27 days... Model C... an auction model

[Siusaidh]

Guys,

The deadline for replying to Nominet's consultation on dropping domains is Friday 14th August, with a web discussion on the Tuesday of that week. And then that's it... over to Nominet to decide.

We already have an 8-page thread on the news release, but that's more of a reaction thread, with plenty of negativity about Nominet (which anyone can understand in the circumstances), but sadly also quite a lot of infighting and name-calling which is totally unproductive.

I watched the way recently this community worked collaboratively with Lazarus to help develop flip.uk, and that was really productive, so I am wondering if the same could be done with people working together to develop one or more models to present to Nominet.

To achieve that, and bearing in mind you only have a 27 day window of opportunity to do this, what I am proposing in this thread is that I take an interventionist role as a (newbie) moderator and moderate out negative attacks on other members (which are irrelevant to Nominet) and you work together to build models that could actually work (you probably won't all agree on one single model, and that's fine of course).

But frankly, if there's one time for people here to work together, it's probably now - constructively, and with clear thinking.

Now you may understandably argue that Nominet has already decided on an outcome and all this consultation is window-dressing. That could of course be the case, but I'm not so sure. I've had several conversations by phone and video link and email with Nominet people over the past 7 months, and my impression is that they really are undecided and want mature advice, drawing on the experience of people who use and understand the processes.

I suspect the auction model may have a lead with them, simply because it's not that complex or hard to implement. If you like, it's the easy way out, once you conclude that the system as it was, was unravelling out of control. But I'm not convinced they have decided on outcomes yet, and what's really needed to protect people's livelihoods is methodology about how to make a workable process where the rules can be enforced.

This thread is specifically for discussion on how an auction model would work. It is:

Model C: You look at the auction model that Nominet has proposed, and you collaborate to fine-tune it, or make comments on how it would work. As this option is likely to be unpopular here, and I'm trying to avoid conflict and negativity, can I encourage people opposed to the auction approach to move the Models A or B threads, to build the case for those, constructively as possible.

The other 2 threads cover:

Model A: You take the proposal that Nominet has made for a future name catching system, and you adjust it, with reasoned and convincing arguments, to a fairer and workable model.

Model B: You present really well-developed methodology for keeping the present system in a re-worked set of rules and parameters, which MUST be enforceable, otherwise there'll be no interest in using it. Nominet have gone past that point. It's pretty obvious that they know (as things stand) that the status quo will still be ridden roughshot over.

This thread is for Model C

 

[super-whois]

How about a Unique Lowest Bid Auction? Looks like Nominet haven't considered this as an option.

 

[Derek]

How about a Unique Lowest Bid Auction? Looks like Nominet haven't considered this as an option.

Great idea, they could then advertise it on late night TV channels along with those "win an iPad for £12" scams.

 

[Siusaidh]

I don't understand. Is this humour that I'm not picking up, or a suggestion that needs explaining?

 

[Derek]

I don't know if he's trolling or just a failed attempt at being funny but look at HappyBid.co.uk as an example. Its basically gambling dressed up as an auction.

 

[mcrick]

Nominet have proposed two auction models (i) sealed bid and (ii) ascending bid.

Sealed bid is where any interested party submits the maximum amount they are prepared to pay for a domain name in secret. The winner is the bidder who submits and pays the highest bid. Winning bids would, I assume, be confidential. I can see advantages of this for those who want to buy and try to flip because the price they paid isn’t public knowledge, although anyone else who submitted a bid would be able to deduce that the winner paid at least £1 more than their bid. It doesn’t educated the market about domain name value.

Ascending bid is the commonly understood auction approach where bidders keep bidding until only the highest bidder is still increasing his/her bid and is declared the winner. Winning bids may also be confidential but less confidential than with sealed bidding because anyone participating in an auction would have a view of where the bidding had got to at any moment in time. Nominet are not proposing to make the auctions open and a free-for-all whereby anyone can bid at any point, instead preferring bidders to express interest through a £10 non refundable fee during a specific time period. Only those who have done this would then be able to bid. Most domain name auction sites don’t generally function in this way, allowing anyone to jump in at any point. Should this be changed?

 

[Nigel]

So instead of making a fee of £3.90 for a caught domain. If they decide to go down the ascending auction route. They could potentially make £1000 if 100 people register on top of whatever the domain actually sells for. They must be rubbing their hands together.

Yes rubbing their hands together....and having a little chuckle as they watch mcrick from porto give us the hard sell. Wonder if he was on the team that put all this together??

