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Domain Name Claims Race

Back when I was in high school, my friends and I used to, from time to time, head to the track to check out some harness racing. I realize that this isn't standard weekend behavior for high school students, but one of my friend's dad owned some horses that ran out there, so through him, we got the racing bug.

Anyway, one of the things that I remember initially thinking was odd about racing was the concept of the claims race. By virtue of entering the horse in a claims race, the owner of that horse was offering to sell it to anyone willing to "claim" it for the stated amount of that particular race (usually somewhere between $3k on the low end and $100k on the high end). I remember asking my friends dad how this could be - what if the owner didn't want to sell? His response: don't enter a claims race then.

So why have a claims race? Obviously, to facilitate the transferability of an otherwise illiquid asset - aka horses. In other words, the races themselves become the marketplace, and all those attending/ watching/ aware become potential customers. Given the complexities of the horse business, it makes complete sense.

I was talking the other day to someone about the purchase of the Topix.com domain name, way back when, and the conept of the claims race came to my head. Buying that name was a pain in the butt. First, we had to find names that we might like. Then we hired someone (Verisign) to approach the owner, otherwise they try to fleece us. Then, once that negotiation faltered, we struck a deal on our own. Then the paperwork, the dotster account, etc., etc.

Why is this? Because there is no standardized secondary market for domain names. There are plenty of primary issuers (GoDaddy, network Solutions, etc.), but once someone buys it from the primary issuer, re-selling it is a pain in the butt. So what if there was some claims site out there where domain name owners/ squatters could assign their name to the site to hold in escrow, until someone agreed to pay the "claim price" set by the owner. Create the market place and implement the transfer.

But what about eBay you say, or any of the other domain auction sites - can't they do that? Yes, they can. But eBay is about buying and selling everything, not one specific thing. Do you think e-Bay when you think about looking for possible domain names? And this is not an auction - but more of a buy it now (for the claim price). And besides, in the case of ebay, facilitating the transfer of the name is an added on service that they're not prepared to handle. StubHub is a great model of showing how a site devoted to a niche market (tickets, in their case) can take a slice out of eBay provided that there's some value added services add on (ticket guaranty in the case of StubHub).

So the claims race for domain names. Perhaps this is a niche business, but it sure could make buying and selling domains easier....


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This page contains a single entry from the blog posted on July 10, 2007 3:31 PM.

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