If Domain Investors are Squatters Then Domain Registrars Are the Biggest Ones of All

This article is not about bashing domain investors or domain registrars. Rather it is about setting misconceptions straight and putting things in perspective.

What motivated this piece is an article on the Forbes website that was reported on by TheDomains. It was about a “leadership strategist” and writer who was starting a new consulting business.

He tried to register a new domain but found that the best ones were already registered and for sale by who he called “squatters” (short for cybersquatters).  He himself owns 40 domains and wrote, “I guess I’m a squatter too”, in parentheses.  Then he went on register a .INC domain that costs $2,000 per year from a registrar. Praising that as “a good news story”.

The irony is that if a domain investor is selling a domain for few thousand one-time payment, with $10 renewal per year, then that person is a squatter. But if a registry charges $2,000 per each and every year, then that is “a good news story”. Makes perfect sense.

The Best Domains Are All Registered

Dot com, the king of domain extensions, is over 30 years old. The first domain was registered in 1985. Dot com has continued its meteoric growth since then. Most quality domains are purchased on the aftermarket either via one of the popular registrars’ marketplaces, boutique marketplaces owned by small domain investment businesses, or auction houses.

So if the domain you want costs a few thousand dollars or more, don’t assume that it was purchased for $10 and the seller is trying to rip you off. You don’t know how much the seller acquired it for on the aftermarket and/or how many years the domain was renewed.

The oldest domains used to cost between $30 to $100 US per year.

If you don’t want to pay for a premium domain, don’t cry about it. Just register a new domain for $10-$15. But it will be of much poorer quality.

If you can afford it, you advertise downtown. If not, you advertise on a rural road. You get the picture.

Or like the writer mentioned at the outset, pay premium year after year for, in effect, advertising on a rural road.

The Domain Aftermarket Is Massive

Every major domain registrar engages in selling registered domains high above their registration fees. These include GoDaddy, NameCheap, OnlyDomains, Register.com, and so forth. They sell millions of dollars of registered domains each year. The domain aftermarket is a billion dollar industry.

So if you are mad at an individual investor selling a domain for hundreds or thousands of dollars above the registration price, you should be even more mad at domain registrars.

The fact is, domain investing and reselling is a legitimate business, just like real estate or trading in other valuable assets.

Now, if you want to be upset at someone for inflating domain prices, you should be upset at the new domain registries.

Domain Registries are Trying to Compete with the Domain Aftermarket

Domain registries are companies that own and/or manage the top level domains (i.e. .com, .org, .global, .inc, etc.). There are hundreds of new top level domains that were introduced in the recent years (like .global and .inc) owned by a number of new registries. Those are new extensions that are alternatives to the original ones, namely, .com, .net, and .org.

The case of the writer mentioned above is a brazen example of how the .inc registry is competing with the aftermarket to sell domains at premium pricing, even for new registrations. That is real price gouging that should make one upset.

Dot Inc is not the only one. Other registries participate in such unreasonable price inflation for new registrations. Take a look at this example:

newTLD-premium-pricing

Note that those are for new registrations. In some cases, pay the exact same premium price for each year you want to renew the domain for.

The dot Club registry even opened its own marketplace for domains that the registry priced at thousands of dollars (for new registrations) as well as domains owned by others. That marketplace is Names.Club.

Before You Call Someone a Cybersquatter Know This…

Squatting or cybersquatting is very different from domain speculating and investing.

Cybersquatting is the registering of domain names in bad-faith that contain known trademarks and company names with the hopes of selling the names for profit to those companies or trademark holders. It is not legal.

If owning and selling generic domains was so questionable and unethical then why are so many large companies participating in it, besides individual investors?

Domain Investors Are Not Cybersquatters

Legitimate domain investors are very careful before they register a domain name to make sure it does not infringe on any registered trademarks and that the domain is not confusing with an existing company name.

Owning many domains does not make you a squatter. Large and small companies own many domains that either are product/service names, or generic names that redirect type-in traffic to their main websites. This does not make them squatters. It makes them smart.

Why You Should Be Glad a Domain Name You Want is Owned by a Domain Investor

If someone else had registered the domain you want and started a business on it then that domain would be gone forever. You would be forced to come up with a different name for your business or product.

When a domain investor owns the domain you want, then there is a very good chance you can acquire it.

You are able to negotiate a price. If the price is too high to pay in a one-time payment, then you can negotiate a payment plan or lease the domain with the option to buy at a later time.

Owning the best domain name for your business will go a long way in helping that business become a success. As noted, all the best domains are registered. The domain aftermarket is the ideal place to acquire that perfect domain.

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