4 Alternatives to Buying a Domain Name

When starting a business there are a lot of things to think about. Securing the right domain name is one. With almost 210 million domain names already registered, though, the chances are pretty high that the one that you want for your business is already taken.

If you ran a toy store, for instance, and wanted toys.com as your domain name – you would be out of luck. Toys ‘R’ Us had to buy it for $5.1 million in 2009. The domain name for Business.com sold for $7.9 million way back in 1999.

Buying a domain name for your business may not run into the millions, but it may cost more than you are willing or able to spend. The following are four popular alternatives to buying a domain name, as well as the advantages and drawbacks of each.

Leasing Domain Names: Alternative #1 to Buying a Domain Name


1. Lease the Domain


One of the alternatives to buying a domain name is to lease it. A lease is a legal contract calling for the lessee (user of the domain name) to pay the lessor (registrant of the domain name) for use of an asset (domain name). The lease is for a specified period of time, and includes lessee rights to renew under certain circumstances and lessor rights to terminate under other circumstances.

Often the owner of a domain is not actively using it, or unable to use it effectively, and would be willing to lease it. This is more often the case as parked domain names are producing less revenue than they did in the early days of parking.

There are websites that will facilitate this type of agreement. LeaseMy.com, LeaseThis.com and Zenscrow, for instance, will help both the lessor and lessee with the complicated business of drawing up a plan that will be agreeable to both parties. Agreements can be for two, five or ten-year terms much like commercial real estate.

If this seems like a good option, it is important to go into a leasing agreement well prepared just as you would any traditional leasing agreement. A firm understanding of the costs and terms is important to making a lease agreement work for both parties. It is also advisable to consult with an attorney specializing in domain names and intellectual property.

Rent to Own Domain Names: Alternative #2 to Buying a Domain Name


2. Rent to Own


When leasing, it is possible the domain name may be taken away after you work hard to build it. For example, if you miss one or more payments, the lessor may terminate the lease. Instead of leasing a domain name, you may want to consider a rent to own agreement with the owner of the domain name as an alternative.

Just as in other rent to own agreements, you would own the name outright after an agreed upon quantity of payments, likely including interest costs and perhaps including escalating payments. An advantage for the renter is the flexibility to pull out if things don’t work out as well as he had planned. If he were to find the domain did not drive as much traffic to his site as he envisioned, for instance, he could decide to stop making payments.

The downside to this is that the monthly payments could be significant. A brand new business, with few revenues, may not generate enough income to afford the monthly payments. In that case, instead of a set payment plan, you could offer the domain owner a part of your business – alternative #3.

Piece of Company: Alternative #3 to Buying a Domain Name


3. Give a Piece of the Company


Rather than pay a set price every month, you may give the owner of a domain name a piece of your business as one of the alternatives to buying a domain name. An advantage to this approach is that the domain holder’s interests are aligned with your own and if you do well, they will too.

Of course, you may not want to give up part of your business to someone else. While the domain owner’s interests are the same as yours, if you are successful they may own a large stake of your business for doing very little work. In that case, you may consider taking them on as a full working partner – alternative #4.

Partnership: Alternative #4 to Buying a Domain Name


4. Form a Partnership


If you want active help, an alternative to buying a domain name could be to make the domain owner a full working partner. It has the same advantages of giving them an ownership stake along with having another person giving their full attention to having the website and business succeed.

This option can be a good fit for a domain name owner that wanted to do something with the domain but was not able to pull it off. They may able to offer useful ideas and have areas of expertise that complement your own. For example, Marc Ostrofsky owns MutualFunds.com and is willing to entertain any offer of partnership, as stated in his interview on DomainSherpa.

Again, a downside to this option is that you may not want another person involved in your business. Taking on a full partner is a challenge for any business, and with a partner that may be located thousands of miles away the problems can be compounded.


Understand the Options, Make an Informed Decision


Whatever you choose, it is essential to know the advantages and disadvantages to the alternatives to buying a domain. Any business relationship has its challenges and that is no different when running a successful website.

In any of these options, it is important that you know the history of the domain name that you want. It is possible the owner has tarnished the name in some way that could turn off potential customers. If that is the case, or none of these alternatives feel right to you, consider a domain name that you can afford or try successfully marketing your own name. After all, who in the 1990s would have guessed an obscure mathematical term like Google would have turned into the household name it is today.

[Photo credits: drewcoffman, stevensnodgrass, comedynose, kheelcenter]

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9 Responses to “4 Alternatives to Buying a Domain Name”

  1. BullS says:

    Can you give examples?

  2. Kevin Y says:

    Thanks Astrid. Preparation helps with any deal, and knowing your options is the first step. I’d love to see the next step for any of these options, and what a terms sheet might look like.

    • Astrid William says:

      Hi Kevin, that is a great idea. I will try to research some term sheets for publishing on DomainSherpa.

  3. BullS says:

    #5-STEAL

    210 million domain names already registered— I think it is too low….

  4. TW says:

    Great article. Would love to lease some of my domains!

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