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Demystifying Premium Domain Names

Jean Guillon

For the purpose of this article it is not necessary to concentrate too much on defining what a Premium domain name is and what it is useful for: all that we need to know is simple, a premium domain name is often a memorable generic name, short or medium in length and highly valuable due to its relevance in search. However, when it comes to finding out how to register a premium domain name then it becomes much more difficult because you won't necessarily know where to go. I decided to focus on one Registry to demystify the premium names conundrum.

"My Registrar does not know"

Some Registrars do their job and will guide you in the right direction but it is important to note that it is not necessarily in their remit to provide consultancy services to help you in registering a Premium domain name. The reason for this is that often a Registrar won't actually make any money by registering a Premium Domain on your behalf. It will once, and once only, when the name has been transferred to it. A Premium Domain name costs more than the Registrar's standard price because it is desirable and it is because is not bought or sold via the registrar. Instead, an external service provider will offer that service and receive a percentage, in return of the sale.

An example with a "Portfolio Registry Operator" named Famous Four Media

Famous Four Media is a Registry Operator responsible for overseeing Premium Domain names of fifty seven new domain name extensions. Some domains like .BID, .TRADE and .WEBCAM are already available for sunrise and pre-registrations at Registrars like GoDaddy but their Premium domains are also available to register, if you follow one of these two different procedures.

When interested in finding a Premium Domain in one of the Domain name extensions managed by Famous Four Media, I discovered two main ways to do it:

1. Contact the Premium Names Manager: The larger registry operators will have someone who is in charge of the high value names. In Famous Four Media's case the Premium Names Manager is Ola Alli, and he was of great assistance when it came to finding out how or where to register their Premium Domain names. Securing one of these names often means spending substantial amounts of money, so Ola and his team are the right people to ease you through the process, and answer whatever questions you might have regarding the Famous Four Media Premium program.

Note: Registry Operators are not permitted to sell domain names directly to the end user (Registrant) but can help you find the best place to get one.

2. The .WEBCAM example: If you want to register the highly valuable premium domain name sexy.webcam you will need to go to a place named "Sedo", where the world's largest inventory of premium domains is offered. There is a page dedicated to this specific domain name extension and from there the procedure is pretty simple.

Additionally some Registrars who are integrated with Sedo's Premium platform will have access to and be able to sell Famous Four Media's Premium Name offerings to you. This means that customers at any participating registrar can buy the Premium Domain Names listed with Sedo in the respective registrars shopping cart and immediately get control of them.

It is worth noting that the pricing of Famous Four Media's Premium Names are not made publicly available until General Availability opens (June 9th). At this point prices can be obtained directly through FFM, Sedo, a Sedo integrated registrar or via an FFM appointed broker who has been assigned the premium name.

A fair and straightforward Fee Structure

The standard term for registering a Premium Domain with Famous Four Media is that there won't be any buyer requirements such as "no parking page". Basically, once acquired, the Registrant is free to do what they want with the domain name. We are not following a Pioneer Program here where the buyer has to follow strict rules to use his domain name.

The pricing structure is also straightforward and, I think, fair in that the premium cost will be a one-time acquisition fee which will be followed only by the standard renewal fee.

"Fair" is the key word here as some other Registries are maintaining the Premium domain name renewal fee the same as the original acquisition price!

A fictional example of this pricing structure based a .WEBCAM domain name could be to register www.space.webcam for the price of $112,000 but to renew it at the standard renewal rate; less than $30 per year.

As the number of Famous Four Media's domain name extensions continues to grow, with .DATE, .FAITH, .PARTY, .REVIEW and .SCIENCE set to be launched later this year, interested parties should keep an eye out for them and their respective Premium names via this page at Sedo. Furthermore, Famous Four Media is also growing their premium sales channel and developing innovative ways to further enhance their premium program and the various procedures it entails. So make sure to keep posted for announcements on this in the near future.

By Jean Guillon, New generic Top-Level Domains' specialist
Related topics: Domain Names, New TLDs
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Jean,First, I am not sure what the Alex Tajirian  –  May 24, 2014 10:56 AM PDT

Jean,
First, I am not sure what the origin of the terminology is but it is, at best, misleading. Premium typically refers to value/price above expected/required level.  Thus, you have to clarify that your terminology and advice apply only to new gTLDs.

