The Digital Shakedown ( Buying & Selling Domains )
I really don’t know how to categorize this topic because you will soon see that there will be mixed feelings about if this is a legit venture or do the digital giants once again have their boot on the neck of the little guy. Let’s talk about domain auctions. If you’re not familiar with a domain auctions then no worries because most people don’t even know they exist and one reason is that it’s very few of them. A domain auction is exactly what the title states, an online auction that private domain owners can buy and resell domain names for virtually any price they someone is willing to pay. An average unique .com extension will start at around $9.99 – $19.99yr but it’s so many hosting platforms online that you can find them in some places for $3.99 or even $1.99 on some sites.
Say I was searching for some clever business names on Google for my new company and ran across a few that I like and picked one. Naturally, one of the first things I would need to do is check the availability of the business name in the state and the domain name to see if there’s a related business that is using it. This is where your professional courtesy or even moral values may come into question when faced with a situation where the business name is taken but the domain name is available. Do you buy it and resell it to them for a profit? Use it and drive their potential traffic your way? Or pass on the opportunity to make some coin and try to come up with another clever business name for yourself?
Let’s start by saying, coming up with a business name that fits your company perfectly just to find that someone is already using it can be very disappointing. So if you are faced with a situation where a company has already registered the business name you wanted but hasn’t gotten around to or just doesn’t know the importance of buying the right domain right away, what do you do? For those not aware, domain names are unique. There are not two identical domain names, there is plenty of extensions like .com, .org, and .net and you can place them behind anything but none are identical. Which puts you in a position to now buy the domain name. The other company legally owns the rights to the registered business name but you own their domain name which means with the diabolical plan you could control the flow of the online traffic and it’s nothing they could do about it but try to compete or change their business name which makes it available for you.
Another option is to profit from it, here’s where making some serious coin kicks in, this is also where your moral standings will come into question. You can say to yourself, self, I am going to contact the guys that own the business name of my dreams and offer them the domain name they need for the same $9.99 I paid for it. Or you can say I’m going to sell it to them and just make a couple of dollars for my troubles. Or you can say, I’m mad about my business name and I want some retribution so I’m going to mark up this domain name 1000% and stick it to these guys.
Charging someone $999.99 for a $9.99 purchase just because you got to the store before they did may seem excessive to some people but it’s just business as usual to others. Back to domain auctions. Let’s use GoDaddy for this example because they hold one of the largest domain auctions online. So for $40.00 a year you can register to be in the domain auction, which means you are now eligible to buy and sell available domain names on GoDaddys auction platform. Godaddy auctioneers will give you a suggested price but you can set any price you want. Just go to Godaddy and search for domain names like (thecolored.com) and you can see how a private owner has placed that domain in the auction on sale for almost $2,200.00.
If these tactics are applied right this can be an incredibly profitable business but at whose expense? If you don’t have a really nice budget set aside an unexcepted 22 hundred dollar expense can be game-changing. That’s why the people that really invest in domains usually target extremely common names and phases for domain names because let’s face it, the average person is not very creative and most people tend it gravitate towards phases, slogans, or sayings for their business names, which means with any success they will eventually need the .com, .org or .net extension(s).
Some people absolutely will target new businesses with unique names to buy their domain, especially on social media. People that start social media businesses don’t understand that business doesn’t start or stop on social media. Yes, they are great platforms for exposure but you will never get the full potential of your social media audience without a website, and having the exact same domain as your business name is crucial. Without getting too deep into it but not having the right domain name can affect your business in more ways than you think. Having a domain name that doesn’t match your brand can make people think you’re taking them down a rabbit hole or maybe you are not the person selling this product, and on a bigger scale, you can get denied contracts for not having a consistent message especially with industries like home health care and private nursing contracts.
Now we come to the real question. If tech giants like GoDaddy are allowing the public to buy and sell domain names for any price then what’s stopping them from getting first dibs on the more valuable ones and selling them in their own auction for a skyrocketed price? In 2019 a GoDaddy employee was fired for bidding in a GoDaddy auction under an assumed name for conflict of interest. Almost 10 years previous the then VP of Godaddy Adam Dicker was criticized about bidding in the domain auction but that was before any rules or regulations were created for the auction.
After reading this, would you buy a company domain name before the actual company can get it with the intention of reselling it to them for a tremendous profit? If so, that would be considered a digital shakedown, and guess what the legal term for shakedown is? Extortion! and it is commonly practiced by organized crime. Maybe it is just all business and being last in line usually results in getting the leftovers but extorting someone’s lack of knowledge or resources for a crazy profit is nothing new, technology has just brought a new way of doing it.