discuss Turning a No into a Yes and a $5,000 Profit. Ethical or Unethical?

[Arpit131]

I stumbled upon this article published on Anticareer.com, where a person was able to sell a domain name which he did not own, for a $5,000 profit.
The gist of the article is that the owner of a domain name tried to sell it to a company he thought was a prospective buyer. However, his proposal was rejected.
As a response to this, he made a list of some 5 domain names(listed on marketplaces for sale) that he did not own, but the company might be interested in, and pitched it to them. The company finalized one of the domain names, offered $6,500 for the same. He bought the domain for $1,500 and flipped it further for $6,500, thus making a $5,000 profit.
The author justifies his act as a good cash flow management.

According to me, this practice is highly unethical. How can you offer to sell a domain name you do not own!

What do you guys have to say about this?

 

[abdussamad]

Happens all the time with physical goods though, there are even people who sell something for say $90 on ebay, and purchase it on Amazon for $50, entering their customers address as the shipping address and their own address as the billing address.

It happens in meatspace in my country. Especially when it comes to low volume electronics items. Customer walks into a shop and asks for the price of a particularly low volume product. Businessman calls around and asks his suppliers what the price is and then gives the customer a quote. If the customer agrees he may even be asked for an advance and told to come pick it up later!

Electronics items tend to depreciate in value very quickly so lots of shops don't keep stock. They pass off that risk to their suppliers and only order as and when required.

 

[JayJay]

1). The domainer offers your domain to a relevant trademark owner. Immediately leaves the owner wide open to a trademark claim for trying to profit / cybersquatting, which they wouldn't have been left open to up until that point.

2). The domainer contacts an individual that you have already offered the domain to / are in negotiations with. Interfering in business like this would be justification for a tort lawsuit.
.

3). The domainer is a terrible salesman and contacts a prospective end user you were planning to contact in the near future, completely ruins the negotiation or says something stupid/immature/unethical/illegal and now you lost any chance of ever pitching them. There are companies and salespeople I know I will never again deal with due to leaving a bad taste in my mouth regardless how great a deal or opportunity they offer me.

 

[Acroplex]

At the time the article was featured/posted on Domaining.com, I was close to making a spoof/parody story of it on DomainGang. Decided to cut the OP some slack.

The bottom line is this: the practice described is very hard to replicate, and it depends on the particular circumstances. One has to have a direct connection to the party making financial decisions, and to be able to shake off any negative predisposition, all while treading waters that potentially breach on trademarks. Also, front-selling, a.k.a. hot air selling, is definitely a practice that's unethical, as far as domain names go.

 

[equity78]

At the time the article was featured/posted on Domaining.com, I was close to making a spoof/parody story of it on DomainGang. Decided to cut the OP some slack.

The bottom line is this: the practice described is very hard to replicate, and it depends on the particular circumstances. One has to have a direct connection to the party making financial decisions, and to be able to shake off any negative predisposition, all while treading waters that potentially breach on trademarks. Also, front-selling, a.k.a. hot air selling, is definitely a practice that's unethical, as far as domain names go.

Another scenario and Theo you have done a lot of work in this field bringing thefts to light. What if the domain was stolen and listed on Sedo ? Eventually that buyer may lose the domain in a UDRP from the original owner, now how does AntiCareer explain that ? He knows a name on Sedo was not stolen ? Not 100% especially when you see a domain listed for a lower price than you would think.

The other part like Johname said is we did not see the communication, if the seller committed to buy and then the middleman went and bought on Sedo, the seller could have refused transfer, I have had that on Sedo, years ago, hit the buy it now, when seller was told to push the domain refused and told Sedo to close his account but they will never sell the name for that price.

There is a way to do arbitrage and make sure you have covered risk factors, but even the best planning can have problems, domaining is one of the craziest businesses out there. The Wild West of the modern century.

 

[Acroplex]

The subject of front-running domains isn't new.

