A recent press release by Sedo helped getting me started on the topic of bringing premium domains to the mainstream market.

Sedo announces partnership with DomainsBot – from the press release:

“This partnership provides an enormous amount of value to service providers by increasing the domain registration rate while adding a new revenue stream without additional costs,” said Mark Klein, Sedo’s Director of Business Development. “The tool itself adds tremendous value to the customer experience by making it increasingly easy for people to find a domain name that fits their needs.”

When a Webhost company or Registrar integrates and displays the Sedo portion of the domain suggestion tool to its users, Sedo will pay the costs that would normally have to be paid to Domainsbot for the queries executed and will also pay the service provider commissions of any transactions that come through Sedo.

DomainsBot executives are excited about the opportunities this integration brings.

“Having Sedo sponsor our name suggestion is a terrific win-win for the entire market,” said Emiliano Pasqualetti, DomainsBot’s Chief Operating Officer. “This gives registrars the opportunity to increase their sales and profit from the exponentially growing secondary market at no cost, and registrants the advantage to find the most relevant domains available and for sale in one place.”

This means that any registrar that would like to integrate the DomainsBot Namespinner with the Sedo results, can now get a namespinner for free if the search results include domains listed on the Sedo marketplace.

The name spinner marketplace

DomainsBot has managed to sign up the right clients and assemble a good development team. There are two major competitors in their market, with DomainTools’ Domain Suggestions being the oldest competitor, after VPOP’s NameBrain faded into oblivion. Also the registry operator Verisign offers accredited registrars a free namespinning tool. All of those tools are being offered to registrars and DomainsBot and DomainTools offer theirs on their own website as well. As far as I know the marketplace currently lacks a service that is capable of providing similar name suggestions for other languages than English.
What differentiates Verisign’s NameSpinner, apart from the fact that it’s free, is that it integrates some of their data from the news aggregator Moreover. However Verisign’s tool does not include domain names that are listed for sale, which are included in the search results from DomainTools and DomainsBot.

Bringing premium domains to the mainstream registrants

In order to bring domains to the retail market, endusers need to be made aware of the value and option of buying premium domains. However there is a major hurdle to overcome in order to get hosting companies and domain resellers to integrate premium names into their offerings: They don’t want to send their customer away.

Let’s take a look what a typical integration of an affiliate program for a domain marketplace would look like on the hosting companiy’s website.

1. Registrant searches for available domains
2. Finds a premium name in the results that he likes
3. Clicks on the affiliate link that brings him to the domain aftermarket website
4. Places a bid on the domain if it’s an auction or submits an offer
5. Receives a response, possibly needs to respond again
6. Finally purchases the domain name
7. Escrow procedure starts
8. Escrow procedure completes
9. Registrant takes possession of new domain
10. Registrant sets up hosting

If the registrant in this scenario is not a current and loyal hosting customer at the hosting company where they performed the lookup, they might now end up hosting their domain elsewhere. After all this whole process probably takes a couple of weeks already, so the hosting company might have sent a customer away, instead of serving the customer directly. While they might earn an affiliate commission, their longterm customer value is much higher if the customer signs up for hosting immediately.
In order to get more hosting companies and resellers to offer premium domains, the purchase process needs to be integrated. This also means that the marketplace selling the domain will need to have control over the domain name when it’s offered for sale, in order to facilitate a quick purchase/transfer process. And after the sale is closed, the registrant should be referred back to the hosting company where the lead originated.

So here’s what the sales process should look like:

1. Premium domain is offered on the webhosting companies’ site in an availability search
2. Registrant decides to purchase premium name
3. Registrant choses hosting package
4. Hosting company bills the Registrant
5. Hosting company transfers domain name to their registrar and changes contact information

Currently there are only a few market places that can offer this level of integration, including a quick domain transfer via an API. First of all, companies that sell their own portfolios, such as FabulousDomains or Buydomains can offer this. Also the Pool Marketplace, which requires users to transfer their names to them before you can actually sell them, could offer this level of integration. So only a company that also holds control over the domain name is uniquely positioned at this point to offer a fully integrated sale and transfer. After all, if you were running a hosting company, would you want to send the user elsewhere when he’s just about to sign up?