Re: [ga] Date: Wed, 9 Jan 2002 15:53:53 -0500

[George Kirikos <gkirikos@yahoo.com>]

Hello,

--- Jeff Williams <jwkckid1@ix.netcom.com> wrote:
> George Kirikos wrote:
> > It's an imperfect analogy, though, as domains are "one of a kind",
> and
> > can't be perfectly substituted, like RAM chips or gold or pork
> bellies.
> > The quantity is always going to be exactly 1, regardless of price.
> > There isn't really a "curve" at all, there are just "points" in
> space
> > in the price-quantity graph. One can't buy 2 sex.com's, or 11
> > eBay.com's.
> 
>   I can't quite completely buy your last statement in this analogy.
> For instance, your not quite right that one cannot buy more than
> one Sex.com.  On can buy/register sex.biz, sex.net, sex.org (This
> one would be interesting from a potential content standpoint >;) ),
> six.info, sex.museum, sex.coop, and perhaps if congress has it's
> way, sex.kids.  Given that yes these other potential derivatives
> ( Using a wall street term here ) they are not the exact same a

Derivatives are something completely different in the finance context
(they refer to "contingent claims", such as options and futures, swaps)

> sex.com, they may be used in exactly the same way and are
> very similar sounding and than also could therefore be considered
> in the potential situation of a Domain Name dispute, as has already
> happened with Sex.com once, as confusingly similer in a UDRP
> filing.  Big mess eh?

Because they can be used in a similar way doesn't make them perfect
substitutes. For instance, one can use butter or margarine on toast. If
the price of butter went up, some folks might substitute more margarine
instead. But, the Warhol's "Campbell Soup Can" (sex.biz) isn't quite a
substitute for Da Vinci's "Mona Lisa" (sex.com), even though they can
both hang in a frame on the wall.

I was re-reading Elliot Noss' initial post where he wrote "This means
that the best approach is the one that puts names into the hands of
those who would put them to the most use. Names in the hands of those
who most desire them will lead to a fuller utilization of the Internet,
more value for users and more revenue for registrars and registries."

This reminded me of the important "Coase Theorem", from the economics
and legal realm (Nobel prize winning). Briefly, if we have no
transactions costs (i.e. trading in secondary markets is efficient) it
doesn't matter how we allocate the "legal entitlement" to something
(e.g. ownership of a domain name). The people who most desire them will
end up with them in the end, leading to an "efficient" allocation, via
Elliot's definition. I think if this is the goal, one has to think of
the costs created by various schemes, how transfers work, how "price
discovery" and "registration rights" are handled. 

The "low cost" scheme that might maximize efficiency (allocational
efficiency) might ultimately involve eliminating the notion of
"expiring domains" entirely (not making this a proposal, just tossing
out a possible implication of that line of thought) and make them all
"owned" and non-expiring. If charges were only made for changes in
ownership, changes in DNS, etc., so that domains that were dormant cost
$0/yr to maintain, then from an efficiency point of view that could
actually enhance things -- no one would be sitting around waiting for
domains to expire. Instead, they'd be directly contacting the owner of
a dormant domain, to buy it. Rules would need to be setup in such a
scheme, though, where the owner could not be found; e.g. maybe a series
of contact addresses, with a line of succession that would be followed
if the owner could not be found (e.g. I could appoint a legal trustee,
if I should meet my untimely demise, who would look after the domain's
value). It would be another business for law firms (or registrars), as
they would be natural trustees for most people (while lawyers may come
and go, law firms last a long time....). I don't know if there's a
"legal constituency"  in the DNSO, but probably the policy people at
ICANN and/or their economic advisors would be familiar with the Coase
theorem, and how it can shape one's thinking in trying to create
efficient structures. 

Thus, it might be that the presence of the deletions themselves are
having the negative impact on the secondary market (i.e. impacting
Afternic, Great Domains, etc.). Transitioning to an "owned" system
would be a big change, though, so careful thought would be needed to
flesh out all the implications.  

Sincerely,

George Kirikos
http://www.kirikos.com/

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