Here's my take from 4 years ago: http://acro.net/blog/domains/dont-go-domain-bargaining-without-the-money/

In the case we're discussing here, the difference is that the initial approach was made for a domain that was indeed owned, and that was rejected as part of a sale.

 

[equity78]

The subject of front-running domains isn't new.

Here's my take from 4 years ago: http://acro.net/blog/domains/dont-go-domain-bargaining-without-the-money/

In the case we're discussing here, the difference is that the initial approach was made for a domain that was indeed owned, and that was rejected as part of a sale.

Right Theo, anticareer had written about this before and then Morgan Linton did.

http://tldinvestors.com/2015/04/selling-a-domain-name-you-dont-own-cool-or-not-cool.html

 

[Acroplex]

This practice was turned into a masterful approach on NameJet by an otherwise respectable domainer. He made thousands of dollars by alerting companies that he could bid on their behalf. In later years, an Indian domainer had the audacity to justify this practice as legit as well. Lots of material on this fella, should I ever decide to write a book. :P

 

[DU]

Pretty certain said "respectable" domainer was still doing this long after the fact.
I would bet still is but I don't really follow his exploits - though the last one on here seemed decidedly dodgy to me.

 

[tonecas]

really? we have doubts that this is unethical? wow...
for what the story tells the guy pitch the buyer as being the owner of the domains. then he went to buy the domain from the real owner and sold it to buyer. sure it is a risky move. the buyer can back-off and he would be left with the domain. but being risky doesn't mean it's unethical. first, this can been seen as making an unsolicited brokerage. second, the guy is lying if he approached the buyer saying that he owned the domain making an unlawful/misleading representation. this has nothing to do with short selling. however, it can be seen as front-running. it's nothing new although. this has been running for years in a similar way from the guys that try to sell you domains that are expired or in pending deletion and that they still don't have.

 

[900Worldwide]

Risky but definitely not unethical.. Middleman got the deal done...

 

[awei]

people call domainers unethical all the time,"how can you squat domains not developing them but later sell them to people who acctually need them for their websties for profit"
do you agree with them?

in this case
the buyer paid $6.5k because the name can benefit them more
the seller asked $1.5k because he valued 1.5k more than the name
what a pity them didnt know each other
it was a failure-failure
until the man showed up, made it a win-win-win
everybody is happy now

 

[ResoluteDomains]

I think something similar happened to IBM way back with a little product called DOS "from" a little known company called Microsoft? They claimed to own an OS that IBM needed and yet they had to go and purchase it from someone else. A 20K purchase (if I remember my history) turned in a multi-billion dollar gamble.

Some think its genius and some think is skanky sales tactics.

 

[ResoluteDomains]

really? we have doubts that this is unethical? wow...
for what the story tells the guy pitch the buyer as being the owner of the domains. then he went to buy the domain from the real owner and sold it to buyer. sure it is a risky move. the buyer can back-off and he would be left with the domain. but being risky doesn't mean it's unethical. first, this can been seen as making an unsolicited brokerage. second, the guy is lying if he approached the buyer saying that he owned the domain making an unlawful/misleading representation. this has nothing to do with short selling. however, it can be seen as front-running. it's nothing new although. this has been running for years in a similar way from the guys that try to sell you domains that are expired or in pending deletion and that they still don't have.

Did he actually state that he owned those 5 domains, which he presented in his reply to the initial rejection? If he did then I think I missed it.

 

[equity78]

This fits with the post by @MapleDots

https://www.namepros.com/threads/ca...-selling-domains-they-dont-own.1088600/page-2

 

[SuperDudePro]

Personally, if I woke up tomorrow and 10 of my names had been purchased for my BIN price, then I don't care if the buyer is selling them to someone else and even had the deal in place before they owned it.

In fact, I'd encourage everyone here to do that to me. Please go find buyers for all of my domains, pay me my BIN, and keep the rest as your 'fee'. I'll be more than happy.

 

[bluemeteor]

It was the end user's own fault he didn't do any research. Probably the owner didn't have a landing page either. But at the end, owner was happy, end user was happy, everyone was happy.

