Prices, Gouging and Haggling for Internet Domains?

GregStevensLA asks: "I'm considering paying for a 'premium' domain name for a small web start-up I want to form. The company that currently holds the domain name is offering it for $1500, but they made it clear to me that they expect a counter-offer and are 'willing to make a deal.' I've never done this before, and I have no idea what a reasonable counter-offer is. If I say 'I can't go above $1000' am I being too easy? Should I try to push for lower than that? My understanding is that these prices are hugely inflated anyway (i.e. pure profit going to companies that probably scooped up the domains for free). In some sense, paying anything beyond a registration fee is gouging, in my opinion. I don't want to be conned... on the other hand, this is the reality of business, and I don't want to come across as amateurish. Does anyone have any advice for this new-comer to domain name purchasing?"

Let's get this point out of the way

[linvir]

Let's get it out of the way early, because I can feel this wave of antipathy coming...

Please do your best to find an alternative first. Look into alternatives before succumbing and compensating these worthless parasites for their land grabbing.

Find a better name.

[nxtw]

Don't give these cybersquatting bastards money. If cybersquatting wasn't so profitable, the cybersquatters wouldn't exist.

Don't Buy It

[mysqlrocks]

I refuse to give money to domain squatters. Buy another domain name, be creative. Domain names become less and less important every day. Focus on SEO and other ways of getting people to your website. The domain name just isn't that important unless you're going to do a lot of non web-based advertising (radio, TV, print, etc.). You can pay for a lot of clicks on Google AdWords for $1000.

Price Gouging

[Distinguished Hero]

Can someone explain price gouging to me? If someone offers to sell you something at a price that you consider too high (gouging), you don't buy it. If someone offers to sell you something at a (high) price, and you agree to pay the person the money, that means that whatever you are buying is worth more to you than the money that you are offering in return (therefore not price gouging). Since (almost) all transactions are voluntary, and people engage voluntarily in transactions only if they think it is to their advantage, how can price gouging exist? Can someone clear this up for me?

Rarity

[Marxist Hacker 42]

If a good is significantly rare, or the need for that good is significantly high, then the transaction cannot be described as voluntary. If the transaction is not voluntary, your reasoning falls apart.

The question is in this case- do you change the name of your business, or run the risk of your competitor being willing to pay the $1500 to grab this domain and then slander your business or direct business to their site in your name. The risk is great enough that this is not a voluntary transaction- and while the gouging is indeed great (had you grabbed that domain yourself, you would have saved more than two orders of magnitude), the cost of NOT grabbing it is potentially even greater.

I fear your business is not long for this world

[wowbagger]

I fear that your business is not long for this world. My reasoning is this: You are considering spending a large chunk of change for a domain name from a cybersquatter, rather than striking out to find an unused name you can register for a percent of the money. Given that ALL small businesses starting out are cash-strapped, the fact that you are willing to waste your limited money in this fashion makes me doubt you will spend your other money wisely. The fact that you then turned to Slashdot for advice on this would tend to confirm the hypothesis that you are not really thinking coldly and rationally enough to found a successful business.

I don't want to sound harsh, but I do think you really need to step back and reconsider your plans - perhaps you can locate a local college where you might get a dispassionate third party to help fix you a nice big bowl of Reality Checks.

I've watched too many businesses fail because the founders, while having the best of intentions, made bad decisions because they were not willing to face the harsh, unpleasant facts.

Please - do prove me wrong. Be successful, and when you are successful, feel free to email me and say "Boooya! In your FACE Wowbagger!" If you can be successful you will have earned the right to do so, and I will congratulate you.

But if you keep doing things like seriously considering spending $1500, or even $100 on a domain name when you are just starting out - I don't expect that email.

Re:Find a better name.

[Marxist Hacker 42]

Don't lay stupid economic behaviors in market users at the feet of the markets. Markets don't shoot people, people shoot people.

The main problem I have with markets is the serious lack of information- by anonymizing the buyers and sellers as much as possible, you guarantee that the con artists will always win out because people don't have enough information to make an adequate decision. That's a stupid system, not stupid people. The only way market price will ever be fair is if all liars are shot on sight.

