It’s time to step back and re-evaluate domain name auctions.
The news today about an employee bidding at SnapNames is certainly disappointing. So here’s my take on what the domain industry should do.
First, chill out. I’ve seen a bunch of comments today from people that now assume everyone who ever beat them in an auction is a fake bidder or scammer. Look, there are a lot of people out there who bid at the last second, bid in a lot of auctions, and bid to win.
Second, it’s time that we re-examine domain name auctions, be they expired auctions, live auctions, or whatever. A lot of questions have been posed in the past that have never really been addressed. Here are few:
-What are domain auction companies doing to prevent this from happening in the future? A lot of people have questioned shill bidding at expired domain auctions. We’ve had to trust the company that it is playing above board. Now claims of illegitimate bidding will have to be taken seriously. That also goes for non-paying bidders. NameJet has done a lot to clean up issues with non-paying bidders; it almost lost its credibility thanks to the issue.
-Should people who financially benefit from a particular auction be allowed to bid? I’m specifically talking about domain conferences that get a cut of auction proceeds. I see two problems with conference organizers bidding in these auctions: if they bid and don’t win, the winning bidder paid a higher price, of which the organizer gets a cut, and second, if they get a cut on a domain they buy then they got a discount.
-Are all existing live domain auctions even legal? In some states you need to have a licensed auctioneer; in others you need to post bond to hold an auction. There are some loopholes, such as calling an auction a “private” auction, but you know what they say about loopholes.