Second, your post boils down to saying that they are whatever the registrar decides to call premium domain names based on, presumably, the ability of the registry to sell them at a price higher than their market value. If a registry wants to sell them at their fair market values, they would auction them off. Obviously, unless registries are irrational, they would not sell them for less than their market value.  Thus, the premium designation for the new gTLDs must be a marketing gimmick.

Third, you describe the concept as often involving “a memorable generic name, short or medium in length and highly valuable due to its relevance in search.” For one, this is not an actionable definition. Memorable, per se, is not easy to measurable. Moreover, the length being “short or medium’ is not well defined. In addition you describe them as also being “highly valuable.” But isn’t their value driven by their desirable attributes such as those you start the sentence with? Thus, high value is a result of having favorable attributes for branding and signaling, which you forgot to mention. What we need are statistical models with quantifiable descriptors that tell us what drives value in the eyes of the market, which are similar to those that have been used to price domain names.

How expected :-) Jean Guillon  –  May 25, 2014 1:37 AM PDT

1) Premium domain names for new gTLD = get there first to acquire a fantastic domain name.

2) A Premium sells at a higher value because it is explicit and a perfect match to what someone searches for. Re-selling a Premium domain name also allows to earn a lot of money. This is called "domaining" (may I suggest to read domaining.pro and domaining.com for thoses interested)
What is great and special is often more expensive: why do you think .COM generic domain names sold for millions of dollars? The same applies for new domain names. A fair market value is decided by the seller : a Registry is alone on his market so - of course - he decides about the price! Regarding what you call a marketing gimmick: there is an offer = take it or leave it for another domain name. No one forces anybody to acquire a Premium domain name.

3) Thank you for adding to my definition that high value is a result of having favorable attributes for branding and signaling. But you know I wouldn't focus too long on waiting for statistical models because good Premium domain names don't remain on the market very long and when it is too late...it is too late. Expect to pay twice and up to 100 times the price of this Premium if you missed it.

How expected :-) Alex Tajirian  –  May 26, 2014 11:27 AM PDT

(1) So, why don’t people snap them up quickly? Do we need high-frequency trading software? Or are these “fantastic” profits illusionary?

(2) You are trying to demystify a concept. Yet, you say that a “Premium sells at a higher value” but still do not specify higher than what. You add that such domains “also allows to earn a lot of money,” a statement that underscores a lack of understanding of basic financial concepts. So, unfortunately, the concept is still a mystery.  To demystify the concept you need to focus on return, not price. For example, I can sell you a small store that allows you to earn tons of money, but that does not necessarily mean it is a good investment.  For the store to be value adding, its selling price must be less than the value of all future cash flows generated by the store, i.e., expected return on the store should more than compensates for the inherent investment risk. This concept is introduced in a first undergraduate course in finance. Moreover, you have caused tremendous damage to the concept of domaining and the industry, in general. You have defined domaining as selling domains at a price higher than their worth. Nevertheless, I agree that some domain names can be worth millions, but you have not explained why. Furthermore, you even use your own definition of a fair price.

(3) You say that “good Premium domain names don't remain on the market very long.” So, now there are “good” and bad premium names? What market are you referring to? Moreover, you are in effect saying that if you pay $10 for a perishable item that is worth $10, you would not be willing to sell it for $12? I guess not; because I should “[e]xpect to pay twice and up to 100 times the price,” i.e. expect to repurchase it at possibly $1,000. I didn’t realize that registries are so irrational that they are willing to sell them at 100th of their worth!

A few answers Jean Guillon  –  May 27, 2014 9:35 AM PDT

1) It depends what you do with your Premium;
2) "higher price";
a) No, price, not return : we talk about domain names here.
b)
i) Why Beer.com sold for 7 million? Because it is about "beer" and .com was the most popular TLD;
ii) Why Casino.com sold for 5.5 million? Because it is about "casino" and .com was the most popular TLD at that time
3)Yes there are good and bad Premiums but to get the best one, you must get there first.

Restricted domains Donald Carter  –  May 27, 2014 9:25 AM PDT

Good article but you should of mentioned the restricted domain names that the registry deems to be ones they can not sell at this time. There is also the fact of some registrars are not filtering out the premium domains so the buy tries to buy a premium domain to find out they cant through that registrar.

Correct Jean Guillon  –  May 27, 2014 9:48 AM PDT

You are right, I forgot to mention them but I tried to make the example simple. Thanks for adding.

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