 

[mcrick]

So instead of making a fee of £3.90 for a caught domain. If they decide to go down the ascending auction route. They could potentially make £1000 if 100 people register on top of whatever the domain actually sells for. They must be rubbing their hands together.

No that's too simplistic a view. Operating auctions costs money. Whomever operated the service would need to be paid. The £10 fee would be for access to an auction. The same principle was applied to the 2 letter / 2 number and 1 letter / 1 number release in, I think, 2010. If you're pro an ascending auction model are you also pro an auction being open to all right up until the last moment or are you only pro bidders who expressed an interested in bidding during a specified time period? If the latter then one has to charge a fee to prevent umpteen services spring up to enter every auction for free and then reselling the access on.

 

[Derek]

No that's too simplistic a view. Operating auctions costs money. Whomever operated the service would need to be paid.

I think the £7,200 from Carspring.co.uk and £42,000 from helptobuy.org.uk would cover Nominet being paid. They don't need to double dip on entry fees also.

 

[mcrick]

I think the £7,200 from Carspring.co.uk and £42,000 from helptobuy.org.uk would cover Nominet being paid. They don't need to double dip on entry fees also.

If they go down the auction route there shouldn't be any fees on top of a sale price or to enter, as the final sale prices will more than cover any costs. I also imagine VAT will be applied on top of any sale price - would this be the case?

So neither of you would prefer a small fee based entry for registering your interest during a specified period of time prior to an ascending auction opening, as was the case with L/LLL/N/NN.co.uk auctions in 2010, keeping late bidders out and would instead accept anyone being able to jump in and bid in any auction right up until its end. If that's the case and you prefer ascending auctions, be sure to express that in your responses.

VAT? I assume so. Maybe not for those outside of the EU.

 

[Derek]

So neither of you would prefer a small fee based entry for registering your interest during a specified period of time prior to an ascending auction opening, as was the case with L/LLL/N/NN.co.uk auctions in 2010, keeping late bidders out and would instead accept anyone being able to jump in and bid in any auction right up until its end. If that's the case and you prefer ascending auctions, be sure to express that in your responses.

I would prefer anyone can bid at any time in the auction if it were a choice between that and having to pay a non refundable entry fee.

 

[Derek]

I would prefer a token based system which could be re-used if unsuccessful. You/they could charge £10 a token.

This would over complicate things and create a secondary market for auction entries. What is the upside to it?

So people buying a UK domain based in the UK could be at a 20% disadvantage before the bidding even starts.

If you're VAT registered you would claim the VAT back on your next tax return. If you turn over less than £85k then yes you would be disadvantaged. But thats no different to any other VAT registered service as a UK based < £85k a year company would face currently.

f this was the case I would prefer that bidders have to be registered in the UK to make it a level playing field.

There is zero chance of a big .com company being told they can't bid on the .co.uk they wanted that is finally dropping, as they're not in UK. Or would they be forced to have some outsourced service bid on their behalf? Another over complication.

 

[mcrick]

I would prefer anyone can bid at any time in the auction if it were a choice between that and having to pay a non refundable entry fee.

Okay. How many auctions do you imagine you'd be bidding in per month or per annum? If it were 50 p/a, you'd lose £500 if you didn't win any (I don't know if the fee from the winner goes towards the final price paid). Not a huge amount for 50 entrance fees in my personal opinion, but you may feel differently. I don't know if that's an amount worth paying to keep as many others out of auctions that you made sure you registered for during the registration period, or not.

I would prefer a token based system which could be re-used if unsuccessful. You/they could charge £10 a token.

So people buying a UK domain based in the UK could be at a 20% disadvantage before the bidding even starts. If this was the case I would prefer that bidders have to be registered in the UK to make it a level playing field.

I think VAT is EU only. Nominet certainly do not charge VAT to non EU based members, at least not to non EU based individuals. Whether you classify that as a disadvantage may depend on whether you consider their money (i.e. those living outside of the EU) is worth as much as yours. In a great many non EU countries people earn far less so its more expensive for them buying something in GBP when converting from their local currency. They may also have incurred other local taxes on their money which you wouldn't, not being based in their country. I am suggesting it's not the stark disadvantage you may always think it is.

 

[Derek]

Okay. How many auctions do you imagine you'd be bidding in per month or per annum? If it were 50 p/a, you'd lose £500 if you didn't win any (I don't know if the fee from the winner goes towards the final price paid). Not a huge amount for 50 entrance fees in my personal opinion, but you may feel differently. I don't know if that's an amount worth paying to keep as many others out of auctions that you made sure you registered for during the registration period, or not.

