Categorized | Domaining Tips

Domaining and… Counterparty Risk?

Posted on 16 March 2019 by Andrei

If you didn’t get a chance to read about the Alpnames (registrar) drama, click here, here and here.

The bottom line (and broader lesson to be learned) is this: as a domainer, you’re making a huge mistake by assuming the only risks you have to deal with are market-based ones such as domains in general going down in value, domains that pertain to your industry/industries of interest going down in value and so on.

Unfortunately, that’s not the case.

There are also counterparty risks you need to be aware of and if you’ve never heard about this term before, here’s a one minute video about counterparty risk that I think you’ll find useful. It’s a term you’ll be coming across quite a bit throughout your existence, so I believe it would be wise to internalize what it is all about.

In a nutshell, you need to understand that when doing business, there’s always the risk that those you do business with will let you down, scam you, go bankrupt and so on. As such, prudence is the operative word when deciding which companies you work with.

The Alpnames situation is a textbook example of the fact that no, domain registration services should not be treated as commodities (check out this video about commodities/commoditization if you want to better understand the term or don’t already know what it’s all about)… or, in other words, that it’s not a good idea to simply go with the company that puts the lowest price on the table and assume that bam, that problem has been solved and you can sleep well at night.

The same way, it means you need to be professional and proactive when it comes to portfolio consolidation, so anything from moving domains away from questionable registrars you only went with to save a buck to being less lazy and transferring domains won at expiration auctions to better-known registrars asap and so on.

Yes, it involves a bit of work.

However, it’s a small price to pay when you think about how much it lowers your counterparty risk.

Am I saying you should never take advantage of domain registration/transfer promotions that are put on the table by lesser known domain registrars?

No.

I’m simply pointing out you need to determine the risk/reward ratio to the best of your ability in each case.

If we’re talking about domains that aren’t very valuable to begin with then sure, saving a buck by taking advantage of such promotions is probably a decent enough options.

If however you were thinking about doing the same thing with the jewels of your crown… well, let’s just say putting 4-5 figure domains and above at risk to save a few dollars might not be the wisest decision in the world. I guess you could do it in a perfect business environment, where you knew for a fact your domains would be 100% safe but in our less than perfect (domain) world… yeah, probably not 🙂

I understand and respect the fact that when it comes to some (primarily quantity-based) business models, promotions and jumping from registrar to registrar make the difference between losing money each year and putting food on the table. I completely get that and risks such as registrar-related ones come with the territory.

By all means, don’t be a scaredy-cat or treat this post as me telling you to hide under your mattress all day from now on but on the other hand, don’t be reckless when it comes to your top assets either!

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