Invest in something useful

[dereference]

It costs less than half of that to register yourself a unique service mark or trademark in a couple relevant classes. It's just as intangible, and you do need to do some research up front, but it keeps its value far better than any domain name. It can take months to complete the process, but if you've done your research the process itself is painless and can be done almost entirely online. As an added bonus, if your registration is successful you can petition ICANN to transfer any (new) infringing domain names to you, as the rightful owner of the mark (you can't necessarily grab existing infringing domains as far as I know, but then again you're going to look for a better name anyway, right? Yes, I thought so).

Buying a Nolo [nolo.com] book on legal protection is definitely well worth the $30-$50 investment, and the knowledge gained will carry over to any new businesses you might decide to start. Don't even consider paying a huge chunk of hard-earned money for a domain name without at least understanding the basics of legal rights that do (and don't) convey with it.

Re:Price Gouging

[chill]

It's very simple really.

All domains are worth precisely $12. No more, no less.

If someone has registered a domain, and is offering to sell it to you for more than that, they're nothing but leeching parasites, or as the PC like to call them, "cyber-squatters".

Don't feed the parasites.

Bullshit. There is such a thing as supply and demand. Domain names have features such as being easy to remember, have connotations to other items, being short, etc. This is why something like gmail.com is much more valueable than MyCantRememberTheNameForEmailButThisMightBeIt.com or asdf1324la8h_asdlkjuq7.com.

A domain name is worth exactly what someone is willing to pay for it, no more and no less.

You might want to review some economic theories postulated after the 17th Century. What you're espousing is called the "natural price" in Pre-Classical Thought.

Re:Find a better name.

[GregStevensLA]

Don't you think, for a system to be judged a "good system", it needs to be a system that is "good" the way people actually use it?

It's like usability and interfaces. If people are constantly messing up, you can blame the users... or you can blame the system for not being designed with "real users" in mind.

Free markets are great when people don't quite behave the way people actually behave.

Re:Don't Buy It

[GregStevensLA]

You're right.... I think I am trapped, a little bit, in an "oldschool" attitude about the transparency of domain names.

At the same time, I can't help wondering... would www.google.com have gained as much popularity if it had been www.askmenoquestionsilltellyounolies.me.uk ?

Would www.myspace.com be as popular if it was called www.socialnetworkingprofilesforyouandme.org.tw?

Re:Don't Buy It

[Glonoinha]

Actually Google wasn't even a word - they made it up because googol was already taken.
Yourname.com (or whatever) is already taken, so make something else up. If it can work for Google, it can work for you.

Re:Price Gouging

[dougmc]

All domains are worth precisely $12. No more, no less.

Ok then. Then I wish to buy google.com for $12. I trust that since you've set the price, you can make sure the deal goes through?

Once I've acquired google.com, I'd also like business.com, sex.com, apple.com and microsoft.com. That's five domains -- how about 5/$50?

Re:Price Gouging

[FLEB]

There are practices which, in the eyes of the market and in the interest of a leveled playing field, may be considered to be "fair play", but are still repugnant, dishonorable, corrupt, anti-social, leeching, and cause damage and fallout. These states are not mutually exclusive. Domain names are a "natural resource" of the Internet. Do cybersquatters have the right to strip-mine cheap domains by the hundreds and leave behind vast tracts of ugly, pointless crapflood and inflated ransom where someone with more initiative and actual talent could have created a beautiful construction (or even a crappy-but-sincere site)? Sure, they're free to buy $8 domains just as anyone else is.

To say they're just quicker, that's the market, and it's all just business, however, hides the fact that, aside from the virtue of being first to force-feed a dictionary down their registrar-of-choice, domain squatters really don't have many other virtues... at all. The term "parasite" fits quite well, unless you're one of the few who actually consider pages of spam and linkfarming with "Learn more about [domain-name-of-the-site-that-you-really-wanted-th at-expired-and-got-snapped-up-by-some-squatting-ra tbastard]" to be a positive addition to the Internet.

