Thursday, March 6, 2008

Domain Resellers

This entry started out to be about Domain Resellers in the .nz market. On the way to writing the article I did some homework & discovered my case study example was actually something else.
The Domain Reseller that isn't

Today, as for the last few months, the cheapest single domain registration of .nz domains is provided by Domains4Less. Strangely enough Domains4Less doesn't seem to be a domain reqistrar, but a reseller for Web Drive's Domain Admin which is a registrar.

There's some interesting aspects to this. Web Drive's primary business is hosting and I don't think they are terribly interested in being seen to be retailing to the low end of the domaining market, but they have spotted a profitable niche having resellers. I've no idea of the history, but looking at their control panel I'm pretty sure they started with web developers reselling hosting to clients and added the ability for them to resell domain names as well. With so many registrars also being hosting companies, this is presumably a handy way of keeping the web developers from visiting the competition on a regular basis.

Web Drive list their retail price at $35 and their reseller pricing is anything from $21.50 to $27.50 depending on volume. Presumably the developer/reseller can make a few dollars to cover their administration costs by marking up their price to retail, but they are hardly going to get rich on it. A big part of the deal is that Web Drive don't provide support to the reseller's customers, but if the developer is already providing support for websites that's hardly a major issue.

Because of a few factors Domain Agent has also became a preferred registrar for .nz domain investors. Anyone with close to a 1,000 domains seems to be there. They have a nice control panel, monthly billing on renewals and that deeply discounted price. The service they offer has a fully functional reseller platform, which as I have no interest in reselling I don't use, but I do recognise it when I see it.

Enter Domains4Less. They have a fairly minimal site based around the Domain Agent reseller system. Superficially they've someone who has decided that they can make a profit by selling domain registration for $22.95 a year, with all the heavy lifting done by the Domain Agent system and their control panel. Once you've subtracted credit card fees it would be a fairly marginal business, but if you're a small operator with slim profits, even a tiny extra revenue stream could be worthwhile. Another thought that occurred to me that they might be trying to push themselves over some limit to get a better price, perhaps an investor with 6 or 7 hundred domains that is trying to increase the size of their managed portfolio to the magic 1,000 domains to get the best price, or perhaps increase turnover to get a better deal from their credit card processing company?

It turns out that they are neither of these things. While researching this article I took the liberty of looking them up at the companies office, and discovered that the two companies have the same directors and a similar shareholding. In other words they have joined Net24 and Digiweb in deciding to go after the price conscious end of the retail market with different branding.

Understanding Domain Resellers

OK, my primary example turned out to be something else, but that doesn't really affect the rules and risks of dealing with resellers.

.nz domains can only be registered through authorised registrars and they have agreed to obey some pretty strict rules that are designed to protect the registrant (domain owner). Other than names they need for their own business, registrars are only allowed to register domains for customers but are allowed to accept these requests from customers in almost any way they choose: web-site, email, phone, fax, cuneiform tablets or through an agent.

A reseller is someone who acts as your agent to register your domain name & (hopefully) makes a small profit on the deal. Presumably they give you some added value over your registering your domain name directly. This could be anything from managing your web presence to passing on bulk pricing.

Your business relationship is with the reseller, and they have the relationship with the registrar who has registered your domains. As long as both relationships remain amicable

What are the risks?

When you're dealing with a reseller, they are accepting orders from you to register domains and passing those orders onto the registrar. It's important to remember this, you may be paying Nocturnal Aviation Web Designers, but your domains are registered though Domain Agent, Discount Domains or another authorised registrar, and that registrar is accountable to the DNC for them. I'm not terribly sure about the other registrars but when I opened my Domain Agent account I read through their Terms and Conditions. As I'm not reselling I only skimmed the reseller portions but if I recall correctly, it has a phrase that if the reseller goes under then Direct Admin will take over the management of the domains to protect the registrants. I would assume that this would apply to any registrar as the DNC would require them to take over the domains and honour their commitments. From that aspect you are protected.

Where it could get sticky is that you usually don't have direct access to the registrar's help desk so you are dependant on the support your reseller can give you and if the reseller goes bad you could lose any prepayments you've lodged with them for renewals they haven't yet processed. If you're renewing just before expiry you might end up with an expired domain you can't retrieve / renew for a while until it's all sorted out. The registrar would need to step in at that point or if they refuse you could go to the DNC as a last resort but you would need to be the registrant of record.

I suppose you could get into a dispute with the reseller over if you had paid to renew a domain and I have no idea how effectively a registrar would resolve that problem but I imagine you could potentially lose the renewal fee.

Other than there being one more link in the chain, and one more company to potentially go belly up, logic says you should be just as safe with a reseller as dealing directly with the registrar. My gut feel has always been that I'd rather deal with the registrar to minimise risks, and I've avoided resellers but I can't justify that feeling.

As long as you are the registrant of record, make sure you have your UDAIs safely filed away and always have a week or two's buffer on your renewal dates the system should work as it's designed to and protect you.

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