Domain Leasing, Joint Venture or Co-Development
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PostPosted: Fri Mar 08, 2013 2:01 pm 

Joined: Tue Mar 05, 2013 10:58 am
Posts: 33
With the advent of JointVentures.com by Rick Schwartz and Danny Welsh a whole new era in domaining, website development, and online entrepreneurship is being unleashed. Don’t misunderstand, both domain leasing and website joint venturing have been around for years, the difference is that up until the announcement of JointVentures.com both domain leasing and joint venture development of a domain name were considered ‘not mainstream’ and at best a novel approach by some domain owners to monetizing their domains. That has now forever changed, and it is thanks to the two gentlemen above.

Domain leasing is really no different in principle than real estate leasing, indeed the best way to quickly understand it is to consider that the domain is like an internet commercial property just like a shop, office, warehouse, or work shop in the real bricks and mortar world. The leasing of the property can similarly be looked on as requiring a contract where the responsibilities of both the landlord and tenant are clearly defined as well as the length of lease and the financial terms of the lease. So there is really nothing new in the concept for domainers and entrepreneurs to get their heads around, except of course that the property is in the ether.

So can leasing only happen with high valued domain names? The simple categorical answer is – NO.

Just like in the real bricks and mortar world there is nothing to stop lower valued properties to be available by lease, indeed as this market develops it is likely that instead of domain name owners selling their properties they will become to prefer to lease the properties and have a continual long term income from such, just as applies in the real bricks and mortar world. Just think how many businesses, especially small and medium businesses lease the property they operate from, and the annual value of the letting of small offices, shops, etc., far exceeds that of the value of more expensive larger offices, shops etc.. So it will also be with domain name leasing.

Of course not all domains will be in reality suitable for leasing, some will have a bad reputation (be blocked on some search engines because of previous behaviour or content associated with the domain name), some will just be such bad domain names that they have no actual value (and yet you may even see some of these get leased – strange things do happen). So just because of the advent of domain leasing does not suddenly give value to domains that have no value prior to it.

Of course another aspect in a valuation of a leased domain can be from the actual development the tenant creates on the site. This is where perhaps the greatest rise in value could occur for the domain owner by having a percentage of revenue derived from the website clause in the contract. Imagine if the domain Google.com had been leased from a domain owner, it would have been a fairly cheap rental as before it was developed it was actually not a valuable domain in its own right. Imagine how such a domain owner would now feel if all s/he were getting in rent was a few hundred or a few thousand dollars a year. So it may actually be worth considering including such a clause in the contract, even if the value of the domain name may be low prior to the lease. Of course the thing then is that the developer would rightly expect a slightly lower basic rent on the assumption that following their development of the site they would be paying a much higher rent to the domain owner. (Everything is swings and roundabouts – even in cyberspace.)

I hope you can see that low value domain properties can and indeed will be leased, but of course these will not make the headlines, again this simply would be reflecting the bricks and mortar real world that we all live in and know about, the trick is to see how the same will occur in the cyber world and take advantage of it as either a domain owner, a website developer, or just simply as an entrepreneur.

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