I Buy and Sell Domain Names AMA | Hacker News Reader

I Buy and Sell Domain Names AMA

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67 pointsohashi68 comments

My understanding of the domain market is this.

Regulators realised the best way to provide domains was to let the market determine their value and allow them to be traded at will (with respect for IP). So they wholesale at dirt cheap prices on a first-come first-served basis and people can then buy and sell them based on market value. Works for real estate so why not domains?

The problem derives from the initial price and the expectations that implants. Many expect a domain to cost $10. So when they are offered a price more than that, they are pissed off and blame the person selling it to them.

Nobody walks past a vacant block in a prime real estate location and goes "bastards, if they weren't squatting that land, I could snap it up". They know the land costs $x million and don't assume it should cost $10. However, because domains are a new real estate market and not every possible domain is out of wholesale, people base their expectation of price on the wholesale price.

Now, let's think of the alternative. Anyone who has tried to buy a top level domain for a country that heavily regulates the names would understand the pain of the alternative. It can cost hundreds or thousands for the wholesale price. You're required to own the trademark already (which adds additional cost for a new project) as well as have a registered company etc. I can think of dozens of my favourite projects/blogs which I'm sure don't have a company or trademark registered under that name. This system would not only be a pain for small business, it would stifle innovation on the web.

I'm not a domainer (I do own about a dozen though) and I get just as annoyed as the next guy when I come up with a name for a project and find some punk wants $15k for the domain. But then I think of the alternative.

> Nobody walks past a vacant block in a prime real estate location

Vacant blocks in prime real estate locations are taxed at their market value though, no? So if you've got that land sitting idle, and you're not collecting income from rent, nor using it yourself, you're going to lose money on it. This is an incentive to sell it to someone who will make money, or otherwise find a way to employ it more productively.

That said, I don't think I'd really like to see property taxes on domain names.

Unfortunately, in most property tax systems your tax rate is a function of what you've built on it, e.g. surface parking earns less than a tall mixed use building but incurs proportionately less property tax.

At first I liked the idea of market value based taxes and clearly a bunch of HN readers agree with the idea.

The biggest issue I see though is the implication for small projects.

For example, maybe in 1994 you snapped up pizza.com. You could have been using it ever since for a pizza price search engine which gets 100,000 unique visitors per month and earns you $5,000 per month. That's decent income, except the taxes on the domain's market value of $2.6 million[1] would be crippling. So despite using the domain in what most would think of as good way, you couldn't afford to have such a good domain. Now extrapolate this example for the thousands of sites that have a good domain name for a small project.

[1] http://news.cnet.com/8301-10784_3-9912380-7.html

Yeah, like I said, I ultimately don't think it's a good idea: it would add too much friction for the benefits.

Another issue with alternative ways of handling registration (and this is all a bit moot now, because I don't think anyone is ever going to change the laws and take all the parked domains back - except Libya) is how you would ever define that it is in use. People complain that they can't buy good domains when they have an idea for a project, but lets imagine you can buy any unused domain for $10 for your project. At what point do we determine that your project is never going to be viable and the domain should be surrendered? There are always discussions on HN about failed side projects, how would you feel if after 3 months, 6 months etc ICANN turned around and said you are not using that domain sufficiently, we're taking it back. I've got 5-6 projects that I have started that will probably never go anywhere, but I wouldn't want to give up the domain just in case.

Could you also imagine the costs involved with any arbitration process to handle that. If you had to build it into the average domain cost, you wouldn't be paying $10 anymore, in fact you might find a lot of domains are cheaper through the free market system that exists now.

Defining 'in-use' is the biggest problem people stumble on when making that argument. I think you've hit the nail on the head with raising the sorts of issues that it would cause.

For one thing, having a crappy useless domain with ads should count as less "usage" than having just a page indicating that some project is being developed, without ads.

> Nobody walks past a vacant block in a prime real estate location and goes "bastards, if they weren't squatting that land, I could snap it up".

