Let's discuss Andrew Rosener's idea of owners bidding in auctions

Discussion in 'General Domain Discussion' started by equity78, Jul 19, 2017.

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  1. equity78

    equity78 Top Member TLDInvestors.com TheDomains Staff PRO Business Account VIP ★★★★★★★★★★

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    To give the idea it's own thread let's discuss the idea put forth by Andrew Rosener of @MediaOptions that owners would be allowed to bid on their own domain names at auction.

    Andrew never stated to do it secretly or against an existing platform's TOS.

    I don't see what Andrew sees, let's say I have a 4L.com Rayy.com, there are a bunch of backorders at $69 and the name is at $300 with Andrew in the lead.

    I think $300 sucks, so I bid Andrew up, he counters back and this goes on in traditional bidding war style to $1,800. For this hypothetical no one else jumped in so it's just me the owner vs Andrew. I obviously have an advantage, I try to get Andrew to go to $1900 so I bid $1850 he has to go to $1900 to take the lead. He doesn't he says too much for that name I'll pass. I will the auction at NameJet. I pay them $1,850 and they send me back 90% of the $1,850.

    I was certainly in an advantageous position compared to Andrew, without me, the owner, he wins at $300. No other person bid, only the person with a vested interest, the owner bid.

    I have proposed a few exotic type auction ideas here at Namepros over the years, some have been allowed, some haven't. One I proposed that @Eric Lyon thought was interesting but decided against (I had no problem with that). Was an owner clawback option, where the owner does not participate in the auction but if it closes say at $500, the owner could say I want to callback my name and pay the winning bidder say 10 or 20%.

    In that example the market would be fair, everyone bidding upfront would know that the owner had the option to clawback the name. It would be better than a reserve auction because there would be some monetary gain for participating and being top bidder as opposed to bidding all day on GoDaddy, not meeting reserve and the high bidder has nothing to show for their effort.

    Just my opinion, what is your opinion?
     
    Last edited: Jul 19, 2017
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  2. DomainVP

    DomainVP Domain Expert Business Account VIP

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    I agree with you.

    If you are selling a domain, then don't bid on it.

    Placing a bid on your own property in order to increase the sale price is shill bidding, no matter what way you look at it.

    An owner clawback option is a creative idea, with a fair result if the owner does decide to pay the 10% - 20%. I do think it waters down the true spirit of an auction environment, but GoDaddy allows something similar when they permit a domain owner to renew their domain well after an auction has taken place. Either way I am okay with that kind of idea existing on the NP auction platform.

    You guys do a great job maintaining the integrity of the auction system here. It's a shame other platforms can't seem to do the same.

    Maybe this means it's time for NP to grow as a large scale trustworthy auction site.
     
    Last edited: Jul 19, 2017
  3. equity78

    equity78 Top Member TLDInvestors.com TheDomains Staff PRO Business Account VIP ★★★★★★★★★★

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    I mean I am certainly open to new concepts and I like Andrew thinking outside the box, but I think he doesn't believe the owner has an advantage, I think it's a big advantage, I own the name and if I win get 85 to 90 % of the sale price back that I just paid, which also makes for extra accounting work.
     
  4. DU

    DU Secret Santa VIP

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    Andrew's idea is the very actual definition of shill bidding.
    I don't know the full laws but it's illegal in many states, across states it can be federal and the idea is basically stupid.

    I'm not sure he is.
     
    Last edited: Jul 19, 2017
  5. equity78

    equity78 Top Member TLDInvestors.com TheDomains Staff PRO Business Account VIP ★★★★★★★★★★

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    Would it technically be shill if you know the bidder is the owner, clearly defined? I am not sure, not saying you are wrong.

    I meant out of the box looking for new concepts, I said I don't agree with this concept.

    What did you think of my concept the clawback option?
     
  6. DU

    DU Secret Santa VIP

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    This creates a market for people bidding for the clawback value which is not what you really want. It's easier to encourage bidding by having the buyer have the ability to release a reserve. It encourages bidding because someone might still actually win below reserve.
     
