Trading in Domain Names: Squatters are Digital Hackers

Why would you pay for an existing domain name when you can register a new one for just a few euros? I understand that question. For a long time, domain trading was considered “not done” and was surrounded by a lot of emotion. It’s a case of: what’s unfamiliar is unloved.

Criticisms Are Justified

The market I operate in, domain name trading, was long seen as opaque, but it’s becoming increasingly professional. When I entered this market, I quickly saw parallels with the offline real estate market. Why? I believe that only through explanation and transparency can we address the criticisms in my industry, where the term “squatters” (akin to property squatters) affected me the most. It’s high time for more clarification.

Registration Fees: The Rent for Your Space

When you take over or register a domain name, you pay the registry (in the Netherlands, that’s SIDN) registration fees, plus annual renewal costs. This is usually handled through your hosting partner, the party managing your website. These costs are comparable to rent, especially since a domain name never truly becomes your property. The registry always remains the owner.

Entry Fee: Payment for Acquisition

Securing a suitable or attractive name that fits your business model is difficult, if not impossible. Most names are already registered. This leads you to the aftermarket: previously owned domain names that are for sale. You pay a broker (much like an offline real estate agent) a fee for the transaction (a commission). Just like retail locations, domain names hold a certain value. In both cases, you can think of it as an entry fee.

Domain Name: A Virtual Storefront

With a domain name and a website connected to it, you’re visible and findable on the internet—essentially, a digital shopping street.

Website and Content: Your Inventory

You fill your digital store with information, and in the case of an online store, with products. This is essentially your store’s inventory.

Rent Unpaid: Property Becomes Available

You must pay renewal fees each year. This sometimes goes wrong, especially when communication between you, the domain name holder, and your hosting partner isn’t clear. Failing to pay means losing your rights to the domain. Fortunately, there’s a "quarantine period," a grace period during which you can restore the domain name to your ownership.

If you don’t act, the domain name becomes available for the next interested party, and it’s often then "for sale" through a broker.

Domain Landlord: The Domainer

With this label, I’m treading on thin ice, but I’ve got your attention. Domainers are people who invest in expired domain names because they see commercial potential. In the Netherlands and Europe, this is still a fairly unknown market. In the U.S. (where trading .com names is common), it’s already fully accepted, and domain names are frequently auctioned.

Squatters: The New Hackers

In my introduction, I mentioned emotions and the idea that what’s unfamiliar is unloved. First, I don’t deny that there are shady parties deliberately trying to take advantage of people. They operate in a gray area and often send out all kinds of unsolicited emails. Thankfully, most parties are simply professional and sincere. Re-registering a used domain name to make it available again is permitted. There’s still work to be done to make this practice better known and accepted.

Funda: A Marketplace

There are several international marketplaces where you can buy a domain name. In the Netherlands, there are also initiatives to make domain trading more accessible. More on that later.