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.

If you think back to the late 1990s, jumping into the internet revolution and securing the perfect .COM name was a big deal. Now it’s just an accepted way of life online, but it seems that two distinct groups have emerged as a result. The first group of internet users already has one or more domains and are familiar with the reasons behind owning a domain name. The second group generally doesn’t even know enough about buying a domain name to know where to start. It’s interesting to see that there’s really no group in between comprised of people familiar with domain names that haven’t purchased one. That should be an indicator right there that if you understand domains, you understand why you should definitely own domains. Part of our goal at Dotster is to bridge that divide by educating everyone about the basics of domain registration.

First, Let’s Play Devil’s Advocate

There are various counter-arguments you can find online that would gladly tell you domains become less important with each passing day.  They cite things such as smarter web browsers unifying search bars with address bars, search engines  paying less attention to domain names, and new TLDs either diluting domain names or simply being worthless, depending on who you ask.  There is some merit to these viewpoints.  Web browsers do continue to improve their navigation methods.  For instance, if I want to visit Amazon.com, I simply type “amazon” into my address bar and the browser figures out that I mean www.amazon.com.  This is where the “domain names are worthless” argument begins to fall apart.  If Amazon didn’t own the amazon.com domain name, I wouldn’t be able to direct navigate there with such ease.

The Domain is Still King

Domains are and will continue to be extremely important in establishing an online presence.  Here are just a few of the reasons why:

• A strong domain name is memorable, and assuming it aligns with your business or personal name, serves to strengthen and reinforce your company’s brand and marketing.  Looking back, internet giants such as Google or  Facebook started with nothing more than a domain name as their brand, and they are now some of the strongest, most recognized brands in the world.  From a marketing perspective, having a good domain name is crucial

• A strong domain creates authority and conveys credibility to internet users.  If you run an online store, credibility will provide your customers with a greater sense of security.  If you’re a big brand or a small brand looking to be the next big brand, having a strong domain is a sign of authority in the marketplace.

• Your domain is your central location on the internet.  With the growth of social media sites and an increased need to have your business or brand present on multiple websites, it’s very important to have your domain to point back to as home base.  You can also use your domain and subdomains to link to your brand across the web.  For instance, if you don’t have your ideal Twitter username (www.twitter.com/yourname),  you can create a subdomain to direct people to such as twitter.yourdomain.com and have that redirect to your Twitter profile.

• Direct Navigation isn’t going away.  In fact, as browsers continue to improve embedded search functions, they also improve direct navigation via the address bar.

• Your domain can improve your search results.  While your domain name isn’t always crucial to search engine optimization, owning a recognizable domain that web users will see when performing searches will help move your website up the search rankings.

All of this combines to make owning a domain essential now and in the future.  Between the branding, marketing, authority, and Search benefits a domain provides, you can’t go wrong when you buy a good domain name.  What makes for a good domain name, you ask?  Look for our next post.