Tuesday, April 1, 2008

Late Renewals and Drop Catchers

It's no secret that most of my domains have come from drop catchers. Most of the currently active .nz domain collectors have also picked a fair proportion of their domains up through drop catchers.

One of the on-going frustrations of drop catching is going to the effort of doing the due diligence on an expired name and not getting it. Sometimes this is because someone else decides it is worth more than I do , sometimes it's because another drop catcher gets the domain, and sometimes it's because the domain owner decides to renew the domain just before it drops.

A couple of domain collectors have long made a practice of gauging the market by letting their domains expire and then renewing them after the Expired Domains auction ended. When this was 8PM they had 4 hours to renew, these days I hope they are renewing a little earlier. I've learned to spot the ones who do this on a regular basis and usually don't often bother seriously determining what I'd spend as I know they are unlikely to actually become available.

I'm not at all sure that it is a useful tactic for gauging the value of domains as there aren't enough people active on the drop catchers to determine a fair wholesale market value. I definitely don't believe you can compare prices at Expired Domains with retail sale prices. Realistically there's about a dozen people who buy domains from there on any kind of regular basis and if a domain goes for $59.95 it's because only one of the regulars wanted to add it to their portfolio. Except in the rare case where it gets competitive Expired is much more like a fresh registration than a sale, and even then it's usually a sale to someone who is planning to mark it up considerably before resale. I've seen really good domains go for $24.50 because I made a mistake and missed the auction end by a few seconds.

So let's assume that the Expired bidding went high enough to pay what the owner wants for the domain and maybe it gets them a sales lead to another domain investor, but some of the big spending investors refuse to buy directly even though they were prepared to bid up large on Expired. About a year ago another investor told me how he'd pulled a domain back from the expired list and approached the person who had bid high on it, someone well known to have deep pockets, and was met with a blanket refusal to deal. Personally I would have approached the 2nd place bidder and offered them the domain for their top bid, but the person telling me the story was nearly as inflexible as the one who refused to deal.

There's another downside to all this, in order to get the name in the expired auction and have a chance of seeing some realistic bids it needs to have been expired for nearly 3 months. Depending on how you deploy your domains that's three months when it's not generating any revenue or not creating any sales leads. If you've decided to ditch the domain this makes sense, but if it really is an investment domain it seems a large loss for a minimal gain.

A few months back a well known investor had quite a few domains he'd lost interest in expire and they dropped over the last few weeks. While most of them were just left , a very few created considerable interest at Expired and he renewed them at the last minute to try selling them. I don't know if he sold any or not but I was astounded when this suddenly became controversial with claims of unethical behaviour being thrown around, as well as some claim that this is unfairly affecting Expired's business.
I know the person who renewed the domains and he has his way of looking at the world that differs in a lot of details from mine, but the important thing is that once he makes a deal he honours it. This means I can do business with him and have occasionally done so and I've found him an honest trader.
Everyone is out to maximise their profit and most of the ones that stay around do it legitimately. this investor is just one of the people doing this, his way, but still within the rules. When he lets a domain expire he isn't forming a contract with Expired, nor with Expired's customers, he's just letting the domain go. He's not the only one who redeems domains in the last few hours.

Like all drop catchers Expired Domains are basically opportunistic, and their whole process is automated so they aren't really expending any more effort on these domains than they do on domains they lose elsewhere, less actually as their drop catcher won't be using any of its limited resources trying to grab it. They offer to try and grab domains, they don't always succeed and they can fail for a number of reasons.

I don't have a problem with what this investor is doing. Expired doesn't own the domains they list, they just offer to try and register them for the highest bidder. He doesn't have a contract to allow Expired Domains to sell his domains and they aren't offering him any part of the action. They're just standing there ready to grab his domains the first moment they can and without any recompense. Sometimes they get them, sometimes other drop catchers get them, sometimes they are renewed at the last minute. When I bid on a domain at Expired I also may chose to bid on that domain at Discount and might even try to reserve it at BB-Online. Expired have no right to complain about this and very little to complain about this investor redeeming his domains when he does.

As it happens this investor did what several other domain owners including myself have done on a number of occasions and renewed the domain fairly late in the process. For me it wasn't for this reason, and I suspect the others in the past weren't for this purpose. The domain was never on offer through Expired, their mechanisms simply can't account for people deciding to renew late in the process.

Even if it did worry them, Expired can hardly refuse to list an investor's domains at the 48 hour mark because that would annoy many other of their regular customers and they will just have to accept the part of the pie that's left them.

If you're after someone's expired names, why not drop him or her an email when the list comes out well ahead of the drop offering him a price if it doesn't go to auction? If you don't want to do this because they might ask too much, and decide to try to get it cheaply, don't complain when it vanishes at the last moment. Either put it aside and move onto the next domain or make this investor an offer and buy it directly. Either way don't get stressed about it. No single domain or group of domains you were trying to get cheaply is worth getting upset about.

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