Posts: Part 1: ICANN, Part 2: Registries, Part 3: Registrars , Part 4: The Domain Aftermarket , Part 5: Customers & End Users

The Domain Aftermarket: The Basics

You may have had people tell you that all the good .COMs are taken.  While this isn’t completely true (there are still some good domain names out there if you get a little creative), many of the possible one-word and two-word combination .COM domain names have been registered.  This doesn’t leave people seeking a good .COM domain name in a great situation, but that’s where the domain aftermarket can play a role.

Most people don’t consider the fact that for all the new domains being registered worldwide each day, there are also domains that are expiring whose owners don’t renew them for various reasons.  These domains go through a fairly complex expiration process.  The basic expiration process involves a two-part period that allows the expired domain owner to reclaim their domain (grace period followed by a redemption period), during which many domains are listed on auction sites for bidding in the event that the domain owner chooses to let the expiration renewal period pass.

When a registrar deletes a domain name with the registry, the domain name has “dropped”.  The domain backorder/auction services that have sprung up work by repeatedly accessing a registry’s servers to catch the domain name as soon as the name is cleared from the registries records.  In the past, was a fight between domain auction services to see who could re-register the domain name the fastest, making it frustrating for people trying to grab a domain name to have any guarantee they’d actually have a shot at it.  As a result, many of the larger domain registrars have partnered with one auction company that gets first rights to the dropped name.  At auction, if there has been bidding or a backorder on an expiring domain, the winning bidder will have ownership of the deleted domain transferred to them.  If the domain name had no bids, the name is deleted at the registry and becomes available to be registered via the standard method with a domain registrar.

That’s probably about as simple a description as is possible of a very complex market for expired domains.  You’ve probably heard the term “domainer” – a term that has a negative connotation attached to it for some people.  While some domain purchasers may be cybersquatters, your average domainer is definitely not.  Domainers practice domain name speculation – that is, purchasing promising domains with the intent of selling them for a profit in the future.  Domainers often rely on auction services and find expiring generic domain names with good traffic potential to purchase.  They then develop sites to increase traffic before selling, “park” the domain with ads to generate revenue, or simply act as a broker to sell the domain name to someone who sees high potential value for it.

Where the Aftermarket Fits in the Industry

While Registries, Registrars, and so on are well defined groups within the industry, the aftermarket is a much broader segment.  It includes domain auction services, drop catching services, domainers, and others in most cases looking to create value with domains above and beyond their original registration value.  For instance, while h5j456j6452he.com is still available to be registered on Dotster for $15.95 and has likely never been registered before, candy.com recently changed hands for a cool $3 million.

How the Domain Aftermarket Affects You

The good news?  If you’re looking for a good domain for your business or personal site, you can definitely find one.  The bad news? If the one you want is taken, it may cost you more than your standard registration.  Many domains have been purchased but are sitting idle and don’t actually resolve to a website.  If you’re interested in purchasing one of these domain names that’s been taken and isn’t expiring, you can always use a Whois Search to see contact information for that domain.  However, if the current owners sees extra value in that domain, you may have to make a sizable offer to have them consider selling it to you.

The domain aftermarket is also a good reminder of why you want to keep your domain from expiring.  If your domain expires and passes the redemption period, not only can it be registered by someone else, but it also shows up in listings of expired domains for auction.  This means if you have a good domain name and lose it by not re-registering it, it may cost you a great deal to get it back from a new owner.  We provide a variety of measures to make sure you remember to renew your domain, including an option to auto-renew and regular email reminders.

Finally, if you’re not doing anything with your domain and thinking about just letting it expire, consider trying to sell it if you think it has any potential value as a generic domain.