For me the annoyance comes from the fact that most of the parcels of land that are owned are actively being used for something, while it seems most of the domains in existence are owned by these squatter bastards.

oh rubbish. There are massive tracts of lands all over the world which are owned and just being sat on. There are a tonne of old warehouses just being left to crumble away in my town. Prime locations, just waiting for the right price.

If we say ln = number of privately owned land parcels and lu = number of privately owned land parcels being actively used (as homes or businesses or being rented), then I contend that lu/ln > .5 (hence "most"). That does not rule out ln-lu being a very large number which makes what you said true, it just sounds like a different measurement that I was making.

If dn = number of domain names owned and du = number of domain names owned with valid DNS and no crappy domain squatter parking pages, then I contend du/dn < .5. In fact, I get the impression it's more like .1 or less (or perhaps something even more ludicrous).

Even if I'm totally wrong about the ratio of land used, there's no way that I'm wrong that lu/ln > du/dn.

There are some steps slowly being taken to deal with that, in Washington DC, apparently the tax on vacant property is %5 rather than 0.85% [1] (although I expect that's more to keep their revenue the same since vacant lots aren't worth much).

The equivalent first step for domains though is for Google to stop treating made-for-adsense domains as real sites, so the $10/year/domain can't be offset by tricking advertisers and web neophytes.

[1] http://yglesias.thinkprogress.org/2008/08/more_vacants/

That's not us in most cases. Our parked domains generally aren't listed in Google. MFA stuff is mostly SEO types doing that. We get our traffic from type ins (and old links) which is more profitable to send directly to ads without any BS content.

It's not just the cost though, it's also the process. I would be willing to pay some amount in the multiple hundreds of dollars for some domains but it's usually not clear how to go about buying the domain. There often appears to be some shady arbiter that offers to try to get the domain for me. But the whole process is handled through a website that gives no indication of how long the process might take or if any action is really going to be taken at all.

I wouldn't have that much of a problem if getting a parked domain was just like getting an available domain except on the checkout page it said $300 or whatever instead of $10.

A lot of registrars have integrated premium domains (already registered) into their search processes. IE go to godaddy, search for cars and click on the premium tab next to it. It lists priced domains there. Those are being pulled from various networks which offer exactly what you're saying and it's seemlessly integrated in some cases.

Sounds like a business opportunity.

Real estate, like almost any other product, is not unique. There is always another lot.

Each domain name is unique. Try another domain name? Probably "on the market for sale."

I believe, even with trademarks, you have to file an intent to use (http://www.uspto.gov/trademarks/process/appcontent.jsp). Maybe this is to stop trademark squatting?

So what are recurring registry fees in your analogy, property taxes?

Yes, something like that as I believe a portion of the recurring fee is used to fund regulatory bodies like ICANN.

I'm not surprised to see my comment being both up and down voted, but anyone down voting my comment, at least take the time to share your reasons for disagreeing. If there is any place a well considered domain purchasing discussion should be able to occur it's HN.

Thanks Ohashi for posting this (I can see from the Reddit thread you are the OP/subject of the thread).

However on a meta point to everyone: I don't see what value there is in starting another, semantically forked, conversation about a reddit thread over here on HN. Wouldn't it be best to keep the conversation over there for the benefit of everyone, including those Reddit'rs who don't read HN?

1) not everyone on HN reads Reddit

2) the discussion on HN tends to be higher quality than other sites, even Reddit

I discovered the post via here :) don't hate me but I don't browse reddit, only navigate there from other places (primarily here)

Perhaps, but maybe some HN'er doesn't want to make a reddit account, I don't want to exclude anyone, I'd prefer having everything in one place, but I will accommodate :)

Because some of us are lazy and don't want to create Reddit accounts?

You also miss the article if you're not subscribed to /r/IAmA, which while interesting, has a pretty high noise:signal ratio. Those used to HN's more focused news feed are least likely to be subscribed to those kinds of subreddits, so it's useful having someone repost the hacker/startup-relevant ones here.

If domains were $100/yr each would you give up? Do you think it would kill other domainers?

i might be pickier, but I would also charge you 10x more on sales to cover costs.

