The moniker.com live TRAFFIC auction now has made news half way across the world in the THE JERUSALEM POST, whcih reported on the auciton of israel.com.

Its good to see that the domain market getting press overseas.

Here is a reprint of the article:

“”"”"”"You would think Israel.com would be an exciting, detailed Web site on the Jewish state, designed to attract tourists from abroad. But when the Web address is punched in to your Internet browser, all you get is a simple page with an Israeli flag smack in the middle.

In contrast, Australia.com has a virtual tour video where a young man from down under guides you through the complex and fun site, and Mexico.com helps Net surfers plan their entire vacation in “just one click.”

But come May 23, Israel.com should be on its way to becoming exciting and informative. The domain name will be auctioned off to the highest bidder on the Moniker.com live auction site. The physical auction will take place at the T.R.A.F.F.I.C East Conference in Orlando, Florida.

Moniker.com CEO Monte Cahn estimates the Israel.com domain name will go for at least $5.5 million; its owner, Jean-Noel Frydman, currently living in Miami, registered it for free in 1994.

Frydman says the site has the potential to provide important information about Israel, to educate and attract millions of people from abroad.

“That is one of the main reasons why I registered the site,” he says. “It was right after the [Oslo] Peace Accord and I thought it would be a good tool for an investment for Israel and I didn’t want anyone to misuse it.”

Frydman is finally letting go of the site because of the state’s 60th anniversary.

“There has never been a better time to make something of Israel.com,” he says. Israel.com can become the great “gateway to the Jewish world.”

An Israel Tourism Ministry spokesman in London says that if the Web site is bought by the right person, it will have a great impact on the Jewish state.

“Hopefully, the Web site will provide alternative information that will balance and add to the present media. There sometimes is a bias in the media and this Web site will be able to counter that bias,” according to the spokesman.”"”"”"

The California Supreme Court struck down the state’s ban on gay marriage Thursday, saying sexual orientation, like race or gender, “does not constitute a legitimate basis upon which to deny or withhold legal rights.”

In a 4-3 ruling the justices wrote that “responsibly to care for and raise children does not depend upon the individual’s sexual orientation”.

The ruling takes effect in 30 days.

This will put the issue of gay marriage on the front burner again.

It was just a couple of years ago that some court rulings had the Bush administration looking for a constitutional amendment to ban gay marriage nationwide.

The issue seemed to go out of the public spot light as state courts upheld bans on gay marriage around the country.

However in light of this ruling, the issue is bound to be back on the front pages of your newspaper.

The ruling is definitely good news for gay couples in the US and good news for the owner of gaymarriage.com

Oh that’s us.

We are always on the lookout for someone in the gay and lesbian community to joint venture with us on this name and develop it into the site it deserves covering the issue, laws, news and personal announcements of gay marriages across the US. If you are a web developer with ties to the community we would love to talk to you.

In the second major Internet acquisition of the day, CBS Corp. agreed to buy online technology news and entertainment company CNet Networks Inc. for about $1.75 billion or $11.50 per share.

The bid is a 45 percent premium above CNet’s closing price of $7.95 on Wednesday.

CNET’s sites include News.com, TV.com, Mp3.com, MySimon.com and GameSpot.cm

The acquisition, would make CBS one of the 10 most popular Internet companies in the U.S., with 54 million unique visitors a month and approximately 200 million uses worldwide, including it’s own online properties, including CBS.com, CBSSports.com and CBSNews.com.

The transaction is subject to approval by CNet shareholders and regulators.

Ask.com bought several reference sites including  Dictionary.com, Thesaurus.com and Reference.com in its acquisition of Lexico Publishing Group LLC.

Terms of the deal, set to be announced Thursday, aren’t being disclosed.

Dictionary.com is the most popular of the newly acquired reference sites, drawing 22.1 million visitors worldwide in March, according to comScore Inc. That represented a 20 percent increase from the same time last year.

According to a report in the Associated Press, Google for the first time, has passed Yahoo as the most popular Web destination in the U.S., according to research firm comScore Inc.

