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

[equity78]

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?

 

[pablohc86]

it's good to have new ideas but I don't like this one.

I prefer seller not bid on what he, it owns.
Reserve price or higher starting price are more transparent ways, IMHO

 

[xn--v4h.com]

Andrew was presenting a theory which I think isnt unlike the stock market of buying and selling at lightning speeds usually on the same stock. There's the ask price and the bid price. If the ask is too high then there won't be a sale. The stock still belongs to the seller of the stock. There's no deception. It's all out in the open. If you don't want to participate then don't. No one is forcing anyone. That's the free market. Therefore nothing immoral about the theory he presented, and one should be able to separate that from what is happening at NJ.

 

[tonecas]

this business never stops to amaze me after all these years.

are we really discussing this thing??

man, when a guy can't distinguish good from bad he is totally f*cked.

how a guy that has move do many domains can come with such a ridiculous idea and tries to defended it publicly? has all the money damaged his brain?

this doesn't even deserve comments.

 

[AndyM]

Go and suggest this to Flippa! They'll probably ban your account just for thinking of bidding on your own name.

 

[xynames]

Cannot lose sight of the fact that shill bidding is illegal.

 

[spankdemon]

It's not really that hard to comprehend......

And if there was no commission (like on NamePros), it would be hilariously stupid. You would be able to end an auction whenever you want by placing an insanely high bid.
How is that free market / no reserve and not just craziness?
I doubt anyone would even bid with that setup.

He obviously does not understand basic logic.
Hey, I think I will just BUY something from MYSELF today and have the "transaction" recorded Everyone looking at a basic sales report will think that the domain sold for 20k, but really, I only have 11k in it now That's not dishonest at all I was able to set a market price and do it at a discount too!
Why can hardly anyone else comprehend my very intellectual and advanced theoretical arguments though!?

 

[anantj]

You're misunderstanding Andrew. He's not advocating this. He's proposing this should be possible. There's a subtle difference between the two.

 

[anantj]

how a guy that has move do many domains can come with such a ridiculous idea and tries to defended it publicly? has all the money damaged his brain?

Calm down. If new theories and proposals were never "proposed", we'd still be believing that the earth is flat. There's absolutely no need for personal attacks like this. It's a theory/proposal and does not equal actually doing this and contravening ToS of the marketplace.

 

[anantj]

I doubt anyone would even bid with that setup.

Exactly. No one is forced to bid in such a scenario but that does not address merits or demerits of the idea. It's still a free market auction.

He obviously does not understand basic logic.

Actually, I'll contend that you've not understood his logic.

Hey, I think I will just BUY something from MYSELF today and have the "transaction" recorded Everyone looking at a basic sales report will think that the domain sold for 20k, but really, I only have 11k in it now That's not dishonest at all I was able to set a market price and do it at a discount too!

What exactly does that achieve? If you research prior to investing, you'll should have an idea of a given domain's price and if the previous sale price was unjustified, you'd not bid up that much. I can certainly give examples of domains that sold for crazy high prices that I did not feel justified and so I'd not bid equal to or even near that high price. I'd only pay what I feel that domain deserves. Ultimately, previous sale prices are one factor in deciding to invest in that domain, NOT the ONLY factor

 

[Crysis]

I appreciate the new prescriptive by Media Options. Discussion is always good.

However, as far as I know, seller bidding on a no reserve auction is not legal. The courts have already decided it. And Media Options was specifically talking about seller bidding on a no reserve auction.

I am a not a lawyer but the below blog by Mike Brandly (Auctioneer, CAI, AARE and certified appraiser for over 30 years.) clearly explains this. I think it applies to online auctions as well.