  7. DomainVP

    DomainVP Domain Expert Business Account VIP

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    Nobody can take what he has accomplished away from him. He is a top broker and investor, well known across the domain landscape.

    However, I am with you on this one @DU. His rationale of shill bidding is a nonsensical distraction from the issue at hand. There is no excuse for bidding on your own auctions. Do some people do it in other auction circumstances, yes, but that doesn't mean it's justifiable within the current acceptable standards and behaviors of domaining.

    It sounds like some pros MAY have been pinched, and friends support each other.
     
  8. equity78

    equity78 Top Member TLDInvestors.com TheDomains Staff PRO Business Account VIP ★★★★★★★★★★

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    Good point but of course no one would know what I wanted, where there are clearly defined values like 3L,4L,4N people would know I wanted a lot. But on a brandable could be interesting. Like I said just throwing out conceptual ideas.
     
  9. NamePrime

    NamePrime The Godfather VIP

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    The risk for the domain owner is too low. He just need to pay the commission and that's it!

    How about, if owner wins, he pays commission and gives 10% of the final price to the second highest bidder. A sort of payment for "wasting the 2nd bidder's time" :xf.grin:
     
  10. DnEbook

    DnEbook DnEbook.Com VIP ★★★★★★★★★★

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    Hard to condone such an act under any circumstances ... (shill bidding)
     
    Last edited: Jul 19, 2017
  11. gilescoley

    gilescoley Top Member PRO VIP ★★★★★★★★★★

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    I would be fine with it, provided its all out in the open. If I have a price in mind Im willing to pay for a domain, I wont go above that price so the owner trying to get the price up wont influence me at all. It would certainly tempt some people to keep bidding though. I think the whole process would open a whole new can of worms though
     
    Last edited: Jul 19, 2017
  12. mad409

    mad409 Always thinking outside the box! VIP

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    Stick to the basics, no reserve means just that and don't allow shill bidding or owner bidding. If you don't think the name will bring fair market value or something you're comfortable with set a reserve.

    All that's been discussed concerning NJ and Andrews comments has brought on a state of paranoia. I even found myself looking at recent auctions for anything out of the ordinary.
     
  13. bmugford

    bmugford www.DataCube.com PRO ICA Member VIP ★★★★★★★★★★

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    Just set a reserve then. That is the point of a reserve auction.
    Actively bidding vs. the domain owner for their own domain is ridiculous in my view.

    Brad
     
  14. deez007

    deez007 The More I Learn The Less I "Know" VIP

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    Totally agree, I don't see how Andrew can justify it. I have read his explanation and reasoning behind his thought process but I dont think it is valid. The whole point of having a no reserve auction is that the owner accepts the risk of the auction closing for less than what he wanted for the domain but with that risk comes the potential reward of getting more bids in and potentially turning into a bidding war.

    By bidding on your own domain the owner reduces his risk considerably and enjoys the best of both worlds.... he gets to enjoy the potential benefits of getting more bids in and hopefully creating a bidding war without the risk of losing his domain for less than what he wanted for it in the first place... this places the owner in a grossly advantaged position over other potential buyers.

    Andrew also used the example of asset forfeiture auctions where previous owners of goods can bid on the auction as well. That example is completley off base... there is no comparison what so ever. For example, lets say Mr Smith gets liquidated and his cars and other assets are taken by the bank and placed on auction.. now, Mr Smith still needs a car and figures he might be able to buy one of his cars back for reasonably cheap. So he heads over to the auction and bids... nothing wrong with that at all.. he no longer owns the asset and he wants to buy it back. Furthermore, the asset already has a predetermined market value..and everyone knows more or less what the car/asset would be worth on the market. Now, if I go ahead and hand register a domain for $10.. might be a decent brandable domain but essentially it does not have a predetermined market value , only a speculative value. Now, if I list the domain on auction at no reserve and it gets a few bids all the way up to lets say $50.. then I go in and bid as well..one of the other bidders ends up biding against me because he might want the domain as it is a perfect fit for his business... so we end up going into a bidding war, taking the bidding up to $1000... the potential buyer then decides this is out of his budget and he would rather look for an alternative... now, by bidding on my own domain, I have created a percieved value of $1000 on the domain... A year later I try sell the domain again, in the sales pitch I mention that it was previously sold for $1000... a percieved value that was only created by me bidding on my own domain...

