4 ms·

I think he is missing something fundamental. Domain squatters are attempting to get the maximum value for a domain. Ideally, they are specializing in determini

I think he is missing something fundamental. Domain squatters are attempting to get the maximum value for a domain. Ideally, they are specializing in determining what that maxinum value is and thus refusing to sell a valuable domain for less than that price. This is actually helpful as otherwise some person comes along and buys the domain and makes some crappy website on that domain and it is their pet project so they don't want to sell (or even worse they have no contact info available and the whois is protected). The domain squatter only cares about selling it for maximum value. They want to facilitate a transaction. A bunch of people using quality, high value domains for low value or mom and pop businesses is suboptimal too. The domain squatter is more likely to prevent that and get the domain to the entity that values it the must (ideally). There is a value to that. This guy's critique makes me think he doesn't understand the value of speculators in a market, which is ironic because he has spent part of his career building trading software and working at investment banks.

EVa5I7bHFq9mnYK 6y ago
And I doubt that business is too lucrative these days. For one domain that sells for $10000, there are hundreds just sitting there and bleeding $10 every year.
ktpsns 6y ago
Well, according to your logic the crappy website owner could also sell her domain to the brand new startup. For a price where the revenue supports the crappy website owner, not some absurd buisness. The current domain trading situation is as if some real estate agent would buy all land instead of mediating seller and buyer. If your exemplaric "crappy website" wants to make a good price, there are still domain agents which could help with the deal.
- xyzelement 6y ago
  That's right. And then it's just a small leap to say that "claiming a domain for a crappy biz and then selling it" is not that different than squatting.
- warp 6y ago
  > The current domain trading situation is as if some real estate agent would buy all land instead of mediating seller and buyer. Zillow (and probably other companies) are experimenting with this, buying up quite a bunch of homes to build up an inventory of homes to sell at a profit later.
arcturus17 6y ago
So I guess your take is that speculators help price goods optimally. And I'm assuming this can be construed as good for society, because value is created, and in most cases, appropriately taxed. Fine - I'll work with that model. It seems to me nevertheless that for domains that system is suboptimal in itself. Although I take it that parkers are better than non-specialized agents at pricing domains, and that they may create more value than charging a $7 flat fee, I doubt that their pricing systems are dynamic and sophisticated enough, and therefore a lot of value goes uncaptured. I see a lot of them simply charge domains at ~$6,000, without accepting lower bids, so for all we know there is a few dozen million domains that could've gone for anywhere between $7 and $5,999.99 that will never see the light of day...
danparsonson 6y ago
It sounds like you're saying that the quality of some person or organisation's contribution to the web can be judged primarily based on how much money they have to throw at their domain name? That's clearly nonsense. These people provide no benefit to the web at large, they just game the system for free money. It's a clear example of a tragedy of the commons.
- xyzelement 6y ago
  No that's not what he is saying. Analogy time - there's a part of your town where two roads come together. There's a gas station on that corner which makes you and everyone very happy, because it's a very convenient place for the gas station to be. But how did that spot end up being a gas station? It's because the owner of the gas station valued that real estate more than the baker and the taxidermist. He paid more for it because he could earn more with it because that's what is most valuable for consumers there. These three things are connected. Same reason GM will pay more for GM.com than a teenager named George Moore (or whatever) - because ultimately GM will generate more value for it's customers with that domain than George will. I hope the analogy is helpful. That's how pricing of most things works.
  - mPReDiToR 6y ago
    No, that's not right. This is the taxidermist and the baker looking at a vacant lot and wishing they could afford to open a shop there, but they can't because some asshole is sitting on it, waiting for Shell or BP to pay over the odds for the land when that won't happen because they can get land on both roads cheaper and put two of their own competing brands up to capture all the gas sales in the area.
    - 627467 6y ago
      In the real-estate world the "asshole" would rent it out to others (such as taxidermist or baker) for cheaper until She'll or BP would show up. I guess in the web world this is equivalent to the trashy ad-filled sites you see on parked sites. Why is it? I guess maybe taxidermist and bakers of the web are cheap and would rather pick another domain. Or is just not possible to legally 'rent' out a domain.
fanf2 6y ago
The value of a domain name is entirely due to what it is used for, the services it hosts. The registration costs are negligible compared to the value to the users of the domain name. Domain squatters reduce the value of domain names by using them for junk advertising web sites instead of providing useful services.
xyzelement 6y ago
Oof! Well done. I always look for the unintuitive economics angle on things and missed this completely! You're absolutely right. The world is a better place when GM.com takes everyone to General Motors and not someone whose initials are GM who got it first. The economics of domain value definitely help make this happen. Thanks for pointing this out!
m000 6y ago
> This is actually helpful as otherwise some person comes along and buys the domain and makes some crappy website on that domain and it is their pet project so they don't want to sell (or even worse they have no contact info available and the whois is protected). That's BS. It's like saying that scalpers help bands, because only the most committed fans will pay the prices they charge. So their concerts will be more lively, and they will have more sells at the merch booths. Btw, a mom and pop business will probably happily sell the domain at the price the scalper charges. So it's not that they're making anyone any favors.
nebulous1 6y ago
> A bunch of people using quality, high value domains for low value or mom and pop businesses is suboptimal too. Your proposition requires a significant amount of "pet project" and "mom and pop" businesses getting the domain first, and also that they refuse to sell out. This has to be so much of a problem that we're willing to regularly pay squatters for the "cure". This seems unlikely to me, and I would say the reality is closer to the squatters looking for a ransom on a domain they're holding hostage, and without them there would simply be many more domains still available from the registrars. Specifically that the hypothetical cases where a domain wouldn't be able to be negotiated at all are outweighed by the overall value currently lost to squatters.

