**Why are they all able to sell the same name at different prices? The pricing models seem very well worked out. Who’s making the money here? The Domain Agents who negotiate the sales of premium addresses… what’s their cut? Are they really representing themselves a lot of the time?**
I would love to hear from an industry insider to give us a little glimpse into this mysterious world.
In: Technology
It’s mostly about buying and selling internet addresses. Big companies own a lot of them. Central registry sets rules, but GoDaddy and others have power too. Prices vary based on demand. Domain agents get a cut from premium sales. They often represent themselves.
All addresses are registered with an organization called ICANN (Internet Corporation for Assigned Names and Numbers).
ICANN authorizes certain domain registrars to use certain domain names. Prior to this they are unowned. This is why you may see the same address listed from several providers. None of them have “registered” it yet but they are listing something which is owned by ICANN. Only the approved registrars can claim them from ICANN and ICANN authorizes those approved registrars.
At the point that you purchase the domain name you are paying the registrar a fee and the actual fee to ICANN for the domain name and the registrar books this for you. It is then registered in ICANN as belonging to that registrar (go daddy, etc.) and then that registrar lists it under themselves as belonging to you.
EDIT: As others have noted, it is worthy of noting that some approved registrars will preemptively purchase some domain names which they think will be highly desirable and then mark them up in hopes to make money. In fact, this is also something that individuals do on occasion WITHIN the registrars. There are several cases where individuals have poached high profile domain names due to an oversight in the renewal of the domain name and then “extorted” money from the previous owner seeking to reclaim them. The registrars mark up the domain names with their fees but so can individuals who have purchased them from the registrar. Those individuals are also many times able to re-sell them to others within the same registrar, etc.
If you register a domain not owned by anybody else, it’ll be a basic cost depending on what services you buy with them (if any). These companies can register the domain for you with the big top level domains like `.com` and `.net` and all that. Other domains like those specific to a country (`.us` for USA, `.ca` for Canada, etc) may require a different registrar.
The domains “for sale” might have belonged to someone else at some time, and when they lapsed the registrar basically transferred ownership to themselves rather than let them die. Or someone decided to just spend some money to buy them. They think these names are valuable enough to be worth trying to sell at a higher price, and are worth the increased costs of keeping them up.
This is my first reaction here so sorry if this is all not ELI5 enough and hopefully I don’t break any rules. I have worked in this industry for well over a decade though and wanted to try my hand at explaining 🙂
First some background info:
The answers here so far are mostly correct, but also seem to be confusing registrar and registry.
A domain has multiple levels:
google.com is a domainname
.com is the ‘Top Level Domain’ for google.com
A registrar manages domainnames, like google.com, for their customers (or themselves), who can use the domain however they want (within terms and conditions of course): create a website to host on it, forward to a different domainname, only use it for mail, etc. Google is the registrar for google.com, so in this example they manage it for themselves.
A registry manages the entire Top Level Domain, so for example all domains ending in .com (google.com, microsoft.com, etc). Every Top Level Domain has exactly one registry that manages it, in the case of .com it’s a company called Verisign.
ICANN was also mentioned but is not actually a registry or registrar: they manage the world wide DNS (Domain Naming Service), which in the most basic explanation is ‘only’ a translation of domainnames you type in your browser to a set of numbers (IP address) that is used to locate the server a website or mailservice is hosted on. ICANN has a lot of influence on who gets to be a registry, especially for generic TLDs (Top Level Domains ending in 3 or more letters like .com, .online, .tokyo). Country TLDs (like .us or .uk, basically anything with 2 letters behind the .) sometimes follow ICANN guidelines for who may use a domainname, but also regularly add their own requirements (like requiring residency in the country itself).
The last piece of background info is regarding the ‘owner’ of a domain. Technically you don’t ‘own’ a domain, you (or your company) owns the ‘right to use’ a domain. This is entered into the registry’s database by a registrar, using your details like name and email address so you can be identified as what is called the Registrant of a domain.
To sum up:
Registry – manages a Top Level Domain – .com
Registrar – manages a domainname in a Top Level Domain – google.com
Registrant – end user that owns the right to use a domainname – Google in case of google.com
Now to the questions, paraphrasing a few:
Who owns the bulk of these domains?
Nobody. Most potential domainnames don’t exist. In general, domainnames may contain anywhere between 3 and 63 characters before the Top Level Domain. While over 150 million .com domains have been registered, the potential number is way higher (I am no math genius, but 36-ish characters spread between all options of 3-63 characters long, you get the idea). Obviously a lot of potential domainnames are also random gibberish that nobody will ever want to use.
What is the power dynamic between registry and registrars?
A bit long to explain, but both need eachother. Obviously bigger registrars like GoDaddy have more sway in a registry’s policies than smaller ones, but no matter their size, they need to adhere to rules set by a registry to prevent not being able to register certain TLDs anymore. And to protect the stability of the internet ICANN, registries and registrars all work together.
Why are there different prices?
Registries set one price for all domains in the Top Level Domain they manage, with the exception of premium domains (see further down). Registrars set their own markup. Some are cheap, others more expensive. All depending on the sort of customer they want to attract and for example level of support they are willing to provide. Basically that is the free market setting in, in the same way different bakeries might sell a loaf of bread for different prices while using the same ingredients.
Why are some domains more expensive than others in the same Top Level Domain?
There are two main options here: either the registry designated a specific domain as being very popular and sets the pricing a lot higher than usual, or someone has already registered a domain and is trying to sell the domain to the highest bidder. This last thing happens mainly with very obviously interesting domains in certain industries (short and generic are usually properties of these domains).
Domain sales agents, what do they do and for whom?
As mentioned above, ‘premium domain’ is a thing that only a registry can declare. Other domains with exceptional pricing are just being sold by the current Registrant. Domain sales agents are sometimes just the current registrant selling the domain, or act as broker between the current registrant and potential buyers (there’s also specific platforms online acting as brokers). I don’t know a lot about their practices honestly, so that’s as far as I get here.
Edit: tried reformatting and added ‘with exceptional pricing’ in the last paragraph
These businesses have two profit models: speculation and services.
As speculators, they register some unregistered domains with the domain registrar. They pay a fee up front, and hope that someone is willing to pay them a premium to get that domain name.
All unregistered names are available from the domain registrar for a fixed fee. Since they work closely with the registrar, they offer a service to people who want an unregistered name for their own use. They also offer those customers bundles, with things like email services and web services, to maximize the advantage of using their services.
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