Covet thy neighbour’s domain guilt-free
Envy may be one of the seven deadly sins, but if you’re in the online business world, a little envy (and a little cash) can get you the domain you desire. There is a growing market online where covetous domain name buyers bid on or negotiate a price to acquire their much desired domain from a willing seller.
The global domain name market
The market is split into two segments namely: the primary and the secondary domain markets.
The primary market includes all domain names that have not been previously registered or, have been registered in the past but have since expired. In other words, these are domains that are not currently registered by anyone and are open to the general market for purchase.
The secondary domain market (also referred to as the “aftermarket”) involves domain names that are already registered by an entity and which may or may not have a website on the Internet. Typically, aftermarket domain names are available for resale at a fixed premium price. Where there are more than one parties interested in the domain, auction houses may be involved to allow buyers and sellers to negotiate on price anonymously. Aftermarket domain names are usually more expensive because there can be a higher demand for them. US-based research company Zetetic revealed that in 2006, the average price was US$5,582, up 13 per cent over the previous year’s US$4,954.
How does the secondary market work?
If a domain is already registered and a party is interested in purchasing the domain, he or she may bid on or negotiate the price with the seller (ie the registered holder or current owner of the domain). For example, the domain example.com registered to Mr. Smith is put in the domain aftermarket for resale. Ms. Jones is interested in registering this domain for her business. Via the auction house, she is able to either place an anonymous bid on the domain or negotiate the price.
Multiple buyers: One domain name
The secondary market is fuelled by the common occurrence of multiple businesses wanting to secure the same domain name. This creates a high demand situation where the value of the domain name rises based on the bids from prospective buyers.
Factors that fuel the secondary market include:
Lax criteria on eligibility
The reality of global domain names is such that many popular domain name extensions are registered on a first-come-first-served basis, without any form of moderation. Registrants worldwide can grab any Global Top Level Domain or gTLD (.com, .net, .org, .biz, .info). Also, many Country Code (ccTLD) extensions like .co.nz for New Zealand and .co.uk for United Kingdom can also be registered without restrictions. Such an open and unregulated market naturally creates competition.
International expansion via the Internet
The nature of the Internet means that businesses are competing for names on a global scale. In the traditional, offline business world, a start-up would typically register their company name locally. Internationally, there could be two or more businesses operating in their respective local markets under the same name. For example, two separate companies, one in Australia and the other in the UK, may both coincidentally trade as John Smith Electronics without this creating any conflict to naming rights. The nature of online business is such that these two businesses may want to acquire Internet market share and develop websites to reach the International market. So in fact, while they are two separate entities based in different geographic markets, the Internet gives them the opportunity to gain market share globally. Thus, they could potentially compete to register the domain johnsmithelectronics.com.
Use of generic domains for online marketing
Often, some of the most expensive aftermarket domain names are “generic domains”, also referred to as “keyphrase” domains. The widespread use of generic domain names for search engine marketing has increased demand for this type of names.
Here are examples of generic (or keyphrase) domains:
Business Type: Sports retailer of football boots
Business Name: John Taylor Sports Pty Ltd
Main domain (website ddress): johntaylor.com
Keyphrase domain: www.footballboots.com
Business Type: Travel agent specializing in guided tours to France
Business Name: Ballarat Travel Centre
Main domain (website address): ballarattravelcentre.com.au
Keyphrase domain: www.franceguidedtours.com
Market speculation
There is no doubt that the work of domain name speculators has been a major contributing factor in the development of the secondary market. Just in the same way that people and businesses invest and speculate in the offline world (real estate is a good comparison), there are individuals and businesses worldwide who actively seek the acquisition of potentially good domain names for resale, especially exploiting loopholes in the trademark and domain eligibility registration legislation.
Opportunities and risks
Large businesses worldwide run the risk of having to spend large sums of money to “recover” domain names they wished they had registered in the first place. In New Zealand, Telecom NZ paid an undisclosed sum tipped to exceed AU$1mil to buy the domain name ferrit.com from a US based Registrant. Telecom NZ wanted to redirect this domain name to its New Zealand website ferrit.co.nz and avoid losing any traffic.Small business may not be prepared to pay such large amounts of money, which means they risk missing out on website traffic that the preferred domain name would have potentially generated.
The introduction of secondary market domains by reputable registrars like Melbourne IT means that businesses have an opportunity to obtain a domain name, even when this is actually already taken, by purchasing the domain from its existing registrant. The involvement of leading registrars in the secondary market has helped to establish an industry where buyers and sellers can operate confidently, without the risk of becoming victims of scams.
How can I tell if a registered domain name is “for sale”?
To check if a global domain name is for sale in the secondary market, simply visit Melbourne IT’s domain registration page. Type in the domain name to check its status. If the domain name appears with a dollar sign ($) or the message “Premium Domain Name” appears, the domain name may be purchased from its existing registrant (or owner). Melbourne IT can help carry out this transaction.