"Sellers can bid at a with reserve auction, so long as the right to bid has been disclosed to the other bidders. Too, sellers can bid at forced sales. However, state legislators and the courts have been clear that otherwise, the seller cannot bid on their own property at auction."

https://mikebrandlyauctioneer.wordpress.com/2010/08/24/can-the-seller-bid-at-auction/

"“The seller can’t bid.”
"Yes, he can. The seller can bid if the auction is a with reserve auction with disclosure, and can bid regardless of the type of auction if the auction is a forced sale. If the seller bids otherwise, the UCC 2-328 dictates remedies for the high bidder."

https://mikebrandlyauctioneer.wordp...ost-misunderstood-things-about-the-ucc-2-328/

"The seller is NOT permitted to bid at a “without reserve” auction, announced or not, unless it is a “forced sale” meaning a sale that is conducted without the consent of the owner (for example, a seller COULD bid on his own car that had been repossessed because the sale of the car is being forced upon the seller without their consent). Otherwise, the seller, nor anyone on the seller’s behalf can bid at a “without reserve” auction as this would constitute a withdrawal of the property."

https://mikebrandlyauctioneer.wordpress.com/2009/11/15/different-types-of-auctions/

 

[3sixty]

@spankdemon
Welcome to the world of Fractional Reserve Domaining, where you can sell a name recorded at 50 000usd but only pay 5000usd.

Perhaps a couple of months down the line the seller really need the money and can list this at the bargain price of 25000 usd.

I been thinking about this discussion alot and it really goes against my integrity to justify allowing owners to upbid their own auctions.

But It does give a great incite into the character of the individuals who advocate and oppose the theoretical allowance of it.

There's just too many openings of the door for manipulation.

The arguements for it funnily enough closely resemble the arguements of Auction.com for it. And in both sides both arguements the power parties inherently benefit in pumping their assets values up, at the fraction of the liability.

In the other thread I mentioned the example of the auction house taken 0% commission to emphasise the problem of owners bidding on their own domains.

Now lets look at a different example.

If you go to flippa you have to pay something like 300usd for premium listing- a marketing cost.

Now lets say instead of this decide you bid on your own domain in auction.

If you are paying 10% commission then a 3000usd bid is an expense to yourself of 300usd if nobody bites. That is basically a marketing cost 300usd to guarantee a sale of 3010usd if someone outbids you by just 10usd.

Except the other bidder is deceived to think that somebody else is bidding and valuing the domain at 3k and if interested will look to outbid this.

And if they outbid you the asset has sold with the "marketing cost" being absorbed as marketplace commission. The odds are always in favour of the seller.

Bring in a few buddies and the whole domain reseller landscape becomes extremely worrying.

 

[anantj]

However, as far as I know, seller bidding on a no reserve auction is not legal. The courts have already decided it. And Media Options was specifically talking about seller bidding on a no reserve auction.

As a proposal. Very big difference in proposing something and actually doing it...

 

[Crysis]

As a proposal. Very big difference in proposing something and actually doing it...

Agree. But he is "proposing" something which is the very actual definition of shill bidding as decided by the courts which is not right IMO.

 

[anantj]

Agree. But he is "proposing" something which is the very actual definition of shill bidding as decided by the courts which is not cool IMO,,

I don't believe the courts address exactly what Andrew is proposing. Shill bidding is the scenario when a seller bids on an auction WITHOUT the knowledge of other bidders. Andrew has explicitly stated that the seller must be know and it must be obvious to other participants that the seller is bidding as well.

Additionally, proposals result in potential change. If proposals and a framework to implement a proposal that benefits all is never considered or implemented, we'd basically have no Uber and the ilk or other changes that seek to change laws for the better. Specifically on Uber, Uber essentially changed the transportation industry because they proposed an alternative that, in some regions, was against the law.

Please note: I'm not condoning the practices or the mechanics that Uber employed to achieve the changes. They were unethical in a lot of aspects but that does not take away from the fact that they tried and achieved to change laws that has, for a certain section of the population, improved transportation

The note above is important. Please consider this when evaluating my entire comment.

