Company that uses Vince.com doesn’t actually own the domain name.
Last week Apparel Holding filed its S-1 to go public.
The clothing company hopes to raise up to $200 million in its IPO, so it’s no small fry. Which is why I find it amazing that it doesn’t actually own the key domain name it uses, Vince.com. The company will rename itself to Vince Holding Corp. upon going public, as this is the brand consumers actually know it by.
It has used Vince.com since it launched the site in 2008. But it isn’t the domain registrant. Instead, it licenses the domain name. From its S-1:
Intellectual Property
…We license the domain name for our website, www.vince.com, pursuant to the License Agreement. Under the License Agreement, we have an exclusive, irrevocable license to use the www.vince.com domain name without restriction at a nominal annual cost. While we may terminate the License Agreement at our discretion, the agreement does not provide for termination by the licensor. We also own unregistered copyright rights in our design marks.
It appears the other party in this license agreement is a guy in California named Vince, who was the registrant of record in 2008 before the new Vince.com site launched.
That the company’s main online presence is at a domain name it doesn’t actually own is a risk factor. Here’s how the company describes it in the risk factors section of its the S-1.
We license our website domain name from a third-party. Pursuant to the license agreement (the “License Agreement”), our license to use www.vince.com will expire in 2018 and will automatically renew for successive one year periods, subject to our right to terminate the arrangement with or without cause; provided, that we must pay the applicable early termination fee and provide 30 days prior notice in connection with a termination without cause. The licensor has no termination rights under the License Agreement. Any failure by the licensor to perform its obligations under the License Agreement could adversely affect our brand and make it more difficult for users to find our website.
If the company pays just a “nominal” amount for the domain license, and only it has the option to terminate the license, I’m surprised it hasn’t been able to negotiate a deal to buy the domain name outright.
Chris says
Maybe Vince is attached to his domain and won’t give up ownership, or would need a very high amount to be persuaded to do so… win/win for everyone. And looks like the company has the right to use it as long as they want since there is no clause for termination from the side of the domain owner. Nominal for a company could be $50k/year. Nominal for a regular guy could be $50.
Andrew Allemann says
Yeah, as long as Vince doesn’t flake out and violate the contract, they’ll be OK. But you’d think they could go to him and say “hey, we’re paying you $x in perpetuity, why don’t we just pay you $X now. You can get the money up front.”
It’s one thing when the company just launched, as if they failed they could just cancel the license. But not that it’s going public…
NEWSgTLDs.com says
I like the “…the key domain name it uses, Vince.com”.
In 20 years you would probaly write the following: “…the key domain name it uses, Vince.clothing”.
Andrew Allemann says
or would it be clothing.vince? or vince.shop?
NEWSgTLDs.com says
I’d say it raises another question: what will new .BRAND gTLDs use as a frontpage? Which second level domain become a standard for .BRANDS?
Andrew Allemann says
That may be one of the most challenging questions for a .brand owner. Then again, a wholesale switch to a .brand domain probably won’t happen for a while.
Jean Guillon says
How to organize the creation of a “standard” (to help brands) ?
JS says
Technically, the domain name ‘www.vince.com’ is just that specific 3rd level, right ?
Andrew Allemann says
www is the third level domain. vince is the second level.
Mike says
Ahh I think the point JS is making is, what if the company has only leased “www.vince.com”, and Vince, the owner, could decide to use “me.vince.com” or even just “vince.com”? Now THAT would be a big risk — according to their statement excerpt, they only mention the lease of “www.vince.com”
I somehow doubt that would be the actual case, but it would be fascinating if it was. Our friend Vince would only have to start using the base vince.com for himself and then he would surely get a swift buyout deal.
Andrew Allemann says
Hmm, interesting. I assume the license agreement is tighter than that.
thelegendaryjp says
Sometimes truth is stranger than fiction. But Chris makes a very good point, without knowing how nominal the fee is, how can we say. All I know is first name dot com’s rock 😉
Jon says
I don’t understand all the concerns raised here.
The price was obviously well into 7 figures. If the price was 6 figures, buyer would have just bought it. So the buyer could not afford to pay several $ million cash, but was offered a lease payment at probably 3% or 5% of purchase price. The buyer could afford that. Post-IPO the buyer may buy it now, or may just choose to keep making annual payments.
Escrow.com offers lease escrow service that takes all risk away from both buyer and seller. And even without Escrow.com, I am sure the lease contract calls for severe penalty – like losing the domain for nothing – if seller does anything in bad faith. So I don’t understand what all the talk about risk to the buyer is all about.
The bottom line is that the buyer is making annual payments it can afford for the name it really wanted. Imagine that.
craig says
Not having title to the url license and yet branding the enterprise on the term, may impact the IPO.
patsnipPat says
technically no registrant owns any domain name; we’re all ‘licensees’ of a kind…
Jean Guillon says
Yep…absolutely.