To learn more about Melbourne IT’s Premium Names and the secondary market call 1300 132 838 and speak to one of our expert consultants.
June 19th, 2007 at 1:11 pm
Regarding “Get the domain name you really want” .. How do you stop someone squatting on a domain name and offering it for sale when they have no legitimate use for it. Can a domain name be revoked from someone who is not using it and is merely hoping that someone will purchase it at an axorbitant price. What about the case where it is a company name?
June 19th, 2007 at 3:40 pm
So does MelbourneIT believe the .au market will be opened up to buying and selling? It appears this is already happening underground anyway – eg jobs.com.au sold for reportedly $500,000 to someone on the auDA Names Policy Panel of all people!
June 20th, 2007 at 8:03 am
How is it that your making money registering domain names infringing on trade marks that are in place before domain registration. Is that not sell property that doesn’t belong to you? Are you not profitting from theft? I recently challenged a domain registration through auDR only to loose. Being as I have to sign an agreement not to sue on the findings. Tell me how is it that I the owner of the trade mark “Airtowel” can be robbed in this way?
June 21st, 2007 at 9:03 am
Hi, I thought selling .au domain names was not permitted (fines may apply). Was this ever the case? Has it changed?
From my understanding, in order to purchase a .au domain, a purchaser was forced to acquire the domain as part of a business sale or other such linked mechanism.
Regards,
Richard.
October 11th, 2007 at 1:55 pm
Perhaps it may be useful for some readers to research the Supreme Court decision in the case of
The Architects Australia Pty. Ltd. trading as Architects Australia v Michael Witty Architect.
Mr Witty was ordered by the court to hand over the domain name architectsaustralia.com.au to The Architects Australia Pty.Ltd which had been trading as Architects Australia for 20 years.
December 18th, 2007 at 9:57 am
The Australian Domain name Governing body (AUDA) has just flagged its intention to open the market to legitimate trading in .com.au domain names. This will allow you to purchase already registered domain names from other people legitimately. Sounds like a great Idea to me.
Paul
December 19th, 2007 at 10:21 am
So what will happen with .au registrations ? will .com.au convert to .au ; or will there be a new round of applications submissions and money payouts and another domain extension to reregister every year ? .
March 6th, 2008 at 12:40 pm
Owning a company name that is an exact match, acronym or abbreviation of the domain name you want doesn’t gaurantee you will ultimately be the licensee of the domain name you’re seeking. Neither does owning a registered trademark or product/service. It’s a first in first served basis. ENSURE YOU REGISTER all the available country extensions of the domain name/s you seek, as brand protection.
Any .com.au or .net.au domains not available to you, because they’re already taken, can be disputed with AUDA. Yes there are costs, and no you might not win. You have to prove that current registrant has no right to the name under the current policy regulations.
Protect your interests from the onset and if you’re serious about acquiring a name, and so sure you have a legal right to it beyond that of the current registrant, then contact AUDA and begin proceedings.
At least in the future you might be able to ‘legally’ negotiate a purchase for the domain name. Previously this was done by way of selling a website or company and including the domain name, or all intelectual property in the bill of sale.
The new policies should appease the people who have commented here as it provides a possible avenue to obtain the name they’re after. Speculators will hopefully be detered by the 6 month holding period before a sale can be made on a new registration.
Do your research before registering a business name, or naming a new product, so you’re not disappointed. Alternately you might consider changing a product to fit in with a domain name available to you. Think beyond your boundaries and be creative.
March 6th, 2008 at 6:26 pm
Does anyone care to explain how a 6 month holding period is going to deter speculators? These guys hold domain names for years and years waiting for someone who comes along that needs it. 6-months will make no difference.
All MelbourneIT have done is paved the way for an avalanche of defensive and speculative domain registrations – no doubt a big revenue earner for them. And at the same time, they will be raising the barrier of entry for small business and start ups that want to get online – the very entities that have been the cornerstone of online innovation up till now.
The days when MelbourneIT could be regarded as a good Internet citizen are over. Now they’re just cashing in on their real estate.
March 26th, 2008 at 11:54 am
Melbourne IT have not implemented this strategy and despite popular belief they are not a regulator of .au name spaces. This task falls to AUDA the governing body of all things .au related.
This attack on a registrar, of which Melbourne IT is just one of many registrars in the world who handles .au domain name spaces on behalf of customers. is misguided and clearly misinformed.
Melbourne IT, just as all other .au registrars, is bound by conditions placed on them by AUDA.
****All thoughts and criticisms can be directed to AUDA, where space is provided on their website, and will have a far more constructive impact rather than singling out a registrar who doesn’t make the rules, but simply has to abide by them.