com would not have cut it.
A .com address is generally better. Unless this domain is something like bestnewyorksushi.com, I doubt you'd need to worry about a copycat.
Basically, you're worrying too much about non-issues. Create and launch your site and try to get some users and customers.
You have to be prepared. They probably are doing the same idea but in a different way.
Anyway, you shouldn't quit because of that. There's always space for more than one product in the market!
Keep working on coming up with a name. It doesn't have to relate to anything you do, as evidenced by Yahoo!, Google, Amazon, FogCreek, StackOverflow, etc. There is no perfect name, and most of the names you think of will be taken.
As for competition... if it's a good idea, it will happen. Whether it's already there or has yet to happen, it's a fact of life. Someone with more money and knowledge than you can always recreate exactly what you do... or what anyone else does. That's just part of life.
"is it worth buying the .net domain and using that?" Emphatically no.
There are plenty of better options available.