The Secondary Market in domain names plays a critical role in Internet commerce yet is often misunderstood. This article clear ups some of the common myths that frequently arise when discussing the Secondary Market.
The Secondary Market is a crucial feature of the domain name ecosystem which encompasses far more parties than domain name investors alone, who play an important but relatively modest part in it. Domain name investors help the Secondary Market to function better for the benefit of sellers, buyers and Internet users by providing liquidity and assisting in moving underutilized domain names to their highest and best use.
A competitive free market is the best system we have for allocating scarce resources such as domain names. Prices for domain names are established in the Secondary Market, not by domain name investors alone, but rather when buyers and sellers come to a meeting of the minds as to the relative value of a domain name. Domain name investors deal in desirable domain names that would be registered by someone, whether a domain name investor or someone else, and invariably whoever owns a domain name would only part with it if a satisfactory sale price was obtained. Ultimately, domain name investors are proxies for sellers by stepping into the shoes of the seller, staking his or her own capital and taking the risk and responsibility of reselling a domain name on the open market to a party who may have a more valuable use for it than the previous owner.
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