Fractional domain ownership - Making the next big thing work.

[Commerce]

I would think that this topic has been brought up before, but I have not seen it specifically discussed, so I thought this would be as good a place as any.

The trend these days seems to be to develop and market a given site and grow it organically. Great if you have the time, energy and funds to do it. Not so great if you don't.

A few years back, some folks realized that it was pretty darned expensive to own and operate a jet. From that, the concept of fractionalized ownership of jet aircraft began, where several folks could own a single asset and use it on an as available basis.

The parallel to a domain is a bit harder to make, but I think that the concept still stands. Clearly, there are some issues to overcome in doing something like this with a domain, but I still think it is a worthy idea to consider.

Say you are a casual domainer, you focus in one or two $100 sales every month or two. You don't have the cash to buy a "huge" name, but you would like to be part of one and benefit in some way from the work and effort you put into the site.

So, the question I put out to others reading this, how could you do it in a way that is legal, fair, equitable and workable for a large community?

I think that doing a fractional name ownership plan for a domain makes sense... Think about if you were involved in an eBay at a very early stage in the process? What would the value of your original expenditure be worth today?

One other thought, say you had a focused niche in mind that applied to a huge demographic, if you have 10 people pitching a site, that's great, but if you have 10,000 or more interested people pitching a site, that's brilliant.

I obviously have a site in mind for this post and I'll share it if there are some great responses here.

So, any other thoughts on this?

-Commerce

Benjamin Franklin is quoted as saying "We must, indeed, all hang together, or most assuredly we shall all hang separately." during the Continental Congress just prior to signing the Declaration of Independence in 1776.

 

[dadster]

sounds scintillating - let me know more. Will think more about it and shoot you any ideas that might be rumbling about the old noggin'

 

[Onward]

See:

Fusu.com

 

[Commerce]

I've seen FUSU and am rather concerned about how such a site would play to the US SEC.

Also, the site itself is beyond the reach of US law, which is an issue for me. As a US site owner, am I going to be violating US securities laws going that route? If so, what are the consequences? Martha Stuart comes to mind.

I think that looking at this in the way of the Jet model is structured is probably more reasonable, as it is a working and proven model. FUSU, while it may be fine, reminds me a bit of an unregulated Duke & Duke (see reference: Trading Places). Also, if I can't read the site, I'm not likely to want to do much with it (they have to change that size=1 font).

FUSU strikes me as a play that simply is based on names. Names without anything behind them (e.g., an experienced team, a track record) are not really something that one can easily get one's hands around value for most names.

A better model would be to start out where most all companies begin. A formal charter with rules of the road fully described (e.g., Articles of Incorporation or an Operating Agreement), some type of interest owners (e.g., family, friends, and fools) and a lot of founder sweat.

Another possible way to do this would be through "micro loans" which could be paid back to the loan makers over a predefined term and rate. This differs from going to a single point to get the loan and might make sense to folks willing to risk up to $100 of their money for a deal that could bring them greater returns down the road. One way to protect the micro loaners would be through something that provides a basis for value like a domain appraisal. While I understand that domain appraisals don't get all that much respect here, there needs to be some constant method for providing a basis for value that would be acceptable to the parties.

My thinking is that a person willing to blow $100 on a "premium four character name" (hard core domainers) might be interested in loaning their money to a project that might actually get them some money back on their money. Especially so, if they are willing to put it out there for a time period to allow the site to become successful and pay them from revenue or go belly up and pay them from a sale.

Also, as I mentioned before, if you have 10 people involved with a $10,000 investment each vs 1,000 people with a $100 interest you will get one heck of a lot more press from the 1,000 telling their friends... really the basis behind social networking and I think a good justification for looking at this idea of fractionalized ownership.

I'm going to do a bit more looking about and research to see what other models have been created.

-Commerce

 

[Onward]

Right...doing lots of research and utilizing pieces of different business models to create a great new plan.

Maybe a Buy/Build/Sell model with 20-30 people each kicking in a certain amount to start....buy the name for 30% of the pot, spend 30% for development, and the remaining 40% for marketing & SEO...then sell with in a years time....then do it all over again with higher stakes...