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What are the risks of investing in domain names?
· Domain name investing is subject to risks of technological change and evolving industry standards.
The Internet in general and domain name investing in particular are still in their infant stage.The Internet could simply stop functioning due to overloading or a virus or terrorist attack. The domain name system could undergo some other unforeseeable sea change. For example, currently domain names are only accessible using the Latin alphabet (a-z). Eventually, surfers may be able to use other alphabets (e.g., Arabic, Hebrew), and domain names of transliterated words from other alphabets will shrink in value.Such companies as i-DNS.net, RealNames, and neteka.com offer domain name access in every major alphabet and language in the world. In any of these cases, an investor could fail to achieve reasonable returns.
· Internet surfers could begin accessing sites primarily through "plain-English" domain names.
The Internet Engineering Task Force is currently developing a proposed standard, the Common Name Resolution Protocol, to allow users to type in simple words instead of complicated URLs to get to their goal. The CNRP standard would unify common names already being used by RealNames , NetWords, America Online KeyWords, MSN Autosearch, Netscape Navigator Smart Browsing, and CompuServe's Go Words. (Representatives from some of those companies are on the IETF standards committee.) If the standard becomes internationally accepted, then the value of the underlying domain names could shrink. The final standard should take about a year to finalize, and then web and software companies would have to decide whether to adopt the protocol.
· Certain domain properties may be expropriated.
When buying names in the country domains, the investor faces a risk that the relevant country's internet administrators will retroactively change the rules as to who can buy the names. For example, a country could rule that a buyer must immediately develop the site and not merely park it. Alternatively, a country could rule that names can only be bought by citizens and corporations located in the country. Unlike real property, internet property is extremely easy to expropriate, requiring only a small change in the country's NIC database.
· Domain properties may be the subject of trademark dispute.
GoldNames does not recommend to investors to purchase or trade in properties that are subject to trademark dispute (e.g., disneyfilms.com). Nonetheless, an investor may accidentally acquire or broker a transaction involving a name likely to invoke a trademark dispute. In addition, even after an investor owns a name, another individual may trademark the name and then try to claim the name from the investor. Merely reserving a domain name isn't enough to safeguard it from trademark dispute
Over 1000 proceedings have been commenced under the Uniform Domain-Name Dispute-Resolution Policy since the policy went into full operation on 3 January 2000. In an effort to assist the community in keeping track of these proceedings, the ICANN web site lists the proceedings arranged by (a) commencement date, (
proceeding number, and © domain name. In addition, the ICANN site now offers a search tool and a statistical report on the status of the proceedings. These may be accessed through ICANN.
· New or changing laws or regulations could greatly restrict the domain investor.
On an ongoing basis, the Internet Corporation for Assigned Names and Numbers ("ICANN", www.icann.org) is working to more closely monitor and arbitrate the registration of names on the Internet. ICANN is primarily concerned with cybersquatting, i.e., investors who deliberately choose domain names that are similar to major trademarks. It is also possible that ICANN will restrict investors from registering names without the intention of immediately developing them.
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http://www.goldnames.com/faq/domainnames_general.html
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