Purchasing Broker for Domain Names: Opportunity for the Sector

A Conversation with Michiel Henneke, Marketing Manager at SIDN

The trade in domain names and the roles that providers play or are still missing in this field were the subjects of discussion between Remco Doeve (Dovendi) and Michiel Henneke (SIDN). A conversation about the current state of the sector and the areas where the market still has much to gain.

SIDN participated in the Chamber of Commerce (KvK) Starter Days to assist newcomers in finding a suitable domain name. You were present there. What challenges do starters face when searching for a good domain name?

"You can see that starters struggle with translating their business idea into a good name. Additionally, they find it challenging to differentiate between the domain name and the trade or brand name. Often, the name they came up with is difficult to remember, and they have to explain or even spell it. Many starters haven't actually sought feedback on their name from a critical third party. Starters should ask others for feedback on this aspect more frequently."

Would starters benefit from purchasing an existing domain name? After all, these are often of higher quality.

"Those who have a name in mind usually opt for an available name. Some do prefer a domain name that is for sale but find the 'aftermarket' difficult to access. Part of this is a matter of price perception: the market is not very transparent, and in the media, they mostly read stories about extreme prices. Also, a starter doesn't know what to look for when making a purchase. There is no equivalent of a 'BOVAG quality mark' for domainers.

A BOVAG for Domain Names. What do you mean by that?

For a starting entrepreneur, it is very difficult to determine the right price for a domain name. They often lack a clear understanding of the peripheral issues to watch out for. Consider, for example, matching trademarks and trade names, where the holder can object if a registered domain name closely resembles them. There are also domain names on the market that have been used maliciously in the past, which can cause problems for the buyer if they go live under the same name."

Isn't that a business risk?

An entrepreneur wants to avoid that risk and needs help. The market for mainstream domain names still operates from a seller-centric perspective. A 'purchasing broker' who can assist the buyer and, for example, emphasize the importance of trademark registration, is mainly present in the top segment. This makes many starting entrepreneurs somewhat hesitant. This effect is reinforced by the fact that there are still freely registerable names available. Add to that the fact that not all domain name traders focus on end users. In the long run, however, this is a hindrance to a more mature and accessible market. Compare it to cars: without organizations like ANWB and BOVAG, the willingness to buy a used car would be significantly lower. Parties in the sector can certainly take up this challenge.

Since some time, SIDN indicates on the website whether a domain name is for sale. To what extent does this contribute to awareness of the trade in domain names? Does an entrepreneur better understand that a domain name costs money by having the 'for sale' status?

The 'for sale' status is a pilot for us that has been running for six months now. We see that approximately 150,000 domain names are offered for sale, and we hear that transactions are actually taking place, but we have not yet received feedback from customers. However, we would like to see more providers using the functionality. We are looking for broader adoption than just registrars with a domain specialist focus.

How can entities like Dovendi strengthen the aftermarket for domain names? Should we do something about the price, or should we raise awareness?

It is mainly about improving the position of the buyer and making the market more transparent: how can you guarantee the buyer of a domain name that the purchase is safe? How does a buyer know what the right price is? In addition to the aforementioned purchasing function, the sales process can also be made safer, for example, with delivery through escrow. Platforms that offer this do exist, but the problem is that the average entrepreneur is not familiar with these platforms. Good information provision can already achieve a lot.

Are you a domainer and curious about the developments within Dovendi?

It starts with an email to info@dovendi.com, and who knows...