Google U.S. audience grew 18% in April compared with the period a year earlier, to 141.1 million.

Yahoo’s U.S. audience, grew only 7% to 140.6 million.

Microsoft  came in third at roughly 121 million.

According to a report by the Assoicated Press,VeriSign, Inc.,  won a patent for its SiteFInder Service which directs users to landing pages when they mistype a web address on March 4, 2008.

According to the report, VeriSign Inc. said it has no intentions of resurrecting the Site Finder service, but it declined further comment on its plans for the patent, including bloggers’ speculation that it could now demand licensing fees from EarthLink Inc. and other companies that have since started similar efforts.

Normally, when you mistype a Web address, perhaps switching two letters, a generic error message often appears.

Site Finder sought to help guide surfers mistyping “.com” or “.net” names _ which VeriSign runs by offering a list of likely alternatives, including pay for placement listings for which VeriSign got a share of revenues when users clicked on one.

VeriSign was criticized when it launched Site Finder in 2003 because of the influence the company already had as the keeper of the traffic control directories containing all “.com” and “.net” names.

VeriSign agreed to suspend the service under mounting pressure.

Despite the March 4 patent approval, the company says it “does not intend to relaunch related services.”

If VeriSign tries to demand licensing fees from others, patent lawyers could claim that similar services existed before Verisign’s was patented.

In fact, VeriSign had cited those pre-existing services in justifying Site Finder.

Time Warner Cable Inc.’s Road Runner and Verizon Communications Inc. are among the service providers that have launched or tested such services to tap the growth in search advertising. OpenDNS also offers it to users of its free directory services crucial for translating a Web site’s domain name into its actual numeric Internet address.

EarthLink was recently criticized after security researchers discovered a vulnerability with its U.K.-based service partner, Barefruit. Officials say that the flaw was quickly fixed and that no users were harmed

According to a report in the Wall Street Journal today,  as we discussed yesterday, Billionaire investor Carl Icahn is launching a proxy contest to unseat Yahoo’s board of directors.

Icahn plans to nominate 10 directors to replace Yahoo’s board before a deadline Thursday, including former Viacom Inc. Chief Executive Frank Biondi, who has worked with Icahn on other proxy fights.

According to the report Icahn is focused on pushing Yahoo back to the bargaining table with Microsoft and believes that he needs more than a few board seats to get a it done.

However, to date Microsoft has given no indication that it would be interested in reviving talks with Yahoo.

Yahoo was up $.58 during trading today and then another $.51 after hours.

Yahoo is now back to $27.65 a share

Late today, reports surfaced that Carl Icahn acquired up to 50 million shares in Yahoo.

According to the reports, Icahn is considering mounting a proxy fight to take control of the board of directors at Yahoo.

Shares of Yahoo were up more than 5% in afternoon trading, after having been down over $1 a share earlier in the day.

Shareholders have until Thursday to nominate a board of directors. The election is on July 3, 2008 when all 10 of Yahoo!’s board of directors are up for election.

The question is now whether Icahn can convince enough shareholders to nominate a slate of director that would favor a sale to Microsoft and whether Microsoft would still be interested in buying Yahoo for $33 a share.

Icahn would need at least a 5% stake of Yahoo’s shares to run a proxy fight. Some major Yahoo shareholders have signaled they’d be willing to back a hedge fund activist to lead a campaign to bring Microsoft back. Microsoft raised its offer from $31 to $33 in the final days before walking away.

However, one major shareholder, Eric Jackson, who last week threatened to run a proxy campaign to elect new board members at the company, announced before the Icahn report came out that he has canceled plans saying he couldn’t raise the money for a proxy campaign.

So now that Microsoft attempt to buy Yahoo has failed (at least for now) what can Microsoft do to take traffic away from Yahoo and Google and put it towards MSN??

How about buy domains. More specifically large domain portfolio and redirect the traffic to MSN.

Microsoft was willing to spend 46 Billion for Yahoo.

