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derivatives
This page looks at domain name as a new 'asset class'.
It covers -
It
supplements discussion regarding the DNS (in particular
of domaining), ecapital
& investment, hedge funds
and domain name portfolios.
introduction
In
a world where it seems that almost anything can be converted
into a financial instrument - David Bowie commodified
his copyrights by issuing Bowie
Bonds and entrepreneurs have promoted specialist funds
dealing with fine art,
classic coins or old violins
- it is unsurprising that enthusiasts have characterised
names as "a new asset class" ripe for exploitation.
There have been attempts, for example, to sell domain
name futures - a punt on whether a basket of names would
rise or fall in price.
Some gurus have suggested that registrants lease dot-com
names to site operators or domainers,
whether for a flat fee, a traffic-based fee (eg 0.1 cents
per unique visitor) or a share of revenue (typically a
few percent of advertising sales).
In the absence of independent studies it is unclear whether
many small registrants are recouping holding costs with
such leasing. One resale specialist trumpets "Turn
my domains into a cash machine!" in urging registrants
to use their unutilised domains as advertising space.
Even
an average domain can easily earn back the cost of registration,
and quality generic domains can earn several hundred
dollars per year
insurance
Some US vendors have promoted domain name insurance, apparently
aimed at speculators worried that the 'value' of their
names might fall and result in the fire-sale offers such
as that of the US vendor noted elsewhere on this site
-
The
inventory of domain names alone is conservatively valued
at over $150,000 ... you can walk away with the entire
network and all of the domain names for only $9,995,
that's 85% off the normal price. I must be in love,
or just losing my mind. Grab this before I come to my
senses.
As
with insurance regarding speculative investment in other
intangibles where there is only a small market, it is
unclear whether vendor establishment fees and annual charges
are offset by protection against ongoing falls in the
price of some names or the indifference of many buyers.
A perspective (fine art insurance) is here.
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