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End of Year Checklist: Renew your Domain Names

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With the final days of 2007 upon us, now might be a good time to review your portfolios to ensure your domain names have ample time before expiring. Many of us ignore the renewal emails that start filling our inbox with 90 days to go, figuring we will renew them with a few days to spare. Instead of doing that, I am going to log in and make sure that all of my premium domain names have at least a year before expiring so I don’t run in to trouble.

One reason expired domain name auction services are in business is due to the fact that some people don’t renew their domain names. I presume many cases are accidental non-renewals, which can be due to a multitude of reasons. Perhaps you changed your email address over the past year. Maybe your spam filter is preventing the renewal emails from reaching your inbox. Whatever the case may be, you should manually check the expiration of your domain names now to avoid any surprises.

Heck, maybe you can even count the renewals as a business expense against your 2007 profits (consult with a tax expert or purchase the Domain Tax Guide to see).

Microsoft Sues Domain Registrar

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According to articles in the Washington Post and PC World today, Microsoft has filed a lawsuit against domain registrar Red Register for registering 125 names with Microsoft trademarks. Although the domain names are currently registered to another company in Tortola, Microsoft believes the current information is false (according the article).

This marks the second registrar in recent history to have a lawsuit filed against it for cybersquatting. A couple of months ago, Yahoo and Dell both filed lawsuits against domain registrar Belgium Domains for registering domain names infringing on their brands. While both of these instances accuse the registrar of owning the infringing domain names, it is scary to think that this could potentially happen to a more mainstream registrar who controls millions of domain names and happens to have some trademark names among them. An article on DomainNameNews.com prints an email showing that many domain names at Belgium Domains are currently locked by the registry.

Trademark holders have become more aggressive in defending their marks in the past several months, not simply going after the domain owners as they did in the past. Back in June, Vulcan Golf sued Google for helping domain owners monetize domain names that they believe infringed upon their trademark. Domain owners need to use caution and common sense when registering domain names.

Jump the Domain Market

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In the investment world, once a story hits the press, the price of the affected company’s stock is impacted almost immediately. In the domain industry, news travels less quickly, and because of that, you could possibly get a jump on news before price increases are made. Timing is everything.

One way to get a jump on the news is to review the list of domain names that are scheduled to be auctioned in an upcoming live auction. Do your best to determine the value for each live auction domain name based on the venue, comps, current market value…etc, and compare your calculations to the reserve prices. Should your valuation be significantly higher than the reserve price, there may be a strong chance the domain name will sell at auction.

When a domain name sells at auction for a significant price, the demand for similar names may increase as a result. In the week or so before the auction, if you are confident that a particular name is going to make a big splash in the auction, attempt to acquire similar domain names using Whois searches or via domain marketplace. If you don’t have the opportunity to do this quickly enough, you can do the same thing immediately after the auction. I recommend this strategy if you have a strong feel for the domain market and are willing to take a financial risk.

Of course, the caveat is that not all domain names are similar, even if they look the same. You need to know the market well enough to feel comfortable going out on these types of limbs. Also, the demand for similar names may be short lived, so this is a short term strategy.

Beware of Inflated Domain Prices

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Investors were selling to one another, inflating prices. When the market figured this out in late 2005, it retreated with punishing speed.

While this quote from a New York Times article is in reference to the real estate market in Cape Coral, Florida, I think this should strike a chord with some domain investors. I believe some parallels can be drawn between the Cape Coral real estate market and the three letter .com domain market, where many domain investors speculate on these names by purchasing them for great sums from other domain investors.

As strong as the domain name market has been, the three letter .com market may be susceptible to dropping in value, and domain investors should use caution when buying at current levels. On average, three letter .com domain names have made incredible leaps in valuation over the past few years according to the price guide at 3character.com. From just a few hundred dollars a few years ago to several thousand dollars today, average prices for three letter .com domain names have seen extraordinary increases in valuation. In my opinion, we are in a period of inflated pricing, not really supported by any reasoning, other than the perceived rarity of the names (there are 17,576 in existence).

These short, easy to remember names might have tremendous value to a few companies, but many of these end user companies wouldn’t be willing to pay close to the current sales value for them. It can also be difficult to monetize these domain names. Frequently, consumers are looking for a particular product or company who may use that particular acronym officially or unofficially when they navigate to that domain name. If the domain owner uses the domain name for parking, and the parking company shows links for the company who uses the acronym, the domain owner may be at risk for a UDRP.

Inflated prices may also be affecting other types of domain names within the industry, however, it seems that this is one area where people are paying large sums simply because of the type of name, rather than what can be done with it, especially when the 3 letters don’t necessarily mean anything or stand for anything particular. In my opinion, this is like people buying houses in Cape Coral, Florida simply because the values continued to increase without a real impetus for the jump in perceived value.

I am not saying that all or most three letter .com domain names may be overvalued. I am merely suggesting that domain investors proceed with caution as the values of these names continues to increase. I would also say that like most nice generic domain names, I am a buyer if the price is right.

What do you guys think? As always, I welcome your comments…

Your Domain Name is Perfect for my Business

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Good Afternoon,

I was driving on South Ocean Drive in Palm Beach the other day when I passed your undeveloped land. I noticed you don’t have a house built on the land, and I think the location would be perfect for the home I am planning to build. It is on the Intracoastal and across the street from the Ocean, which is exactly what I am looking to buy for my family’s new home. For your undeveloped land, I would be willing to pay you $50,000. Please call me if you are willing to sell it. I will even pay for the escrow and legal fees.

Regards,

Anne I. Diot

Imagine if a property owner received hundreds of letters like this a month. While this letter is far fetched for a property/land owner, this parody is very similar to emails domain owners receive every day. People assume that just because they see an undeveloped domain name, they should be able to buy it for a fraction of the value. Developing a website on a domain name can take years to complete. Just because a domain name hasn’t been developed, doesn’t mean the owner has no plans for it.

When will people learn?

Mike Berkens on the Biggest Threat to the Domain Industry

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Mike Berkens, owner of one of the most valuable private domain portfolios, touched on it in my interview with him, but he expounds on what he believes is the biggest threat to the domain industry on TheDomains.com blog. Mike feels that as an industry, we need to police ourselves or a governmental agency will step in and potentially impact more than just the trademark domain issue.

Here are a few suggestions that Mike makes in his post regarding what we can do:

1. Do NOT register, backorder, or participate in any auction containing these types of domains.
2. The drop services have to stop taking backorders for these obvious trademark infringing names.
3. Stop domain tasting.
4. Join the Internet Commerce Association (ICA)

Check out TheDomains.com to read more about this important subject.

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