 

[Crysis]

I don't believe the courts address exactly what Andrew is proposing. Shill bidding is the scenario when a seller bids on an auction WITHOUT the knowledge of other bidders. Andrew has explicitly stated that the seller must be know and it must be obvious to other participants that the seller is bidding as well.

This is not the case.
This is the quote by Andrew "If a domain is listed for sale with no reserve I actually don’t see the problem with an owner bidding for the domain."

"Again and for the last time, I am NOT supporting shill bidding. I'm supporting the IDEA of openly allowing owners to participate in auctions which have NO RESERVE. Everyone has a fair and equal shot at buying the asset. Where is the flaw?"

On a no reserve auction, even if the other participants are aware that the seller is bidding, it is still shill bidding and is not legal.(Please see the part highlighted in bold below)

"The seller is NOT permitted to bid at a “without reserve” auction, announced or not, unless it is a “forced sale” meaning a sale that is conducted without the consent of the owner (for example, a seller COULD bid on his own car that had been repossessed because the sale of the car is being forced upon the seller without their consent). Otherwise, the seller, nor anyone on the seller’s behalf can bid at a “without reserve” auction as this would constitute a withdrawal of the property.

https://mikebrandlyauctioneer.wordpress.com/2009/11/15/different-types-of-auctions/
https://mikebrandlyauctioneer.wordpress.com/2010/11/25/what-is-shill-bidding/

Additionally, proposals result in potential change. If proposals and a framework to implement a proposal that benefits all is never considered or implemented, we'd basically have no Uber and the ilk or other changes that seek to change laws for the better. Specifically on Uber, Uber essentially changed the transportation industry because they proposed an alternative that, in some regions, was against the law.

Please note: I'm not condoning the practices or the mechanics that Uber employed to achieve the changes. They were unethical in a lot of aspects but that does not take away from the fact that they tried and achieved to change laws that has, for a certain section of the population, improved transportation

The note above is important. Please consider this when evaluating my entire comment.

I agree with you here. Proposals defintely result in potential change.

While I do not necessarily agree with Andrew's justification of sellers bidding on their own auctions, I absolutely condemn the personal attacks on him.

 

[xn--v4h.com]

I don't believe the courts address exactly what Andrew is proposing. Shill bidding is the scenario when a seller bids on an auction WITHOUT the knowledge of other bidders. Andrew has explicitly stated that the seller must be know and it must be obvious to other participants that the seller is bidding as well.

Additionally, proposals result in potential change. If proposals and a framework to implement a proposal that benefits all is never considered or implemented, we'd basically have no Uber and the ilk or other changes that seek to change laws for the better. Specifically on Uber, Uber essentially changed the transportation industry because they proposed an alternative that, in some regions, was against the law.

Please note: I'm not condoning the practices or the mechanics that Uber employed to achieve the changes. They were unethical in a lot of aspects but that does not take away from the fact that they tried and achieved to change laws that has, for a certain section of the population, improved transportation

The note above is important. Please consider this when evaluating my entire comment.

Reading some of the posts here, i think you are wasting your time explaining. If they still can't get it by now, they won't get it later either.

 

[Wannabean]

It's very interesting from a purely theoretical point of view under very specific circumstances. The potential for misuse is absolutely huge and @deez007 makes a great point about the corruption of aftermarket sales data.

 

[Wannabean]

Agree. But he is "proposing" something which is the very actual definition of shill bidding as decided by the courts which is not right IMO.

Yes but the motive and end game for Andrew's proposal is completely different to why shill bidders shill. That's why it's only interesting from a theoretical point of view because in reality how do you distinguish between honest and pushing bids? The fact that 90% of the funds are returned to the owner anyway is just an incentive for the owner to place bids, for a fraction of the actual cost, whose purpose are only to push the price higher and not 'protect' value of their asset. It's such dodgey ground.

So to be safe, it's muuuuuuch better to just stop owners bidding on their own names. In my opinion Andrew actually has 1 fair point but there are A LOT of reasons why this would be horrible to actually implement.