By all accounts it would take well over a year to get regulatory approval which will have costs tens of millions more and then at least 1 most lightly 2-3 years to truly integrate Yahoo into MSN. The total acquisition in cash, stock, time and costs might have topped 50 billion.

If Microsoft went out and took down some of the publicly traded domain companies, and the top 20 domain portfolios what would it cost them?

Certainly less than 5 billion.

They would take traffic away from both Yahoo and Google and place it directly into the MSN channel.

Add a parking company and you have accomplished something at a fraction of the cost of Yahoo.

Dark Blue Sea for example, which owns reportedly 600,000+ domains of their own, generates seven figures for parking domains and has it own hosting company, has a market cap of less than $30 Million based on today’s trading price of $.35.

Marchex.com which owns hundreds of thousands of domains has a market cap of $500 million.

Then there are the major private portfolios (including ours) that generate substantial revenue that could be purchased and switched over to MSN.

As we all know, It was reported a couple of years ago that one privately owned portifillo accounted for 1% of Yahoo traffic alone.

By taking out a few public companies, and some of the top privately portfolios could MSN take 10% traffic share away from Yahoo and Google and get MSN into the 15% share range?

Just the perpection of MSN market share gaining and Yahoo and Google’s losing ground would get the attension of the media, advertisers will slowly migrate over, and you have a start of something.

Not a bad way of spending a fraction of the money Microsoft is saving by not buying Yahoo and getting into the game.

Fusu.com billed as the world’s first and only domain stock exchange seems to be getting a lot of buzz in the industry.

However is it legal????

I started looking at this a couple of weeks ago, as I was considering listing one of my domains for sale.

It looks like a great idea, sell part of a domain, raise some cash, and allow other to participate in the current income and upside potential of the domain.

But the more I looked at the exchange, the more I found asking myself if the sale of a partial interest of a domain, by a US Resident or Citizen, was the sale of an unregistered security in violation of federal and/or state laws.

First the disclaimer.

Although I am an attorney, I am not by any means, nor do I represent that I am an expert in US security laws. I do have a basic understanding of them. I am not smart enough to make a determination of whether the domain interest being sold through Fusu.com are securities under US federal or state laws. I am smart enough to see that there substantial issues that need to be addressed.

This is what attorneys do. Spot issues. This is what we are taught in law school to do. This is what law school exams and even the bar exams test, the ability to spot issues.

Resolutions of issues require substantial time and research by experts in their field.

I would advise anyone considering buying and especially selling domain interests, to get an opinion of a very good attorney, who specializes in security laws, prior to doing so.

Security laws in the US, both state and federal are some of the most complicated laws on the books and violation of such laws carry substantial civil and criminal penalties.

According to fusu.com:

“Investors can buy percentage ownership in domains and trade their shares”

“Fusu uses the concept of a traditional stock exchange and applies it to the domain names industry by providing a trading platform for owners, shareholders and investors”

Domain owners can sell up to 45% of their ownership in a domain to an unlimited number of investors.

Fusu.com does not limit the number of investors that can buy shares in any one domain. The domain owner appears to be in control of the domain with his 55% ownership. All decision regarding the domain name, as whether to park the domain, where to park it, or whether to develop it, all seem to rest with the domain owner. However fusu.com does give the shareholders a right to vote on the sale of the domain if:

“The domain sale price is less than 150% of the current market value; you are required to get approval from at least 90% of the shareholders”

Once the investor buys a share he can then sell the share to anyone else on the exchange or keep the share in which case, according to Fusu.com the shareholder would be entitled to his pro-rata share of all domain parking revenues and sale price, if the domain is sold.

Domainers have to place the domain into an “escrow” account with one of Fusu registrar’s which right now is limited to Eurodns, to insure the proper distribution of funds if the domain is sold.

Fusu.com also states that:

“”"By being a shareholder in today’s best domains, you participate directly

• in the increase of domain valuations,
  
• in parking revenue, and
  
• In the sale of premium domains.”"”
  

