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Patent Filed for Domain Name Securitization

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.

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  1. Andy says

    Haven’t people tried this before? Filing for a patent is one thing, but getting approval from the SEC is a different kettle of fish. IMO it’s fraught with problems.

  2. Reece Berg says

    @ Andy: I think the closest thing on the market is Fusu which is just for individual domains, not portfolios and I don’t believe Fusu measures the risk associated with owning a domain or share in a domain. I’m kind of curious how something like risk is going to be evaluated — Revenue generating domains would certainly be considered “safer” than comparably priced domains not generating revenue in most circumstances I would imagine, but where do you go from there?

  3. AEM52 says

    If you go to DiscussNames.com and search for ‘King George’ you’ll see this idea published on October 18, 2008 on a thread started by Pete Lamson two days earlier.

  4. jp says

    I think this would be awesome although it may take some of the fun out of all this I welcome it. It will be great for those of us that have good portolios at its inception.

  5. Rob Sequin says

    Hmmm. Domain backed securities.


    Sure, they’ll probably get the patent but no one will ever buy into a portfolio of domains.

    One bulk nameserver change and the “risk” is changed.

    Who pays renewal fees? What happens when one domain is sold out of the portfolio.

    No portfolio owner would even lock down an entire portfolio in perpetuity in order to issue “stock” on a portfolio.

    Interesting idea and a patent is MUCH different than getting investors in this idea.

    I’m no stock expert so just my opinion.

    • Andrew Allemann says

      @ Rob – the sale of a domain in the portfolio is actually discussed in the patent. It would have to be replaced by equivalent domain(s) based on risk profile and earnings.

  6. Rob Sequin says

    Thanks. Interesting.

    I wonder who would be making the decision to find an equivalent domain.

    Don’t get me wrong. I support what they are doing but comments posted here may help them make a better patent.

    Again though, selling the idea to investors is another thing altogether.

  7. Steve M says

    I like this idea, and believe it to be worthy of/qualified for a patent (handled by the US PTO, not the SEC).

    Though I would have written it somewhat differently, including the critically important claims (including at least 3x as many of; though they can be added later for more $$$ during prosecution).

    As their law firm no doubt prepared them for; because the PTO fights these types of apps tooth and nail; they’re in for a long, hard, and expensive (likely 50-100k+) road ahead.

    And like Rob points out, successful, profitable implementation may prove difficult.

    I wish them well.

  8. Rob Sequin says

    It would be interesting to hear from the Cowboys.com partners to see how they structured the deal and if they are all happy with their investment.

    After all, stocks are fractional ownership, right?

    • Andrew Allemann says

      Yes, but in this case you would basically be paid interest. You likely wouldn’t have a claim to the domains unless their was some sort of default.

  9. Tan Tran says

    Interesting stuff. We need these types of ideas to work to take domaining to the next level.

    Congrats to Namedrive for having the vision to go out there like this.

    Congrats also to fusu.

    All these guys are really pioneers and we should find a way to make one of these great ideas to work. It would all boost the industry as a whole.


  10. Greg W says

    Great…! Steve L is so innovative..if anyone could do this he can… He has great shot at it..He can see and execute what we just think about..Success of this idea is soon to follow…

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