The Freename Forum

Almost three years ago, in October 2022, Bob Hawkes predicted that in three years there would be a domain investment trust (DIT), similar to a real estate investment trust (REIT), a company that owns and possibly manages income-producing real estate, just for domains. Hawkes continued: “And once we have one, we will have many, with different regional, TLD and sector emphasis, some well diversified, some very specialized, like a DIT just for aspects of space exploration, for example. Someone can please remind me in 3 years that I was wrong.” The three years are almost up; domain lawyer John Berryhill took up the matter and stated: the prediction did not come true. This led to a discussion on namebio.com about how sensible such a venture could be with regard to domains.

Initially, it appears to be an investment like any other: there is a value, such as a premium domain or a portfolio with valuable domains, in which interested parties who cannot afford this value themselves participate. This provides the investment with liquid funds that can be used to invest in further domains, for example. The investor community could agree on a threshold value at which a domain should be sold. If a corresponding offer is received, this would be the winning bid. But the reality is different. The investor platform Rally, which enables investors to buy and sell shares in collectibles, was last mentioned when the directions.com domain was announced as an investment in January 2022. It is still for sale and shares in it can be traded - just like for hotspot.com. Supply and demand are far apart: the lowest selling price of US$ 6.15 per share is matched by the highest bid of US$ 3.25. It therefore does not appear to be the case that domain shares are being traded on a large scale. The overall interest looks poor, as only these two domains are listed on Rally. There has been no awareness of domains as an investment for small investors. For many commentators on namebio.com, partial ownership of domains therefore looks like a scam.

As the history of domain trading has shown so far, trading shares in domains or domain portfolios is not very successful yet. There were already attempts at such business models in the 2000s. On the one hand, the “Domain Developers Fund” was active from 2008 to 2015 as a public alternative investment fund that invested exclusively in internet domains. But Rick Schwartz had already pursued such a model earlier, after he snatched the domain flowers.mobi from under the nose of the company 1-800-flowers for US$ 200,000 at an auction in October 2006. However, he was unsuccessful with the domain. Schwartz later sold shares in the domain on the Slovakian domain exchange Fusu to nine domain investors, who received a 10 percent share, meaning that at least he got something back from his investment. However, Schwartz got himself into trouble when he sold the domain flowers.mobi for just US$ 6,500 without asking the shareholders. The domain exchange Fusu has long since ceased to exist. Schwartz, asked by Andrew Allemann about the current discussion, explains: “I think you would have to define the exact fractional ownership. But I am definitely not against it. Anything that adds liquidity is a good thing.” In the past 18 years, nothing has changed in the field of fractional ownership of domains and share trading. Perhaps it will be enough to ask about it again in 18 years' time. Domains are similar to paper: they are patient, but demand registration fees every year.