You're right, it would be a cheap way for me to stifle competition and divert money to me that could have went to Nominet.

I think it would be short sighted greed for Nominet to charge an entry fee. It won't take many failed entries for people to say this is a waste of time and money and give up. Then we've got less bidders overall and lower sale prices.

 

[Murray]

So neither of you would prefer a small fee based entry.

If Nominet want to try and fleece as much money as possible that's up to them but lets not pretend it will benefit bidders

You could make it so you have to register interest in an auction beforehand without the fee, that would accomplish exactly the same

£10 might deter non serious bidders but if they aren't serious they wont be driving the price of the auction up anyway

It's crazy how these auctions are being sold as an improvement and also a £10 fee is an improvement, what next? a monthly subscription to the auction platform as a base to help "cover costs" on top of paying to enter the auctions

 

[Siusaidh]

I'm finding it a bit hard to get my head round £10 entry fee every time you want to bid for a name. That seems extortionate to me.

I can see the point of there being a 'penalty' to stop trolls messing up 100's of auctions at a time.

But if Nominet was going to insist on a £10 entry fee to an auction then, off the top of my head:

(a) Why not use a system like 'Dropcatcher' uses, where you pay for a participation, but if you don't get the name you want, that entry fee is then re-usable the next time you want to try to get a name?

(b) I'd also observe that if Nominet says these auctions are going to be used for charity, then if they are putting the auction platform out to tender, the bids for operating the auctions should be restricted to non-profits or charities with clear purposes and high reputation.

What should not happen is that, say, GoDaddy undertakes to run these auctions.

I have written to Nick Wenban-Smith this week on the subject of large registrars - but haven't heard back yet. What I want to clarify is, if Nominet decide to run auctions at around 90 days (after a 'pending delete' period)... can we be sure that large registrars with their own platforms won't auction the names first in order to cream off the profits before Nominet's charities get them?

I could imagine emails routinely sent to registrants with wording something like: 'We are sorry you have decided not to renew your domain name and have chosen to let it expire. If we do not hear from you, we serve notice that consequent to your decision we shall be auctioning your domain name to let someone else have it. Please reply within 7 days if you do not want us to do this, as if you do not, we shall take that as confirmation that you have indeed chosen to let it expire.'

And frankly, as that would be (to use Nominet's justification for non-action over the mass-registration) "a matter between the registrars and their clients", would Nominet intervene to stop that happening?

I am considerably concerned, based on previous behaviour, that large registrars may see the new model and decide to monetize all expiring domains for themselves, thereby preventing the money ever getting anywhere near a charity.

 

[dee]

How about a raffle ? Everyone pays the usual reg fee (effectively a ticket) and only people who enter get drawn randomly from. If highly contested Nominet make more but fair for everyone. Also means people wouldnt just blanket bomb as would cost every entry.

 

[Siusaidh]

I 'get' that idea, Dee. I'm not saying it's unattractive - it retains the thrill of the chase, never knowing which day you are going to get lucky. If I may suggest one aspect where it loses out, I do wonder if the auctions help increase public awareness of what domain names are worth? It's possible that people with portfolios may get at least some benefit from a platform publicised to the UK public (and beyond) as a national auction site, leading to greater appreciation of domain names' value.

I've heard that argument expressed by others - I don't know if it's right.

 

[dee]

I 'get' that idea, Dee. I'm not saying it's unattractive - it retains the thrill of the chase, never knowing which day you are going to get lucky. If I may suggest one aspect where it loses out, I do wonder if the auctions help increase public awareness of what domain names are worth? It's possible that people with portfolios may get at least some benefit from a platform publicised to the UK public (at least) as a national auction site, leading to greater appreciation of domain names' value.

I've heard that argument expressed by others - I don't know if it's right.

Fair point. But surely it just becomes the hoarder with the biggest wallet wins the long game as there's no barrier if you have funds ?

Edit. It would also mean that people with portfolios would get access to that auction site? Is that what you mean aswell?

 

[Siusaidh]

That is indeed the strength of your argument, Dee. Frankly, as a small player with limited funds myself (can nurses have a pay rise please) your method would probably have advantages for myself.

However, as I think we're trying to discuss the auction model here, I'll limit my own further comments in this thread to that topic. But you have a workable theory and best wishes putting that to Nominet.