DomainInvesting.com

I frequently visit the various domain forums, and I am often surprised by the lack of common sense exhibited by some people who are too trusting. Accepting a direct Paypal payment directly from a buyer on a transaction over a few hundred dollars can pose a significant risk. Apparently it isn’t too difficult to request a chargeback, and once the domain name is transferred, if a chargeback is requested, it may be difficult to reclaim the name.   This would remove the money from the seller’s account, while the buyer can retain possession of the domain name.

Another thing that seems to occur too often is payment for domain names using a stolen or compromised Paypal account.   When the actual account owner learns of the charges and requests a chargeback, the domain seller is once again left without the domain name and an empty bank account.

The most simple way to avoid this is to use common sense. If you are completing a deal with someone who you’ve never met or heard of, it is always best to use an escrow service such as Escrow.com or Moniker. If that person refuses to use an escrow service, it is probably better to avoid the transaction. If you have a sneaking suspicion that something is amiss, its always best to trust your gut.

With domain hijackings seemingly at an all time high, I think now is the time for a public domain registrar to take action. I believe security key fobs are a nearly impenetrable line of defense that should be put into action by a responsible registrar. This would curtail domain hijackings, potentially saving registrants thousands of dollars in legal fees and hundreds of hours fighting to have their domain names returned.

Domain hijackings can occur when a hacker gains access to a person’s domain registrar account. This can be done by hacking into someone’s email account using a variety of methods or by hacking into the actual domain account. Either a weak password or a multitude of other factors can potentially lead to this outcome. Once a hacker is in possession of the registrar account, there are many ways he can control the domain names without raising the attention of the domain owner. If the domain names are transferred to another registrar, it may be too late for the rightful owner to take action, and the process of getting the domain names returned can be costly and time consuming.

Domain names are intangible assets, and the loss of one can be fatal to a business. It can mean missed sales, lost emails sent to addresses linked to the domain name, confused customers, and it can be emotionally draining on the registrant. While we are able to secure our tangible assets such as jewelry or property deeds, it is more difficult to secure our domain assets. For example, if I lose the key to my safety deposit box, the bank doesn’t simply permit the finder to access the box. As it currently stands in the domain business, if a hacker gains access to my domain account though unscrupulous actions, he may be able to take control of my domain names. I don’t think its fair to be held accountable for something that may be out of my control.

With that said, I think a security key fob with a changing passcode (similar to what Paypal offers) could help secure a domain registrar account. I would pay a premium for this service, and I am sure others would as well. Having good security is a unique selling point that distinguishes some registrars from others. Having the best security system in place before competitors would certainly give one registrar a major competitive advantage. Most registrants wouldn’t want multiple security key fobs, so consolidating all domain names at the most secure registrar would be the most likely outcome.

I urge all registrars to take action, no matter how secure you believe your system is.

When Sahar writes, I generally listen. This morning, Sahar made some predictions for 2008, and the following predictions worry me a bit:

“1. Top prices will drop: As the top of the domain market is driven by a handful of buyers (Frank Schilling, Kevin Ham and Co., Anything.com), I see those coming to the conclusion they either have enough to develop or have better returns elsewhere, therefore stop paying top dollars.”

“5. Top portfolio owners to diversify away from domains, investing in other technologies (Search technoligies, others), services ( arbitrage, others).”

Sahar has a great feel for the domain name market, better than most, so when he makes a prediction like this, I would take some time to evaluate your holdings.

I’ve noticed that many of the mid-level to highest-priced domain auction acquisitions end up in the portfolios of the big players. They control quite a bit of the money that is invested in domain names. If one or more of these companies drop out of the bidding at domain auctions, we could see what would appear to be a market correction. Of course, another company could come in and fill the void, but it would take a whole lot of financial power to do that.

Regarding the prediction below, I know that Owen Frager has also been saying something to this affect for a while:

“4. Top portfolio owners to collaborate more with marketers outside the domain space (such as Scott Day/Seth Godin The “ever” project), SEO folks.“

This is a smart approach to domain development. If you look at some of Scott Day’s domain names (like Chairs.com as an example), you wouldn’t know that each wasn’t a full business. Not only does Scott seem to have one of the nicest portfolios assembled, he also has one of the smartest development strategies.

At this time of year, it’s always good to evaluate your portfolio and make changes if necessary. It’s smart to have a diversified portfolio in case there is any type of domain market correction. When it comes to domain names, content is king (for monetization and protection), so now is the time to consider your development strategy.