Patent would allow for securitization and trading of domain name portfolios.
Gregory Manriquez and Stevan Lieberman of NameDrive have filed a patent for domain name securitization. The patent was filed in November 2008 and published yesterday.
The invention, titled “Method for Domain Trading”, would allow an entity to divide a domain portfolio into a levels of risk, issue bonds or loans on the portfolio, and trade the portfolio on an open exchange. If implemented as described, this method could bring liquidity to a market that is very inefficient.
The method would divide a domain name portfolio into risk levels such as high, medium, and low. Risk factors could include domain TLD, vertical, pay-per-click performance over time, size of portfolio, and origin of domain traffic.
Each tranche would then be valued mostly on monthly revenue generation and growth. The portfolio owner would then be given a loan on the portfolio, and this loan can be traded on an open market.
Although securitization has gotten a bad wrap thanks to the mortgage meltdown, in theory it creates financial flexibility and could push the domain name industry to the next level.