Million dollar domain names are cool and all but to be honest I'd rather think of a cool name that doesn't exist yet and get that domain for ten dollars.
1) You're relying on the current domain name holder to be convinced by your option pitch and not just playing stubborn and getting paid upfront. The kind of person that's a domain squatter to have an interesting domain in the first place is going to be the stubborn sort looking to make bank upfront.
2) You can't just 'lease' the domain name as suggested and build up a company around it if you don't own it outright (i.e. be the admin/technical contact/owner. Again, if you're dealing with the kind of sleezeball that squats domain names, you can't leave them the option of taking back their domain name.
For many years I've owned what I think qualifies as a "killer" .com domain (i.e. three letters, cool sounding real word in English and other languages) and I would have been open to this arrangement with the right party (i.e. depending on your business plan, backing etc.). I still might be at some point in the future but right now I've got other plans for it. It would be relatively easy to set up some kind of escrow arrangement through lawyers.
It's a nice idea in theory, but the problem is that only one side has actual control/ownership of the domain at any one time.
If the startup owner gets control, they can decide to stop paying, and the original domain owner has to sue for their money.
If the original domain owner keeps control, and the startup does well, they can be held to ransom by the domain owner threatening to redirect the domain.
Of course in theory all of this can be prevented through contracts, but the prospect of having to use the (international) court system to enforce one's rights is not an attractive one for either side. Startups often run out of money, and domainers like to spot an opportunity, so there's just too much risk.
As an aside, names aren't actually that important, so long as you can own your namespace. Flickr? Facebook? Craigslist? These are all pretty bad names, but it didn't seem to matter.
Does this mean there's a business opportunity here, than? A 3rd party, escrow-esque middleman who holds the domain so that neither party breaks the agreement?
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[ 3.2 ms ] story [ 21.7 ms ] thread1) You're relying on the current domain name holder to be convinced by your option pitch and not just playing stubborn and getting paid upfront. The kind of person that's a domain squatter to have an interesting domain in the first place is going to be the stubborn sort looking to make bank upfront.
2) You can't just 'lease' the domain name as suggested and build up a company around it if you don't own it outright (i.e. be the admin/technical contact/owner. Again, if you're dealing with the kind of sleezeball that squats domain names, you can't leave them the option of taking back their domain name.
If the startup owner gets control, they can decide to stop paying, and the original domain owner has to sue for their money.
If the original domain owner keeps control, and the startup does well, they can be held to ransom by the domain owner threatening to redirect the domain.
Of course in theory all of this can be prevented through contracts, but the prospect of having to use the (international) court system to enforce one's rights is not an attractive one for either side. Startups often run out of money, and domainers like to spot an opportunity, so there's just too much risk.
As an aside, names aren't actually that important, so long as you can own your namespace. Flickr? Facebook? Craigslist? These are all pretty bad names, but it didn't seem to matter.