    How on earth can this be considered fair business practice?
     
    Last edited: Jul 19, 2017
  15. DGMDomains

    DGMDomains Established Member

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    That's why they created reserves imo. I feel it wouldn't be fair to outbid someone thinking they're up against an end user or another investor. You would also still need to pay for your own domain and on top of that the commission fee.

    To each their own I guess.
     
  16. Kuffy

    Kuffy Name Stag VIP

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    I used to go to a lot of antiques auctions, and bidding on your own lots was fairly common at some of them. You weren't allowed to bid if you had set a reserve, but if you hadn't, and you won the auction, then it was marked as a no-sale, and you didn't pay commission. There are a variety of reasons for bidding on your own items.

    If there is virtually no interest, then you may decide to let the item go at a lower price, setting a reserve can prevent this.
    There may be a charge for setting a reserve.
    Some sellers will gauge the enthusiasm of the buyer, and run the auction based on the buyers apparent enthusiasm
    A seller may push the auction if the buyer is a known dealer in high price items, and the seller may consider that he has undervalued the item.
    The bidders may be part of an auction ring, and the seller may want to push the price to a true value.

    I guess a couple of these reasons could apply to on;ine domain name auctions.
     
  17. nicedomains

    nicedomains Business Member Business Account VIP ★★★★★★★★★★

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    Aaand we often wonder why end users are so weary of entering domain name auctions or doing business with domain investors...
     
  18. dordomai

    dordomai Active Member VIP

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    it could work if people would not bid in bad faith (no intent of acquiring the domain just to drive up the price)..

    In the real world, no it could never work because of greed.
     
  19. Ategy.com

    Ategy.com Business Member Business Account VIP

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    First of all .. at the end of the day a Clawback is effectively the exact same result to the seller as paying commission.

    Also .. I think it's wrong to make too many connections to other auction systems when we are ideally looking the best one for us. Now if those other systems have advantages or flaws, then discuss those specific points. But the merits of either side here should be won or lost simply because it is or isn't how it's usually done.

    Andrew's (@MediaOptions) isn't really his math .. nor is it his logic. It's simply a free-market option in it's absolute purest form. It's also important to note that all bids in this format should be in the open and the rules would still state that we know who the bidder is.


    At the end of the day it's not about the process, but about a buyer being willing to buy a domain at a specific price .. or not. Everything before that doesn't even fit into the argument of a free-market transaction. "The domain is currently set to this upcoming price .. do you want it .. or not?" If nobody does, then it goes to the last person who said yes.


    As for the math, i'll use the same example as with @Michael in the other thread ...

    If Andrew wins his own auction at $23,800, and the previous high bid was $23,600 (I'm assuming $200 minimum steps) .. then he is actually losing $25,980 ($2380 fees and $23,600 from the money he didn't get from the other potentially winning bidder and was the theoretical auction market value).


    Another thing to remember is that so called shill bidding is going to happen whether we want it or not. there is no way of stopping someone who really wants to do it.
     
  20. Ategy.com

    Ategy.com Business Member Business Account VIP

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    It's very important to understand that this pure Free-Market vision for a less regulated auction system ignores what's fair and perceived and all the other "fluff" (for lack of a better term .. and to egg on the discussion .. lol)

    It's simply about whether somebody wants a product a certain price or not. It doesn't even matter if that person is the same person who is selling it. It's quite simply who ever the seller wants to sell it to .. and in this case it's to whomever wants to pay the most for it.

    It makes a lot of sense when it clicks in your head that most of the other details really have zbsolutely zero significance in the Free-Market approach.


    NOW .. where I will stand in defence of the other perspective ... is that there is a point where morality comes into play .. the ethics of community and all that sort of thing. The Free-Market approach dismisses all of that as not even being a real thing. BUT .. to people it can and possibly should be a real thing.

