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Domain Investors or “Domainers” are often hated, but is this fair?

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If you have ever tried to register a domain, you have likely encountered the work of Domain Investors. The business model of a domain investor, also known as domaining,  is on a basic level, quite simple. Their goal is to find a domain they believe will be in demand and register it for the purpose of reselling it at a profit. Alternatively, if the site generates traffic they may use it for an advertising-filled site that provides no real value to the public, but will generate revenue for the registrant.  Domain investors, or “Domainers”, as they are called, register hundreds of thousands of domains for their purposes. They can invest very little per domain, to walk away with a big payday, if they pick a winner.

There are multiple arguments for and against the Domainers business model. Often, The loudest negative voices come from those negatively impacted by domaining. The scenario is all too familiar. You have an idea, you think up a great name, you go to your registrar and you get the dreaded “this domain name is unavailable” message. Logically, you go to investigate.  When you arrive you find a generic advertising page, known as “cash parking”. Or, you may just find a message indicating that the domain is for sale. They have your ideal domain name, and they aren’t even using it for anything. Worry not, it seems they will sell it to you. So you click the link, thinking maybe you can afford it. You visit and find the asking price is way out of your range. Bummer.

The scenario above is one that many who have developed web projects have experienced. Some angry folks take to Domainers blogs and emails to show their frustration. I found an example of this on DomainInvesting.com, a site aimed at Domainers.  In a post, the author relayed a message that he received referring to him as “scum”.  The comments from this post are a good example of the sentiments of both sides, with many feeling that Domainers are the worst kind of people. Many believe that domainers are ruining the internet, and depleting the supply of “good” domain names. On the other side Domainers vehemently defend their position. They say that their business is not only legal, but legitimate and acceptable.

Domainers are correct in that their businesses are legal. There are no laws against purchasing a “generic” domain name, and using it for ads or reselling it. As long a trademark doesn’t apply to the name, the registration is legal. Intentionally registering a trademarked name or something similar is a practice known as “Domain Squatting”, and is illegal. Those in the domain investing industry like to compare themselves to speculative real estate investors, and both are industries that generate ire from the public. These arguments are not inaccurate, much like real estate speculators who buy land, not necessarily to build on, but to hold on to, and sell later at a profit; domain investors do the same with digital property.

Love it, or hate it, this industry is wildly successful. With the advent of new  Top Level Domains, or TLDs,  the domaining industry is only expected to grow. These new TLDs, like “.xyz:”, “ .site” or “.blog”, are being rolled out as alternatives to the traditional “.coms” and “.nets,”. These new TLDs are prime hunting ground for Domainers. These alternative domains don’t command as great a price as the legacy TLDs, but as these new TLDs come into more use and become more widely accepted, the digital real-estate will be scarcer, and prices will increase.  It does seem that the new TLDs, because there are so many, will make it quite difficult for Domainers to get them all,

So you might think that those in charge of the administration of domains might take issue with these practices, think again. ICANN, the non-profit corporation who oversees domain names and IP addresses, along with the various registries, and registrars are no fools either. Domainers have to get their names from somewhere, and guess who gets a piece of the action, all of the above. In fact, Domainers business is so good for domain registrars that most have at least some features for Domainers. In most cases, they not only get the registration fee, but a piece of the sale too. Godaddy is a notable example of this relationship; they offer a full suite of tools for Domainers to make use of, for a fee of course. Registrars like NameCheap are not as invested in this products specifically for domaining. They do, however, maintain a marketplace, and offer low-cost first-year fees.

Domainers are simply people who see an opportunity to make money and take it. Their business model is often unpopular, and to some ethically questionable. Unpopular though it is, domain investing is legal. I have mixed opinions on the matter myself. On the one hand I find it somewhat annoying to find good names becoming less accessible, or, having to submit to borderline extortion to get them. On the other hand, an internet domain name is a commodity. It is not, however, one that is necessary to our survival. It is not like say a drug company jacking up prices on lifesaving treatments to make a buck. This is not going to physically harm anybody. They are generally only buying addresses that are worth something. It is not like they are arbitrarily registering names with the intent to deplete resources.

At the end of the day Domainers are not going anywhere. Domainers, Like many businesses, they are not always loved for trying to make money. There really is no point in hating them. There really isn’t much you can do as long as their business remain legal, anyway. The rest of us just have to figure out how to work with them, or work around them.  I’ll close with a word of advice; if you have an idea and want a domain name, go grab it up now. Even if you don’t plan to start your project for a while, it is risky to wait. Remember if you snooze, you lose; Domainers are always on the hunt.