Do you think you would still find buyers for a 10x price? Or maybe you would only go out of business because costs would not be covered or revenue would not be enough?

If everyone charged 10x the price (and they rationally would), then I think most businesses would have to accommodate. Some would go under, sure. You would probably see less liquidity and more sales force focus.

I think the solution to limit domain squatting is to set domain taxes in the same manner real estate taxes work. Charge 0.1%/year of the domain price. So if somebody wants to buy your domain for $10000 and you don't want to sell it, then the tax would be $10/year. That would make squatting domains without generating any income from them not profitable.

People generally the income generating type of domain names (those investing in a lot of them). If it took a 10k offer to make me pay 10$ more, i'd sell my whole portfolio at 10k each and retire. it would be kind of awesome. :)

1) It's $10/year vs $10K once. 2) If you prefer to sell your domain for the price buyer is looking for -- that's win-win situation. On the other hand if you want to keep that domain to yourself without using it -- then the tax ($10/year in that case) would help you to reconsider that. 3) If 0.1%/year tax is not enough -- it can be increased a little. E.g.: 0.2%/year.

Why do you need to generate income with something for it to have value?

True story: I have a name I really like which I did use previously, but it currently sits there gathering dust waiting for me to put a new project on it. A VC backed start up offered me $20k for it, but I turned them down. Should I have to pay more for that domain now?

I think you should either pay "domain tax" or sell.

$20/year maintenance fee for the domain name that you really like to use in the future -- is a bargain. Especially if you can sell it for $20K.

I have a friend who's registered HIS_SURNAME.net many years ago.

Turns out the WWE wants that domain. Not sure how much they offered him for it, but he'll never sell it - it's his name.

What level of surcharge would you suggest for someone using their own name?

Also I once bought some art for GBP40 that's now worth around GBP5000. People would want to buy that. I'm not planning to sell though. Should I have to pay a yearly fee to someone for not selling that?

Can you give us a sense on the amount of revenue you make per year?

xx,xxx, it's more than enough to live on as a single person, not enough to support a family probably (in a developed country)

First off, I am dismayed at all the people on reddit who are condemning you. Some people talk like they have some sort of God given right to the domain name they want. It also amazes that people believe a successful business starts with a domain name =|, but that's another argument.

My question to you is. Why do some squatters stay so anonymous there is NO way to contact them? Also, it doesn't make sense to squat on a domain name that does not get any traffic... If a squatter is sitting on a domain name that does not have any traffic, why won't they sell even to a low offer? Like, a $20 profit is a $20 profit right?

> people believe a successful business starts with a domain name

Domain names don't make or break a business, but they certainly help. Factors like name relevancy, and catchiness help draw visitors and create brand recognition.

Totally agree. If only google had been able to buy searchengine.com they'd have been much more successful. Or if socialnetwork.com hadn't been taken by an evil squatter then facebook might have really taken off.

If your business has real value, the domain name is not relevant at all. Look at the top startups. How many of them have "keyword rich" domains that are relevant to their business?

Of course you can argue that this is an effect of domain squatters, but I would argue that the fact they couldn't get their first choice of domain name has had no discernible impact on these businesses.

When Facebook started, it was just people, a couple pictures, their contact info, their classes, and a Wall. There was no messaging or News Feed. It really wasn't much of a social network at all compared to what it is today.

I would argue that some sites benefit from having a non-specific domain name. If Google had been searchengine.com, maps.searchengine.com and mail.searchengine.com seem a bit weird. Having a less specific name allows a company to pivot without changing its branding.

For Google it might even hurt them at this point. Lots of users don't know their browser, but they know that Google=Internet. "Yahoo Search Engine" would be a lot more competitive with "Search Engine" from a branding perspective.

yep, totally.

Likewise if amazon had been called books.com they'd have a hard time diversifying into the huge repertoire they have now. The same's true of just about any popular site you care to mention. What does flickr mean? del.icio.us? What does ycombinator have to do with startups? etc etc etc.

Amazon is a much better example than the one I used.