    If you look back into the other thread I think you'll see i'm the only person who tried to objectively explain both sides and specifically said that neither was absolutely right .. nor wrong.


    The only honest answer is that the logic and math can work both ways depending on where you place the moral question. And it's not even that one is moral and the other isn't .. it's just different.

    Most importantly .. if you haven't taken the time to truly understand both sides .. then you really shouldn't pass judgement either way yet.
     
  21. tldboss

    tldboss Supportive Member NamePros Supporter VIP

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    I think sellers should not bid on their own auctions.

    I understand that Drew is talking about a case where everything is out in the open (bidder knows seller is taking part), still I do not agree with the idea, sellers will eventually/potentially bid in bad faith.

    I like your idea, but it won't be easy to manage
    Some members have multiple accounts, which means they can still bid and not pay anything at the end of it

    Better to keep it simple - reserve or no reserve (no bid from seller / someone they know / business partner)
     
  22. Beezy

    Beezy Active Member VIP

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    The free market price of a domain on namejet is the price before the owner or his friends or brother etc. start bidding.

    And yes there is a way to stop shill bidding. By exposing, banning and dragging the people that do it so the next person thinks twice.
     
  23. Ategy.com

    Ategy.com Business Member Business Account VIP

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    That certainly could help .. but equally true is that it most certainly in no way stops it .. not even close.

    Not in the real Free-Market argument ... in that case it's simply who is willing to pay the most ... and that person can be anyone .. including the seller.


    What you are talking about is VALUE (which I can understand feels like it should be part of the discussion .. but anyone can value anything at different amounts .. in the purest form of the opposing side of the argument, perceived value is completely irrelevant) .. and yes most certainly the argument "can" be made that the value of the domain was to the previous person non-affiliated to the seller. BUT .. even then .. the seller valued the domain more than that last bid. I understand it's a hard concept for some to grasp because it goes against traditional values/concepts .. but until you truly see and understand it .. you shouldn't be opposed to it (and you shouldn't be for it either though .. lol .. I'm just saying the only way to judge is to completely and fully understand each point of view).


    What most certainly can be considered as non-value activity however .. is if there are MULTIPLE seller-affiliated bids AFTER the last non-seller-affiliated bid. But again .. it must be stress that in this view of how auctions should be .. there are still some rules .. which includes transparency .. including making public the fact the seller is making bids (and specifically which bids).
     
  24. Ategy.com

    Ategy.com Business Member Business Account VIP

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    Again .. i need to stress that I really think there are valid concerns and points on both sides.

    I'm focusing on what most people seem to be opposing because most doesn't seem to truly see that as a potentially viable alternative with a very credible argument and logic behind it .. and I think it's very important people truly understand and appreciate both sides of an issue before actually taking sides.


    I'll be the first to say there are valid arguments against the point of view I appear to be supporting .. at the end of the day it's about figuring out if there is a way to synergistically combine aspects of both to create a better alternative ... and if that is not possible .. then truly understanding then measuring out all pros and cons from both sides to figure out what is best specifically for the domaining community (because at the end of the day, that could be a completely different answer for different auction types/setting/products).


    OK .. good night .. talk amongst yourselves .. it's 5:30am .. I'm going to bed .. @MediaOptions .. feel free to step in when you wake up! lol
     
  25. Kuffy

    Kuffy Name Stag VIP

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    The problem with standard auctions is that you need two buyers to get anything approaching a fair price. Allowing the seller to bid gives the seller a chance where there is only one potential buyer.

    Another approach which I have often thought could be better for domain names is a Dutch auction. A proper Dutch auction, not Ebay's misunderstanding. In this type of auction, the name would be listed at a price that is in excess of the expected price, and the price is reduced at regular intervals. When the price drops to a level that is acceptable to a buyer, he claims the name, and the auction ends. There can be no further bidding or action. To make this work, the buyer would have to agree to sell at that price, and to disregard any attempts by another buyer to increase the price.
     

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