An Overlooked Aspect of Purchasing a Domain: Privacy (or Lack Thereof)Posted: February 3, 2012 | |
We’ve discussed tips on buying domains in the past, and one of those tips was to make contact directly with the domain seller to purchase the domain instead of through a marketplace. While we gave reasons for it, one reason we didn’t mention that could factor into which route you take is the lack of privacy of domain marketplace transactions.
Before going into this topic, do note that not all transactions on these marketplaces are made public. Domain buyers can request for a transaction to be made private (which on some marketplaces costs a fee up to 2.5%). Many buyers don’t realize they can make this request however and their domain purchase is made public by default.
In addition to transactions that happen through a marketplace, the marketplace simply providing escrow to an outside domain transaction may also lead to them publishing it. Sedo has recently come under fire for publishing domain sales in which it merely handled escrow for an outside domain transaction. Most people assume those transactions would not be published, but in the case of Sedo, they are.
In some cases, maintaining privacy to the seller during negotiations can make it worthwhile to proceed through a marketplace. That said, the lack of privacy of the transactions is one of many things for you to consider before making your purchase through a marketplace.
What this lack of privacy means
If your purchase is publicly made, it will be shared with a number of sites – most notably the 3 resources mentioned here where domain sales prices can be researched. What this means to you may depend on the transaction size, what you’re doing with the name and whether the privacy of the transaction is important to you or not.
If your intent was to resell the domain, your purchase price for it being public may hurt your ability to get its fair market value for it if you got a great deal on the domain. A potential buyer could research the domain, see your purchase price of it and expect that offering a meager amount over that would be sufficient to buy the domain.
If you intended to develop a business on the site, understand that your purchase may come up when people search for your business. Whether this actually impacts your business depends on many factors, but regardless of those, you may likely have a preference of whether or not people should be able to discover your purchase.
Having your purchase public CAN be a good thing for your business
Don’t necessarily jump to the conclusion that your purchase being public is a bad thing. One of the hot companies in b2b services, SalesForce, has made several purchases of domains and more often than not, their purchases are public. Their public purchases tend to be major ones Data.com and Social.com for instance both cost them 7-figures and were widely reported on when they happened.
The publicity to be gained from major purchases such as those can actually greatly benefit a company. The domain itself may cost a lot, but the benefits of having it almost always outweigh the costs, and the free press gained from a notable purchase alone could be worth a significant amount of the price paid.
When it may be bad for your purchase to be public
The old saying “the cat’s out of the bag” can describe what may happen with some public purchases. It’s best to get your domain in the early stages of your business development, in conjunction with naming/branding your business, but your business may take a long time after that to develop and you may want to keep it under wraps during that time.
If the domain you’re buying is descriptive in nature, it may give away what your business will be about. In fact, if the name centers around a product or service you’ll be offering, it may give enough advance notice for a competitor to come out with a similar product or service sooner.
Protect the privacy of your off-marketplace purchase with an NDA
A majority of purchases directly from the seller are not publicized, and it’s believed there are more private transactions that take place than public transactions. That said, you cannot stop a seller from publicizing your purchase unless you have them sign a Non-Disclosure Agreement.
If you fear the repercussions of your purchase leaking out to the public, using an NDA is a good idea just to be safe. Obviously they may publicize the sale anyways, but doing so could come with severe legal consequences.
In the end, your private purchase may still partially leak to the public
Even with everything described above, you can’t stop a media source from noticing the change in whois on a domain and reporting on that change with speculation of a domain sale.
There is not a significant chance of this happening if you’re a small business purchasing a domain that is not premium. If you’re a larger business however, news sources may monitor domains for your whois information and would be alerted whenever any new domain suddenly contains your information.
Whether you’re a large or small business, buying a premium domain may also get noticed through a whois change as there’s more likelihood that they are monitored. Sometimes even with a change from the previous owner to a private registration on such domains is enough for some news sources to speculate on the potential sale of the domain.
One thing to note is that in the case of a leak due to a whois change, the purchase price would not reach the public unless the seller or buyer publicized it. So if the purchase price being made public is your primary concern, you can keep that safe with a private transaction protected by an NDA.