RegisterFly collapse creates headache for eNom’s buyer.

The Dummit Law Firm of Winstom-Salem, North Carolina is leading a class action lawsuit against RegisterFly, ICANN, and eNom after the collapse of RegisterFly left about 75,000 domains in limbo.

This spells trouble for Demand Media, the domain company that launched last year and has collected over $200M in investments. Demand Media purchased eNom and is now on the hook for any potential liabilities. eNom is a party in the lawsuit because RegisterFly started as its life as an eNom reseller. Demand Media’s pockets are bigger than RegisterFly’s and ICANN’s, which is probably why they were included in the lawsuit.

New domain name companies, such as Demand Media and iREIT, have found themselves on the defending end of lawsuits based on acquisitions. In the iREIT case, the former business partner of one of the domain portfolios it acquired has filed suit. The allegations in the lawsuit have nothing to do with iREIT, other than that it bought the domain portfolio in question. This is a legal risk that these companies have probably paid little attention to. Instead, they’re more concerned with the legalities of trademark domains. It’s hard to do due diligence on portfolio acquisitions other than reviewing the domains being acquired. I imagine that the lawyers for these firms write terms into contracts to state that they are only acquiring the portfolio, not the business that owns them. But this may be a tricky proposition.

Domain portfolio buyers should write two items into contracts:

1. They are only buying the assets of the company (i.e. the domain portfolio), not the actual company.
2. The seller warrants that there are no trademark-infringing domains in the portfolio.

Information from Sedo, along with an Afternic sales analysis, reveals that the typical domain name purchase is under $1,000.

It’s always bothered me that domain name aftermarkets reveal “average” sale prices for domains. Averages do not represent typical domain sales because they include outliers like Vodka.com, which sold for $3M. So if a domain seller sells 100 domains for $100 each and one domain for $3M, then the “average” domain sale price is nearly $30,000. But domain sellers shouldn’t expect $30,000 — they should expect $100 for their domains.

Sedo CEO Tim Schumacher talked about average sales prices at the ICANN meeting in Lisbon, Portugal on Sunday. But he also revealed Sedo’s median sales price, and it tells a different story. The average sales price is about $2,000, but the median price is around $600. The median is the middle point at which half of domain sales are above the amount and half are below the amount.

Domain Name Wire conducted analysis of Afternic’s reported sales from 2006 and found similar numbers. The average sales price was $1,665 but the medial sales price was $750. (These numbers do not include sales that buyers or sellers requested not be disclosed.)

The message isn’t that domain values are low, but that sellers need to understand what’s really going on in the market. As Ron Jackson points out in his sales charts at DNJournal, the top sales are exactly that. They do not represent “typical” sales. The “typical” domain name sale is under $1,000.

ICANN is reviewing policies in the wake of the RegisterFly fiasco.

Many in the domain name community are blaming ICANN for not taking action sooner against disgraced (and disaccredited) domain registrar RegisterFly. The company imploded earlier this year, placing valuable domain names in limbo. ICANN intervened after it was too late, say critics.

An article from the Associated Press says policy reviews are on the agenda. There about 860 registrars now and growing. (The number of active domain registrars is lower. Google, for example, is a domain registrar but does not register domains on behalf of customers.) ICANN is reviewing a number of policies, including:

1. Whether registrars should have to exhibit certain skills/competencies
2. If ICANN should approve registrar ownership changes
3. If ICANN can create enforcement tools short of removing accreditation

The latter item is key and something ICANN officials have lamented about in the past (including publicly at last year’s Domain Roundtable conference). ICANN’s hands are tied as it can’t fine, suspend, or otherwise punish registrars for infractions that may not warrant removal of accreditation.

A number of domain name owners, including investor Frank Schilling, recommend that all large portfolio owners have some sort of stake in their registrars. Domain company Logic Boxes offers a domain accreditation consulting service to help domain owners become accredited registrars. The company advertises that domain owners with more than 4,000 domain names should consider becoming a registrar.

Oversee.net’s popular conference will hit Amsterdam in May, back to L.A. for 2008.

Oversee.net, parent company of domain name parking company Domain Sponsor, has announced its next DOMAINfest conference will be in Amsterdam May 16-17, 2007. The agenda and speakers have not been set, but people interested in speaking may complete a submission form. The DOMAINfest web site also refers to another conference in L.A. in 2008.

The most recent DOMAINfest conferece was held outside of L.A. in Hollywood from January 31-February 2, 2007. The keynote speaker was Michael Arrington of TechCrunch. Sponsors for the event included Casale Media, Skenzo, Domain Capital, and Bank of America, among others. Oversee.net has a line of credit with Bank of America.

DOMAINfest is just one of many industry conferences for domain name owners. Sedo is holding its SedoPro Partner Forum in June just before the next TRAFFIC conference in New York City. (Early bird admission prices for the TRAFFIC conference end this week. Domain Name Wire will be at the TRAFFIC conference.) The next Domain Roundtable conference, organized by Name Intelligence (DomainTools.com), will take place in August 2007.

Video.us has sold on domain aftermarket Afternic for $75,000.

Video.us has set a record for publicly announced .us domain name sales at $75,000. The transaction was executed through Afternic and was completed today, according to the sales logs at Afternic.com.

.Us is the country code domain name for The United States. .Us has grown in popularity and there have been many five figure sales. Large companies have started to embrace the .us extension, and Volvo has even advertised its Volvo.us domain name in TV commercials.

Other high prices realized for .us domain names include Models.us for $30,000, Jew.us for $29,500, and Football.us $18,510.

City.us domain names often attract offers in the $5,000-$10,000 range. I have personally bought a number of .us domains that have direct applicability and potential business uses, such as Wifi.us and Prefab.us. Video is certainly a hot topic these days with video search, video content (e.g. YouTube), video on wireless devices, and video offerings from traditional phone companies.

The whois for Video.us still shows the previous owner, AdoptableDomains.com, and the domain currently resolves to Sedo parking. It is unclear who the buyer is.