[thenbrent]

My understanding of the domain market is this.

Regulators realised the best way to provide domains was to let the market determine their value and allow them to be traded at will (with respect for IP). So they wholesale at dirt cheap prices on a first-come first-served basis and people can then buy and sell them based on market value. Works for real estate so why not domains?

The problem derives from the initial price and the expectations that implants. Many expect a domain to cost $10. So when they are offered a price more than that, they are pissed off and blame the person selling it to them.

Nobody walks past a vacant block in a prime real estate location and goes "bastards, if they weren't squatting that land, I could snap it up". They know the land costs $x million and don't assume it should cost $10. However, because domains are a new real estate market and not every possible domain is out of wholesale, people base their expectation of price on the wholesale price.

Now, let's think of the alternative. Anyone who has tried to buy a top level domain for a country that heavily regulates the names would understand the pain of the alternative. It can cost hundreds or thousands for the wholesale price. You're required to own the trademark already (which adds additional cost for a new project) as well as have a registered company etc. I can think of dozens of my favourite projects/blogs which I'm sure don't have a company or trademark registered under that name. This system would not only be a pain for small business, it would stifle innovation on the web.

I'm not a domainer (I do own about a dozen though) and I get just as annoyed as the next guy when I come up with a name for a project and find some punk wants $15k for the domain. But then I think of the alternative.

[davidw]

> Nobody walks past a vacant block in a prime real estate location

Vacant blocks in prime real estate locations are taxed at their market value though, no? So if you've got that land sitting idle, and you're not collecting income from rent, nor using it yourself, you're going to lose money on it. This is an incentive to sell it to someone who will make money, or otherwise find a way to employ it more productively.

That said, I don't think I'd really like to see property taxes on domain names.

[RyanMcGreal]

Unfortunately, in most property tax systems your tax rate is a function of what you've built on it, e.g. surface parking earns less than a tall mixed use building but incurs proportionately less property tax.

[thenbrent]

At first I liked the idea of market value based taxes and clearly a bunch of HN readers agree with the idea.

The biggest issue I see though is the implication for small projects.

For example, maybe in 1994 you snapped up pizza.com. You could have been using it ever since for a pizza price search engine which gets 100,000 unique visitors per month and earns you $5,000 per month. That's decent income, except the taxes on the domain's market value of $2.6 million[1] would be crippling. So despite using the domain in what most would think of as good way, you couldn't afford to have such a good domain. Now extrapolate this example for the thousands of sites that have a good domain name for a small project.

[1] http://news.cnet.com/8301-10784_3-9912380-7.html

[davidw]

Yeah, like I said, I ultimately don't think it's a good idea: it would add too much friction for the benefits.

[DirtyAndy]

Another issue with alternative ways of handling registration (and this is all a bit moot now, because I don't think anyone is ever going to change the laws and take all the parked domains back - except Libya) is how you would ever define that it is in use. People complain that they can't buy good domains when they have an idea for a project, but lets imagine you can buy any unused domain for $10 for your project. At what point do we determine that your project is never going to be viable and the domain should be surrendered? There are always discussions on HN about failed side projects, how would you feel if after 3 months, 6 months etc ICANN turned around and said you are not using that domain sufficiently, we're taking it back. I've got 5-6 projects that I have started that will probably never go anywhere, but I wouldn't want to give up the domain just in case.

Could you also imagine the costs involved with any arbitration process to handle that. If you had to build it into the average domain cost, you wouldn't be paying $10 anymore, in fact you might find a lot of domains are cheaper through the free market system that exists now.

[ohashi]

Defining 'in-use' is the biggest problem people stumble on when making that argument. I think you've hit the nail on the head with raising the sorts of issues that it would cause.

[Hexstream]

For one thing, having a crappy useless domain with ads should count as less "usage" than having just a page indicating that some project is being developed, without ads.

[__david__]

> Nobody walks past a vacant block in a prime real estate location and goes "bastards, if they weren't squatting that land, I could snap it up".

For me the annoyance comes from the fact that most of the parcels of land that are owned are actively being used for something, while it seems most of the domains in existence are owned by these squatter bastards.

[user24]

oh rubbish. There are massive tracts of lands all over the world which are owned and just being sat on. There are a tonne of old warehouses just being left to crumble away in my town. Prime locations, just waiting for the right price.

[__david__]

If we say ln = number of privately owned land parcels and lu = number of privately owned land parcels being actively used (as homes or businesses or being rented), then I contend that lu/ln > .5 (hence "most"). That does not rule out ln-lu being a very large number which makes what you said true, it just sounds like a different measurement that I was making.

If dn = number of domain names owned and du = number of domain names owned with valid DNS and no crappy domain squatter parking pages, then I contend du/dn < .5. In fact, I get the impression it's more like .1 or less (or perhaps something even more ludicrous).

Even if I'm totally wrong about the ratio of land used, there's no way that I'm wrong that lu/ln > du/dn.

[ultrasaurus]

There are some steps slowly being taken to deal with that, in Washington DC, apparently the tax on vacant property is %5 rather than 0.85% [1] (although I expect that's more to keep their revenue the same since vacant lots aren't worth much).

The equivalent first step for domains though is for Google to stop treating made-for-adsense domains as real sites, so the $10/year/domain can't be offset by tricking advertisers and web neophytes.

[1] http://yglesias.thinkprogress.org/2008/08/more_vacants/

[ohashi]

That's not us in most cases. Our parked domains generally aren't listed in Google. MFA stuff is mostly SEO types doing that. We get our traffic from type ins (and old links) which is more profitable to send directly to ads without any BS content.

[markkanof]

It's not just the cost though, it's also the process. I would be willing to pay some amount in the multiple hundreds of dollars for some domains but it's usually not clear how to go about buying the domain. There often appears to be some shady arbiter that offers to try to get the domain for me. But the whole process is handled through a website that gives no indication of how long the process might take or if any action is really going to be taken at all.

I wouldn't have that much of a problem if getting a parked domain was just like getting an available domain except on the checkout page it said $300 or whatever instead of $10.

[ohashi]

A lot of registrars have integrated premium domains (already registered) into their search processes. IE go to godaddy, search for cars and click on the premium tab next to it. It lists priced domains there. Those are being pulled from various networks which offer exactly what you're saying and it's seemlessly integrated in some cases.

[pmichaud]

Sounds like a business opportunity.

[ericHosick]

Real estate, like almost any other product, is not unique. There is always another lot.

Each domain name is unique. Try another domain name? Probably "on the market for sale."

I believe, even with trademarks, you have to file an intent to use (http://www.uspto.gov/trademarks/process/appcontent.jsp). Maybe this is to stop trademark squatting?

[KaeseEs]

So what are recurring registry fees in your analogy, property taxes?

[thenbrent]

Yes, something like that as I believe a portion of the recurring fee is used to fund regulatory bodies like ICANN.

I'm not surprised to see my comment being both up and down voted, but anyone down voting my comment, at least take the time to share your reasons for disagreeing. If there is any place a well considered domain purchasing discussion should be able to occur it's HN.