Sure, it's a free market. Yes, it's supply-and-demand coupled with disproportionately low first-time costs. It's all a natural and fair system, and there probably isn't one that's better, but that doesn't even touch the fact that domain squatters are useless leeches and parasites, and generally, all-around "not a good thing". You can sit around and point at how shiny and clean the "supply and demand" system is, but I still see this very real effect here... the do-nothing virtual-lardass sitting on some piece of property they have no intention of ever making anything of, trying to grow disproportionately rich for having done or been little of value to anyone.

No, I don't want to change the free-market system, I haven't seen much better. Still, though, people need to realize that things like (accurate) name-calling, boycott, anger, hate, protest, ostracism... these are parts of the system! To yell "Shout it to the hills! This person and their kind are a load of shiftless parasites! Buy nothing from them, and seek to eradicate them! Make them hate themselves and their career choice!" is as integral a part to capitalism as is "fair market value". Basically, the heat comes with the kitchen.

Am I getting a fair shake or getting conned?

[BidNo]

Sorry but most of this discussion is terribly naive. Internet domain investing is very real and very large with billions of dollars in investment capital. Did you know Internet ad revenues have now passed those of local newspapers? If you want to buy Trump Tower you either buy it or not. But you're not going to jawbone Trump into selling for the price he originally paid for raw land and bricks. If don't buy, find something else that suits your budget. Or buy land and build your own. When there are many buyers for a domain name, supply and demand drive the price - after all, there is only one. The original OP question was, "am I getting a fair shake or getting conned"? In real estate, recent comparable sales are used to evaluate this question, and it's the same with Internet Domains. Try the site http://dnsaleprice.com/ [dnsaleprice.com] to search for recent sales comparable to the domain of interest to determine if you're getting a fair price. Cheers, BidNo

Other considerations

[Webwork]

1. Type-in traffic: If the domain is a naturally descriptive phrase - MiamiHotels.com - you will benefit from steady type-in traffic. For every type-in visitor, and they can be considerable in a world of 100s of millions who are online - that's one less click you have to pay for via AdWords, etc. 2. Type-in traffic II: If the domain has a baseline of traffic you will have an "insurance policy" against search engine results volatility, that is, one day you rank and the next day you tank in the search engine. 3. Memorability as brandability: What's branding about? Lots of things, but foremost you want to be remembered - by association. Which is the easier path to remembrance: BostonPlumber.com or BobsPlumbingServicesLLC.com? My vote is on . . . (I'm sure you can guess). 4. If you follow 1-3 then you can see that certain domain names have inherent value and some people were savvy enough (and old enough = had a credit card at the time) to register some pretty neat domain names. Chances are, if you (the naysayers) had the chance and the foresight, you likely would have registered a few yourself. Of course, the purists never would have done that as they knew some day Google would love them and their website - briefly - until the latest algo change. 5. SEO as the alternative remedy? Ya, like that's going to work for the long haul. Especially when everyone and their brother is playing the same game and the search engines are hard at work in an effort to make SEO irrelevant. 6. Overpriced? Inflated? So what? Don't get your shorts all bunched up in a knot. If it makes you feel that you have greater meaning in this world - that you have STRONG opinions - great. OTOH, feel free to devote that energy and attention to something that might really matter. If the guy/gal holding the domain is a bum then a bum's karma will be their lot. Why make your karmic lot that of the whiner, the self-righteous, the judge? Move on. Somebody holds a domain for a cruddy little links page. You got time for that as an issue? (Just kidding, of course, on this point. You can labor about whatever gets you torqued. :-P ) 7. OMG - They're doing nothing with the domain! It's parked! Ummmm, ya, but if you notice there's a lot going on in the parking industry. More and more they're turning those domain names into mini-portals. Almost as good as 791/2% of the domains that are actually developed, at least in terms of delivering something that the casual user might find useful. Truth is, it either gets down to a business decision or a moral/ethical/political issue. I cannot recommend too many political issues for a business, as there is ultimately no answer that will work for everyone, across all ethnicities, religions, cultures, etc. Not to say it's not a legitimate area of focus, just that if one labors to make the politically correct decision on all possible issues chances are that one will never get down to the business of doing business. That's not bad if mom and day are paying the bills, but those days are numbered. Choose the domain name and pay the price if the domain name has some traffic, is easily brandable, is memorable, works nicely on business cards and letterhead and bills, AND it's worth it to you for those and other business reasons.