Professional domainers have been buying and selling domain names since at least as early as 1994. In those days some domainers were saying that domain names with more than one word in them wouldn’t sell. But they have long since been proven wrong. A recent development in the controversial practice of domaining is domain renting.

I first discovered the practice through Carl Ocab, who links to two domain renting websites from his blog.

In the spirit of full-disclosure, I had this idea about a year ago and did nothing with it. I didn’t act on the idea for two reasons: I wasn’t sure how well it would fly and I didn’t have the time to work on a new development. It seems that maybe there is a market for it after all. But I’d like to tell you why domain renting may not be such a good idea.

An Evaluation Of DomainsForLet And DomainsListing.com

I see three problems with domain renting right now, especially as these two sites have approached:

  1. If you are renting a domain then you don’t own it. They can kick you off any time they want. Why would you run that risk? Picture this: You’re renting a domain name and your business is kicking it up pretty good. You’re making money. The domain owner decides he’d like to monetize that site and tells you that you have to leave. Now you have no business. Now you have to get another domain name and work to build your business from scratch again. Meanwhile, customers who visited your domain and want to do business with you again may never find you again.
  2. Buying a domain name is not that expensive. You can get a domain name for $10/year. Why would you pay someone $20/month for the opportunity to get kicked off a domain name a year later? If you want to test an idea that you aren’t sure will fly, just buy yourself a domain name and develop a website. If it doesn’t work out for you then don’t renew the domain – or sell it.
  3. Most of these domains are useless. Seriously, who would want to rent bornunderaluckystar.com or 184u.info. One of the many uses of a domain name is that it brands your company. A key strategy in finding a domain name involves keyword research and picking one that puts to use a valuable keyword so that people searching for a particular topic can find you more easily. Do people search for 184 on a regular basis? How about “born under a lucky star?” Granted, some domain names, like YesforBush.com might be handy as a temporary address during a certain season – like election year. But this is the wrong year for Bush. Honestly, most of the domain names that I’ve seen for rent just plain stink.

Three Better Ideas For That Domain Name You Aren’t Using

Got a domain name that you think may be valuable some day? Keep in mind that it will never be valuable if you don’t do something with it. Domain names do not appreciate over time. Lucky for you, they don’t depreciate either. Instead of renting a domain name, try one of these options instead:

  • Developing your domain for resell
  • Renting subdomains
  • Leasing to buy

Chris McElroy, an experienced domain seller, discusses that first option here. But I’d like to discuss the other two.

Renting subdomains

Subdomains are easier to deal with for renting for several reasons. No. 1, a subdomain acts as its own domain and none of the content on a subdomain will ever affect the content on the parent domain. So you can rent subdomains and still develop your domain. Secondly, subdomains can be created and deleted at the drop of a hat so if someone rents a domain and does something with it that would mar a domain’s reputation, it won’t affect the parent domain at all. You can delete that subdomain and never use it again. Plus, with subdomains, you can customize a renter’s web address because they can choose what their subdomain will be called. Fourthly, you’ll make more money because instead of renting just one domain you have an unlimited number of subdomains that you can rent, therefore raising your ceiling of profit.

Leasing to buy

A lease agreement is different than a rental agreement. With a rental agreement either party can end the relationship at any time. With a lease, you can apply stipulations that provide for the security of both parties. You can stipulate that as owner of the domain you get a certain percentage of profits from any business sitting on that domain. You can also stipulate that the leaser gets first chance at buying the domain should it go up for sale. And you can stipulate the future value of the domain should the leaser decide that he wants to buy it. By agreeing on these terms beforehand, you and your leaser enter a co-equal relationship that benefits you both and neither gets the short end of the stick.

I can see leasing a domain at $20 per month provided that a portion of my lease payments be applied to the future sale of a domain should I decide to buy it. I can also see leasers willing to pay an up front flat fee for the option to buy a domain should their business succeed. And since it is more difficult to break a lease contract than it is a rental agreement, you can have protections in place for both parties should either decide to break the agreement. If the leaser’s business doesn’t work out and she decides to close up shop then you get your domain back according to the agreed upon stipulations.

And that’s about the size of it. At least, that’s the way I see it.

Allen Taylor writes the daily News and Media Blog at http://newsandmediablog.com and runs an Internet marketing business in Adams County, Pennsylvania. He owns several domain names.

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