And to be clear: It is such dicey territory I wouldn't want anybody even remotely associated with me bidding on my auctions, yet alone my brother or close friends. Imo the only way to go is an infallible and zero tolerance, bomb proof shilling and bidding policy. Otherwise things get very messy.

 

[spankdemon]

None of the bids by the seller are "honest"!

Everyone else is bidding exactly what they are going to have to pay, and the seller is only really bidding a fraction of that, so NONE of his bids are legitimate.

If the seller thinks he made a mistake and overpaid for the name in the first place (or the market has gone down since he bought it), any bid he places is a shill bid, because he knows that if he wins, he is only adding to his initial cost. So if he does bid, he's just taking a risk so that he can try to push other people up to where he can recoup most of his money or maybe even make a profit. If he's bad at it, he will lose more money.
Shill bidding is simply when you make it seem like the item is worth more with phony bids.
It doesn't matter if you're "transparent" about it or not.
If you really believe you already have too much money in the domain, you won't bid, because you know you'll just lose more money if you win.
..Unless you're scum and don't mind shilling to pump it up as high as you can risk.

If the seller thinks he got a good deal when he acquired the domain, then when he puts it in auction, his bids are also just pushing other people up until some high number where he starts to risk losing too much money because of the commission.
If he pays 10k to an oblivious owner for a good LLL.com and puts it in auction, then even if he bids 30k on the name, he will only have to pay NameJet 4500! ..for a total cost of 14500......Meanwhile, other people may have been legitimately bidding 25k+ in hopes of winning it....
That's fair, right?

Some of you seem to think this is such an interesting, revolutionary idea, and we should all be grateful to have it brought before us.
Oh no, the world just wouldn't be as good if we didn't tolerate anyone pushing their unethical, bullshit, and very dumb propositions just because they are well-known or well-spoken. How would we ever progress!

 

[Wannabean]

None of the bids by the seller are "honest"!

Everyone else is bidding exactly what they are going to have to pay, and the seller is only really bidding a fraction of that, so NONE of his bids are legitimate.

If the seller thinks he made a mistake and overpaid for the name in the first place (or the market has gone down since he bought it), any bid he places is a shill bid, because he knows that if he wins, he is only adding to his initial cost. So if he does bid, he's just taking a risk so that he can try to push other people up to where he can recoup most of his money or maybe even make a profit. If he's bad at it, he will lose more money.
Shill bidding is simply when you make it seem like the item is worth more with phony bids.
It doesn't matter if you're "transparent" about it or not.
If you really believe you already have too much money in the domain, you won't bid, because you know you'll just lose more money if you win.
..Unless you're scum and don't mind shilling to pump it up as high as you can risk.

If the seller thinks he got a good deal when he acquired the domain, then when he puts it in auction, his bids are also just pushing other people up until some high number where he starts to risk losing too much money because of the commission.
If he pays 10k to an oblivious owner for a good LLL.com and puts it in auction, then even if he bids 30k on the name, he will only have to pay NameJet 4500! ..for a total cost of 14500......Meanwhile, other people may have been legitimately bidding 25k+ in hopes of winning it....
That's fair, right?

Some of you seem to think this is such an interesting, revolutionary idea, and we should all be grateful to have it brought before us.
Oh no, the world just wouldn't be as good if we didn't tolerate anyone pushing their unethical, bullsh*t, and very dumb propositions just because they are well-known or well-spoken. How would we ever progress!

Fair enough. But I think you'll find I damned the idea with faint praise if you actually read my post properly.

 

[JB Lions]

It's just not something that would ever work in domaining (most places), there is no market for it. Even if everybody knew the owner was bidding. I've never heard anybody say, I really which the owner of the domain could bid against me. The only reason why the owner would be doing that is price manipulation. Bidding to get the numbers up. And there is no risk again if they won, because they would get the money back minus the fees. So it's not something that would ever happen.

 

[Wannabean]

I've never heard anybody say, I really which the owner of the domain could bid against me. The only reason why the owner would be doing that is price manipulation.