5 thoughts on “Domain Investors or “Domainers” are often hated, but is this fair?

  1. Why is it “ethically questionable”? Domain names have always been sold on a ‘first come, first serve’ basis since the beginning of the Internet — even when Network Solutions simply gave them away for free. Feeling a sense of envy or entitlement to somebody else’s property when that somebody else had the forethought to register a non-trademark infringing domain name before you could think of it does nobody any good, especially you.

    Instead, simply enter into a commercial transaction with the owner of the domain name you want to own just as you would enter into a commercial transaction with the owner of the residential real estate you want to call home. Don’t like the asking price? Make a counteroffer and negotiate! Or, simply move onto the next best domain name (home) you value enough to pay the owner’s asking price.

    You are entitled to nobody’s domain name just as you are entitled to nobody’s home. Whining or complaining to the owner about them owning the real estate (virtual or physical) but not using it is not going to win you any leverage in your attempt to acquire the real estate from the owner (domain name or empty residential lot). Be nice, be reasonable, do your research into comparable sales, and make a solid offer. You might just buy the piece of virtual real estate you want to own from the person or entity – Facebook, Microsoft, Apple, P&G, and other mega corporations are by far the largest holders of unused domain names (tens of thousands!) – at a great price you can brag to your friends and colleagues about.

    Don’t want to do the negotiating? Hire a domain name broker just as you would hire a REALTOR for your residential real estate purchase. It is very much the same process. A domain name broker can even help you find financing for your domain name acquisition. Just ask them for help and most will work to help you get a deal done with the domain name owner. More often than not, it is the owner of the domain name who pays the broker’s commission, not you the buyer.

    So, just proceed with your domain name acquisition as you would with your purchase of a new home for your family. Beyond the non-trademark infringing requirement that is made illegal by the Anticybersquatting Consumer Protection Act (ACPA) of 1999, there is no ethical dilemma for domain name owners, sellers, or buyers that is different for residential real estate owners, sellers, or buyers. Let’s stop trying to imply there are additional ethical dilemmas beyond traditional real estate for domain names where there are none.

    • Thanks for your very detailed comment. This article was inspired by frustration, but in the process of writing I was forced to look at both sides of the argument, which I tried to show in the article. I did find it difficult to separate my own experiences from the writing.

      I do, however, stand by what I wrote. there are some folks who feel this business model is unfairly taking advantage of the first come first serve situation, and thus they find it ethically questionable. Personally, I find it frustrating at times, but as long as you are engaging in a legal business, I will just have to figure out how to work with you to get what I want, or find an alternative solution. One thing I would never do is the petty name calling or squabbling that I saw on the Domain Investor Blog. As you noted above this is unproductive.

      As I said in the article the Real Estate argument, which I have seen a few times on some of the Domaining blogs, and here again in your comment, holds water. It is a comparable business model. The physical real estate industry has its share of critics, just like your industry does. It could have to do with the feeling that the system is rigged against the small guy. Whether that is reality of perception, I suppose that is in the eye of the beholder.

  2. There are 6 billion people on earth. Domains have been available for public registration for 20 years or so. The internet ha generated a trillions of dollars and transformed life as we know it.

    And, if I am not mistaken, you are disgruntled because on the 14th of October 2016 you couldn’t get the domain you wanted for a $10 registration fee.

    We didn’t wait for you. Sorry.

    • Thanks for the comment. No it wasn’t one specific occasion, many times I have run into this problem. Although recent events did inspire the article. The world lives on capitalism, money talks, it is just the way it is. I don’t necessarily always like the system, but I certainly support the right to engage in a legal business.

  3. Originally, domain names WERE NOT intended to be sold. Domainers are taking advantage of a broken system. If domains were intended to be sold, the renewal rates would be based on the value of the domain similar to real estate and not a flat renewal fee (i.e. .com domains). This would encourage more fair pricing, less hoarding and get domainers out of their lottery mindset. For example, if a domainers had to pay 5% of the domain’s value in renewal fees and they are saying a particular domain is worth $10,000, they would have to pay $500 a year in renewal fees. This is more in line with real estate. As it currently stand, a person selling a .com domain for $50,000 is paying the same $18.00 renewal fee as a person selling a name for $100. This clearly indicates the system is broken.

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