 

[TestCase]

Personally, I don't have a problem with this method of selling domains. It's called arbitrage and millions/billions of dollars are made every day using this method.

Yes, there are potential negatives to this method, but the vast majority of the sales will likely be win-win-win situation all the way around.

 

[equity78]

Personally, I don't have a problem with this method of selling domains. It's called arbitrage and millions/billions of dollars are made every day using this method.

Yes, there are potential negatives to this method, but the vast majority of the sales will likely be win-win-win situation all the way around.

Well I was writing about the arbitrage aspect in the other thread. But it's not pure arbitrage when doing that in liquid markets I am securing something I know I can sell every time by buying stock etc...

The problem in domains is someone might not sell even after getting a sale because the price is too low. or there are names for sale at Sedo where you think of the buy it now is only $500 cool, go pitch an end user on $5,000. Then come back to buy the name and the listing is old, the name sold years ago and is no longer available. So it can be a lot more risky than traditional arbitrage.

 

[lambo.com]

Couldn't care less. #respectthehustle

 

[DanSanchez]

Domain front-running is highly unethical, you can excuse it, but it doesn't change the fact that you had no authority over the property to pretend to own it. Given he owned one of the names, the buyer was under the belief he also owned the others. It's no different than the practice of listing domains you don't own on Afternic, which happens all the time.

Front-running is getting all the benefits without taking any risk, it's not a hustle, it's stealing. Plain and simple. Shocking to see so many people here advocating for it without considering the risks.

 

[lambo.com]

Domain front-running is highly unethical, you can excuse it, but it doesn't change the fact that you had no authority over the property to pretend to own it. Given he owned one of the names, the buyer was under the belief he also owned the others. It's no different than the practice of listing domains you don't own on Afternic, which happens all the time.

np post doesn't say he claimed ownership.

Doing so would be a problem.

 

[DanSanchez]

Implied ownership, selling is all about trust. You claim you own one domain, why wouldn't I believe that you owned the other five you offered alongside your original offering? He didn't claim he informed the buyer, which leaves it entirely for interpretation. But given the scummy way of describing the deal, I would suspect the buyer was not informed.

 

[lambo.com]

Implied ownership, selling is all about trust. You claim you own one domain, why wouldn't I believe that you owned the other five you offered alongside your original offering? He didn't claim he informed the buyer, which leaves it entirely for interpretation. But given the scummy way of describing the deal, I would suspect the buyer was not informed.

Implied ownership doesn't mean anything, if buyer didn't ask that's their bad. This is a good hustle. If 'broker' got asked, then they should declare they are not owner but are able to 'make it happen'.

 

[lambo.com]

Implied ownership, selling is all about trust. You claim you own one domain, why wouldn't I believe that you owned the other five you offered alongside your original offering? He didn't claim he informed the buyer, which leaves it entirely for interpretation. But given the scummy way of describing the deal, I would suspect the buyer was not informed.

Selling is not about trust in domains is it? That's why escrow.com have a business, you don't need to worry about other party/(ies) as deal is facilitated by escrow provider.

'scummy'? Hardly, three parties got what they wanted.. Haters gonna hate, ballers gonna ball.

 

[DanSanchez]

Selling is not about trust in domains is it? That's why escrow.com have a business, you don't need to worry about other party/(ies) as deal is facilitated by escrow provider.

'scummy'? Hardly, three parties got what they wanted.. Haters gonna hate, ballers gonna ball.

Yikes, that's a short sighted way of looking at the relationship you have with your clients. But tell me, how did this deal evolve after the buyer agreed to purchase the name?

Seller: Okay great, please pay me so I can go buy the name really fast.
Buyer: What do you mean? You want a full payment before I get the domain?
Seller: Yes, sorry that's how the deal goes.
Buyer: No, we can use Escrow if you want.

From my experience, selling domains at this level requires trust. Even if Escrow is involved the buyer needs to be reassured their time isn't being wasted. This isn't hustling, hating would imply caring, and clearly you have a different set of ethical standards than most of the veterans working in the space.