Not necessarily. But it certainly opens up that possibility and must remain outlawed as a result.

Sometimes the owner wishes they could buy their own domain back for a price higher than it actually sold for in a no reserve auction. This is the scenario Andrew is talking about. The idea is not to push other buyers up but to have the option to buy your own name at the cost of commission rather than lose it for much less than you value it.

The counter arguments are obvious. Set a reserve. Set a starting price.

I've definitely lost names for 10% of the price I valued them at in no reserve auctions. Afterwards, if I asked myself if I'd have paid more just to keep it, the answer would have been yes. Now I confess that my reaction to this scenario has been to slap myself in the face and say 'grrrr why did I set a no reserve auction, with a funny end time, on a rubbish platform, with no reserve'... rather than....' wow would have been cool if I could have bid on my own name' but nonetheless there is a frustration there and I for one read Drew's post as a specific address for this kind of situation, as opposed to, 'c'mon everyone lets bid on our own auctions all the time and rip everyone off.'

It was badly timed and misplaced but he's getting absolutely annihilated for advocating price fixing and I don't see how what he wrote can be construed as that.

I'm totally against owners bidding on their own names but I'd rather have had the discussion with Andrew, from an Economic standpoint, rather than the witch hunt it's turned in to.

 

[Wannabean]

In fact, how bout this as a solution?

(I'm just freestyling ideas here so please don't call me names if you disagree folks. Just tell me where and why I've gone wrong. This is just a discussion after all!)

So instead of allowing owners to bid in no reserve auctions, how about only allowing them the option of the last bid?

So what that means is after the auction has finished (with no participation from the owner), the seller has two choices:

1) Places 1 final bid to buy their own name back

Or

2) Relinquishes the right to do so and it sells like in a normal auction.

@MediaOptions ?

I for one would prefer this set up as a seller to reserve or starting price auctions but I might well have missed a pitfall or two. (it's late and I've had wine )

 

[deez007]

In fact, how bout this as a solution?

(I'm just freestyling ideas here so please don't call me names if you disagree folks. Just tell me where and why I've gone wrong. This is just a discussion after all!)

So instead of allowing owners to bid in no reserve auctions, how about only allowing them the option of the last bid?

So what that means is after the auction has finished (with no participation from the owner), the seller has two choices:

1) Places 1 final bid to buy their own name back

Or

2) Relinquishes the right to do so and it sells like in a normal auction.

@MediaOptions ?

I for one would prefer this set up as a seller to reserve or starting price auctions but I might well have missed an a pitfall or two. (it's late and I've had wine )

Interesting idea/suggestion...

How about this one also...

Include the option to have a "Seller buy back" option...so basically lets say, I am selling my domain on auction... MYDOMAIN.COM... bidding gets to $500.. but I actually want $5000 ... there is no reserve and the higest bidder is @Wannabean with $500.. then when the auction closes, there can be an option where the seller can make an offer to the buyer to buy the domain back at 10% MORE than what the buyer just paid for it... (or 15% or 20% or whatever)...and if he agrees then seller pays buyer and the domain doesn't change hands... buyer wins cos he made a profit....seller wins cos he saved his domain...marketplace wins cos they get their commission...industry wins cos it curbs shilling....EVERYONE WINS

 

[Wannabean]

Interesting idea/suggestion...

How about this one also...

Include the option to have a "Seller buy back" option...so basically lets say, I am selling my domain on auction... MYDOMAIN.COM... bidding gets to $500.. but I actually want $5000 ... there is no reserve and the higest bidder is @Wannabean with $500.. then when the auction closes, there can be an option where the seller can make an offer to the buyer to buy the domain back at 10% MORE than what the buyer just paid for it... (or 15% or 20% or whatever)...and if he agrees then seller pays buyer and the domain doesn't change hands...

Very cool. I think that's an improvement on my idea. I like the idea of the runner up being compensated in this scenario.