In this case, google has a catchy two syllable name and a twelve year-old product that outpaces the competition in accuracy and design.

I fail to see how Facebook is anything but a brilliant name. It is easy to remember and describes the physical implementation of the site.

So does every other factor in starting your business: your parents wealth, your education, access to certain resources, etc. It all helps, but business is about dealing with what is your reality and making the best of it.

Why are you dismayed? What is it in particular that you see wrong with such condemnation? I share it and in fact thought the response on reddit was relatively tame.

I think it's very reasonable to consider domain squatters to be parasites who add nothing of value, and only hinder entrepreneurs and others who want to buy domain names. They're scum; yes, what they are doing is legal, but so are many other kinds of scummy enterprises. Of many analogies presented in the reddit discussion, I find the one with the ticket scalpers the best. Not the kind who buy unwanted tickets from people who couldn't go at the last minute and resell them - those are creating value, they're helping people find tickets who otherwise wouldn't be able to. But those who pre-buy blocks of tickets from the venue to later resell them - they create nothing of value. If they didn't exist, prospective clients would be able, and in fact would prefer, to buy their tickets directly from the venue. Same thing with domains.

Some ways of making money are despicable, even if legal. Nothing wrong with moral condemnation where it's appropriate.

Those scalpers create value for someone willing to pay a lot more money but don't have the time to wait in line.

We're not leeching off yours or any other business (unless it's trademark infringement case). Just because you didn't get the domain you wanted doesn't make it an optimal distribution. It's entirely possible it's less than optimal, you create something, it dies and a dead page sits there. Users continue to try and order and fail. With my ads, they are getting redirected to someone actively trying to get more customers and who service their needs. I've seen google ads match people better on paid clicks than organic traffic. Why? Because when you're paying, you make every damn click count.

People mostly don't wait in line anymore - they buy tickets through a website. The tickets aren't there, because the scalpers pre-bought them. Now people need to waste time looking for scalpers to buy tickets from, and pay lots more money to support the scummy business set up by the scalpers. If the scalpers weren't there, _everybody_ would be better off except the scalpers. That's why they're parasites.

All the talk about "optimal distribution" is laughable. Nobody's saying that the system without domains squatters is optimal or pessimal, that's not the point. The point is, you add no value to anyone except yourself, you create nothing of value, and you hinder people who want to actually do something worthwhile with the domains. If the domain squatters weren't there, _everybody_ would be better off except the domain squatters. This includes users, who wouldn't be annoyed by the horrible parked-domain ads and would find what they're looking for, if not by organic traffic, then through ads on search engines or real topical sites that actually add value. Again, it's very simple: if the domain squatters weren't there, _everybody_ would be better off except the domain squatters. That's why they're parasites.

How are scalpers pre-buying ahead of everyone else?

Here is a thought experiment, let's say there is someone willing to pay up $100,000$ for a ticket that's face value is $50. All the tickets were sold for $50, no reselling occurs. The difference between the highest price (presumably 50$) someone was willing to pay and the highest price of our rich patron is lost in utility. A better scenario would be guy sells his $50 ticket for some price more than the value he would get from the ticket and capturing excess utility himself. In this scenario without someone playing a scalper role, that utility is lost.

You immediately think every use of a domain is better, which is a more laughable argument. Who are you to decide what is or isn't a better use?

You also have no idea how actual users behave and navigate to things. Some people do get value out of parked pages. I see CTRs over 100%. That's right, they come back to click another ad, consistently.

Somehow the same ads on google are different than me showing identical ads on a parked page. Some integrate organic and paid search links exactly like google, is that ok?

Sorry, your arguments don't add up.

haters gonna hate. i was surprised it took so long (seems to have coincided with US timezones going into evening). I buy and sell em for a living and I don't think domains make or break a business at all. It's just a tool of which there are a nearly infinite number of.

As far as anonymity, well, first off if you start with calling them a squatter, I will add a 0 to the price I will sell to you if I respond at all.

Second, 20$ is a profit if you don't value time. Some of the big guys have 100k names and get tons of offers every day. Is 20$ worth the time to negotiate, escrow and transfer for someone making 20 mil a year? nope.