EVa5I7bHFq9mnYK 6y ago

And I doubt that business is too lucrative these days. For one domain that sells for $10000, there are hundreds just sitting there and bleeding $10 every year.

ktpsns 6y ago

Well, according to your logic the crappy website owner could also sell her domain to the brand new startup. For a price where the revenue supports the crappy website owner, not some absurd buisness. The current domain trading situation is as if some real estate agent would buy all land instead of mediating seller and buyer. If your exemplaric "crappy website" wants to make a good price, there are still domain agents which could help with the deal.

xyzelement 6y ago
That's right. And then it's just a small leap to say that "claiming a domain for a crappy biz and then selling it" is not that different than squatting.
warp 6y ago
> The current domain trading situation is as if some real estate agent would buy all land instead of mediating seller and buyer. Zillow (and probably other companies) are experimenting with this, buying up quite a bunch of homes to build up an inventory of homes to sell at a profit later.

arcturus17 6y ago

So I guess your take is that speculators help price goods optimally. And I'm assuming this can be construed as good for society, because value is created, and in most cases, appropriately taxed. Fine - I'll work with that model. It seems to me nevertheless that for domains that system is suboptimal in itself. Although I take it that parkers are better than non-specialized agents at pricing domains, and that they may create more value than charging a $7 flat fee, I doubt that their pricing systems are dynamic and sophisticated enough, and therefore a lot of value goes uncaptured. I see a lot of them simply charge domains at ~$6,000, without accepting lower bids, so for all we know there is a few dozen million domains that could've gone for anywhere between $7 and $5,999.99 that will never see the light of day...

danparsonson 6y ago

It sounds like you're saying that the quality of some person or organisation's contribution to the web can be judged primarily based on how much money they have to throw at their domain name? That's clearly nonsense. These people provide no benefit to the web at large, they just game the system for free money. It's a clear example of a tragedy of the commons.

xyzelement 6y ago
No that's not what he is saying. Analogy time - there's a part of your town where two roads come together. There's a gas station on that corner which makes you and everyone very happy, because it's a very convenient place for the gas station to be. But how did that spot end up being a gas station? It's because the owner of the gas station valued that real estate more than the baker and the taxidermist. He paid more for it because he could earn more with it because that's what is most valuable for consumers there. These three things are connected. Same reason GM will pay more for GM.com than a teenager named George Moore (or whatever) - because ultimately GM will generate more value for it's customers with that domain than George will. I hope the analogy is helpful. That's how pricing of most things works.
- mPReDiToR 6y ago
  No, that's not right. This is the taxidermist and the baker looking at a vacant lot and wishing they could afford to open a shop there, but they can't because some asshole is sitting on it, waiting for Shell or BP to pay over the odds for the land when that won't happen because they can get land on both roads cheaper and put two of their own competing brands up to capture all the gas sales in the area.
  - 627467 6y ago
    In the real-estate world the "asshole" would rent it out to others (such as taxidermist or baker) for cheaper until She'll or BP would show up. I guess in the web world this is equivalent to the trashy ad-filled sites you see on parked sites. Why is it? I guess maybe taxidermist and bakers of the web are cheap and would rather pick another domain. Or is just not possible to legally 'rent' out a domain.

fanf2 6y ago

The value of a domain name is entirely due to what it is used for, the services it hosts. The registration costs are negligible compared to the value to the users of the domain name. Domain squatters reduce the value of domain names by using them for junk advertising web sites instead of providing useful services.

xyzelement 6y ago

Oof! Well done. I always look for the unintuitive economics angle on things and missed this completely! You're absolutely right. The world is a better place when GM.com takes everyone to General Motors and not someone whose initials are GM who got it first. The economics of domain value definitely help make this happen. Thanks for pointing this out!

m000 6y ago

> This is actually helpful as otherwise some person comes along and buys the domain and makes some crappy website on that domain and it is their pet project so they don't want to sell (or even worse they have no contact info available and the whois is protected). That's BS. It's like saying that scalpers help bands, because only the most committed fans will pay the prices they charge. So their concerts will be more lively, and they will have more sells at the merch booths. Btw, a mom and pop business will probably happily sell the domain at the price the scalper charges. So it's not that they're making anyone any favors.

nebulous1 6y ago

> A bunch of people using quality, high value domains for low value or mom and pop businesses is suboptimal too. Your proposition requires a significant amount of "pet project" and "mom and pop" businesses getting the domain first, and also that they refuse to sell out. This has to be so much of a problem that we're willing to regularly pay squatters for the "cure". This seems unlikely to me, and I would say the reality is closer to the squatters looking for a ransom on a domain they're holding hostage, and without them there would simply be many more domains still available from the registrars. Specifically that the hypothetical cases where a domain wouldn't be able to be negotiated at all are outweighed by the overall value currently lost to squatters.