A few stipulations in Moniker’s broker agreement for next week’s TRAFFIC auction have raised questions in the domain name community.
[Updated 10/19 4:15PM CT: I had a chance to talk to Moniker CEO Monte Cahn and get clarification on a number of items in the agreement. See below for comments.]Moniker’s live domain auction at TRAFFIC next week will be the biggest live domain auction ever. In addition to domains previously announced and premium .mobi domains, the following domains have been added to the list:
* Above.com
* Advertisement.net
* Appliances.net
* Breathalyzer.com
* CaymanIslands.com
* CD.net
* Coast.com
* Cost.com
* DigitalCameras.com
* DownloadGames.com
* Elections.com
* Gambia.com
* Globe.net
* GroupRate.com
* HELL.com
* Hi.net
* Idea.net
* InternetRadio.com
* Iran.com
* JonesBeach.com
* MonaLisa.com
* Mortgage.net
* Mozambique.com
* People.net
* PO.net
* Prohibited.com
* Reunite.com
* SexEducation.com
* Tall.com
* TelephoneCall.com
* Transplant.com
* TravelForLess.com
* University.org
* USCitizen.com
* Vocalist.com
However, some domain owners are crying fowl at the terms of Moniker’s contract for the auction.
Let me point out that it makes sense for there to be an exclusive broker contract for this event. Moniker doesn’t want to offer a domain only to find out the owner sold it a few days earlier. However, there are a few items in the contract that are questionable:
1. 180 day exclusivity. Since the auction is next week, this doesn’t make sense. Moniker claims that 180 days will allow it to include the domain in future auctions and on the Marketplace Pro system. I think this is a stretch given that the other 5 auction opportunities won’t all fall into this window. Here’s the practical implication: if your domain doesn’t sell at the auction, but sells on another venue in the next 180 days, you will have to pay Moniker a 15% commission. On a thread at DNForum, Moniker rep John Mauriello said that you can change the exclusivity clause to 30 days if you wish.
UPDATE: Moniker used its standard brokerage agreement for the auction. If a name gets a lot of publicity during the auction and then sells afterward, it makes sense for Moniker to be compensated. If your domain only goes into the silent auction, and then 3 months later it sells on Sedo or Afternic, Moniker won’t come knocking on your door for 15%. Also, Moniker will agree to different terms depending on how premium the domains are.
2. The following clause has worried of a few Domain Name Wire readers:
“Seller agrees that Broker may purchase a Name from Seller during the Exclusive Sale Period in an effort to consummate a sale with another party (For creative financing, special term sales, etc).”
For example, assume a company wants to buy a domain but can’t afford to pay your $100,000 asking price. Moniker might buy the domain for $100,000, then offer it to the interested party for $50,000 up front and $50,000 financing. In theory this will be to the sellers benefit, but it’s also possible that this can be abused. As long as sellers can agree to accept a deal, rather than just sell at the reserve, this term shouldn’t cause any heartburn.
UPDATE: This is strictly from a financing perspective. If Moniker or Domain Capital finances the domain, they have to take ownership of it. Although this clause reads as Moniker can buy domains and flip them, this is not the intention.
3. A number of potential sellers are upset that they’re being asked to sign an exclusive agreement without even knowing which, if any, of their domain have been selected for the auction. Keep in mind that the contract says the domains will be attached in an addendum, so this agreement won’t apply as a blanket to all of your submitted domains.
Overall the agreement is what I’d expect from a domain broker. The question is if the terms make sense for an auction.
UPDATE: Overall, I think the agreement is fair. Moniker isn’t out to nail anyone, and getting clarification direct from Moniker was very helpful.
basicity says
I share the same concerns that you highlighted above. Per your writing of Moniker’s Live and Silent Auctions taking place later this month, I submitted my domains portfolio for consideration. Got an email yesterday saying my domains are being considered and asking me to sign the Exclusive Right To Sell Agreement. Read over the agreement and couldn’t agree to the same items you highlighted. And so I didn’t sign it and only gave my consent to the auctions taking place at Miami TRAFFIC East 2006 from Oct 26-28 only.
ParkQuick says
Monte seems to be doing a good job given the pressures that he is under on this one. Moniker would like to make some money, of course, and a successful auction will also build their brand even more. It should be exciting.