Must-read: “Busting domain name secondary market myths”

An article co-authored by Zak Muscovitch, General Counsel of the Internet Commerce Association (ICA) and Nat Cohen busts some of the most common domain name secondary market myths.

The Secondary Market, where already registered domain names are bought and sold, is often misunderstood. The new article from the Internet Commerce Association (ICA) called “Busting Domain Name Secondary Market Myths” tries to clear any misunderstandings.

“Domain name investors, as one of many participants in the Secondary Market, play an integral role in facilitating transactions and providing liquidity. Domain name dispute panelists in particular will benefit from a greater understanding of the domain name Secondary Market which has figured prominently in numerous contested cases affecting valuable domain names.”

“The Secondary Market in domain names plays a critical role in Internet commerce yet is often misunderstood. This article will attempt to clear up some of the myths that frequently arise when discussing the Secondary Market.”

Here are the 9 key points from the article:

1. Myth: Domainers are the Secondary Market

2. Myth: Domainers Provide No Value to the Domain Name Ecosystem

3. Myth: Domain Name Investing is Easy

4. Myth: Domainers Control the Price of Domain Names

5. Myth: All the Good Domain Names are Taken by Domainers

6. Myth: If Domainers Didn’t Own Domain Names, They Would be Available for Registration

7. Myth: Raising Registration Fees Would Free Up Domain Names for the Rest of Us

8. Myth: Domain Name Investors are Cybersquatters

9. Myth: Domain Names Should be “Use it or Lose it”

Conclusions

“The Secondary Market is a crucial feature of the domain name ecosystem, which encompasses far more parties than domain name investors alone, who play an important but relatively modest part in it. Domain name investors help the Secondary Market to function better for the benefit of sellers, buyers and Internet users by providing liquidity and assisting in moving underutilized domain names to their highest and best use. A competitive free market is the best system we have for allocating scarce resources such as domain names. Prices for domain names are established in the Secondary Market, not by domain name investors alone, but rather when buyers and sellers come to a meeting of the minds as to the relative value of a domain name. Domain name investors deal in desirable domain names that would be registered by someone, whether a domain name investor or someone else, and invariably whoever owns a domain name would only part with it if a satisfactory sale price was obtained. Ultimately, domain name investors are proxies for sellers by stepping into the shoes of the seller, staking his or her own capital, and taking the risk and responsibility of reselling a domain name on the open market to a party who may have a more valuable use for it than the previous owner.

In short, a thriving Secondary Market helps ensure that the DNS remains a vibrant engine for powering the Internet economy and helps ensure that domain names are put to their best and highest use.  Domain investors act as middlemen providing liquidity and helping facilitate transactions in the Secondary Market.”

This article was adapted from an online presentation by Nat Cohen and Zak Muscovitch, made to NARALO on December 14, 2020 which is viewable here commencing at the 10:00 minute mark: https://bit.ly/37nGo2u.

Read the complete article here.