As far as contacting, most anonymous whois emails end up in a real mailbox I believe. There are other ways to track them down, for example getting a broker. Holding large portfolios, even if they aren't converting on traffic, can convert on a sales model. Average portfolio churn rate is around 2% for the big guys I believe. Parking helps cover costs, but sales generate the $$$.

Wow, I am just totally shocked at the response at reddit.

How many domains do you hold at a time and what are sales like?

i have a few hundred now, I sell maybe 10 a year.

I'm guessing it varies but how much of a domain name's value is in it's name vs it's history (how much traffic it's getting)?

What advice do you have for someone who is not a domain seller but has collected a couple domains that they no longer want but would like to sell them rather than just release them for someone else to profit from?

What is the most expensive domain name you sold? Back in the original .com bubble someone offered me (and I accepted) $10k for nonames.com. Would that domain go for that today?

the history part is interesting, that can be one component of value. It's more SEO guys that look at that stuff - domain age, links, etc. Valuable names will get type in traffic (if we define value as type in traffic - and many people doing this do exactly that). That type in traffic is there because the name is good and doesn't disappear/change because of history. It can only be increased from that level because of history. In terms of valuation though, we all have our ways of thinking about it. There is a simple traffic value estimation, SEOs value certain factors, and many more ways to valuate domains.

as for selling, if you just want to dump there are 2 markets. reseller and end user. Resellers are domain investors, webmasters, people here at HN probably fit. People involved with web who will pay a small price. End users, pay a lot more and are generally companies. You can contact them offering it for sale, otherwise you just wait until they come to (this is what I do).

A lot of the deals I do are private, so I won't reveal the most expensive one. NoNames.com... beats me. No Name is a big brand though now right? Not sure if the domain predates the brand, but I would think they might be interested among other potential buyers. You would be in the clear had you registered it prior to their company.

Say someone has a site (blog or whatever) that has traffic, but few/no ads or other monetization. How do you estimate that site's value for resale purposes?

First I would look at the niche, is it something with a lot of monetization options and/or high paying opportunities?

If so, I can look at similar sites, I can look at PPC bids, affiliate programs/conversions. I could see if competitors with ads are selling and see what sort of price/value they are offering (also checkout their media kits if they offer to see what people are paying).

It makes a difference if you're selling a website or a domain alone though. Domain only gets complex because the nature of the traffic matters hugely. Changing things dramatically will lose search engine traffic if that's the major source (toys.com is a good example of this).

The problem with domain brokers is trust. I simply don't see myself paying >1000 eur/usd without ever shaking hands in real life first. All the small brokers, no well established "brands" (at least for someone outside that line of business) don't help building the trust needed.

If your problem is simply about trust in terms of you pay the money and will they give you the domain, there are escrow services that handle this for you, and I sold a domain for $4K once via Paypal. It is not that difficult to safeguard yourself.

Escrow.com - I do basically every transaction through there. Sedo and others offer escrow services as well.

well, there's sedo.com, buydomains.com, quite a few established middle-men. A lot of small brokers too admittedly.

True, I once bought from sedo and it was OK at the time (I think it was about 300-400 EUR) but unfortunately not every domain for sale is offered by sedo (at a comparable price).

I answered a bunch of questions on the IRC channel and thought others here might be interested as well.

What are your thoughts on the new .co (Columbia) TLD? Valuable (as an approximation of .com)? Safe (as in not going to cut off companies like Libya did to bit.ly recently)? Anything else?

The value is in typo squatting co. No doubt about that. Lookup the .cm story (The Man Who Owns the Internet on Business 2.0 back when it was running - Kevin Ham). He wildcarded the Cameroonian DNS and caught all the typos. Since he didn't register them, he wasn't typo squatting either, everything was wildcarded. Brilliant business move, .co is the same thing in terms of opportunity. As far as riskiness, you never know.

unless I missed something, libya didn't cut off bit.ly, they cut off vb.ly and everyone got a bit edgy that they might do it to bit.ly too.

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