According to its terms and conditions, Fusu.com, “is governed by the laws of the Slovak republic”

So we have two basic questions:

Is the determination of whether the instrument being sold by a US citizen or resident is a security be determined by US law, or Slovakian law?

If the determination whether the instrument being sold by a US citizen or resident is determined by US law, then is the sale of shares or interests in a domain name, a security under US law which would be required to be registered with the Security and Exchange Commission?

Let’s be clear here. The domain owner is the one actually selling the shares or interests in the domain. The domain owner is the one who gets the proceeds from the sale.

Fusu.com is just facilitating the handling of the sale of shares.

As to the first question, although as I previously said I do not have the answers, my gut feeling is that a US based domainer is subject to US securities laws when they sell an instrument and get the funds, especially when the buy of the shares is most lightly also a US citizen or resident.

The second question is much harder.

Under US law, securities have generally been held to include:

1. Stock certificates, Bonds, debentures or other evidence of a secured indebtedness or of a right created in the holder to participate in the profits or assets distribution of a profit-making enterprise.
   
2. Written assurances for the return or payment of money.
   
3. Instruments giving holders rights to money or other property. Instruments can be in the form of, notes, contracts, agreements, certificates of interest or participation in profit-sharing agreements, collateral-trust certificates, preorganization certificates or subscriptions, transferable shares, investment contracts, voting-trust certificates, certificates of deposit for a security, and a fractional undivided interest in gas, oil, or other mineral rights.
   

A “security”, under federal law and the laws of Florida (where I live), also includes an “investment contract”, which means, generally, an investment of money in a common enterprise with the expectation of profit to be derived from the efforts of others.

In addition to Federal Security Laws, each state has its own securities laws and regulations. These state rules are known as “Blue Sky Laws”, which regulates both the offer and sale of securities.

With few exceptions, every offer or sale of a security must, before it is offered or sold in a state, be registered or exempt from registration under the securities, or blue sky laws, of the state(s) in which the security is offered and sold.

There are substantial civil and criminal penalties both under federal law if it is determined that the interest in the domain being sold is a security that requires registration prior to sale.

Some types of securities and some offering in securities are exempt from registration requirements. However, most of these exceptions deal with offering which are limited in size and deal with only “accredited investors” which are generally investors who meet specific net worth and annual income requirements, neither of which fusu.com attempts to qualify in the registration process.

In an e-mailed I received from fusu.com General Counsel on Friday, Mr. Tomas Stremy, in which I raised many of these issues, he stated that:

“According to Slovak law we are not selling securities but forward looking contracts, and act only as broker. We are currently working with counsel to address US specific regulations.”

My gut feeling is that since, the investor/shareholder is suppose to receive a pro-rata share of the revenue currently derived from parking the domain, it may not be treated as a futures contract under US law. A “futures contract”, which by definition, may only have value in the future, does not contemplate a current income component. The entitlement to current parking revenue definitely gives a shareholder the current right to participate in the income generated by the domain.

If the domain interest, is definite by US law, I don’t think it helps that fusu.com calls the initial sale of the domain interest by a domain owner to shareholders as “going public”.

“”Going public” happens when the domain owner sells shares of its domain to the public for the first time. This is called an Initial Domain Offering, or IDO

I do not think it helps that fusu.com calls themselves the world’s first “Domains Stock Exchange”.

I do not think it helps that when you click to buy an interest in a domain on fubu.com, you click on “buy shares”.

As far as buying a “futures contract” I don’t see a contract anywhere on the site. If your Selling and others are buying a futures contract, then there should be an actual contract that all parties sign or at least the seller signs on a transferrable basis.

Beyond the SEC and Blue sky laws (which again are only applicable to US residents and citizens), there are other potential problems with the exchange.

Although Fusu.com seems to have the shareholders protected in the event of the sale of the domain, by use of a registrar’s escrow service, there does not appear to be any system in place to make sure the shareholders get their share of parking revenues. There does not seem to be a requirement that the domain be parked with any particular provider and thereby there does not seem to be anyway for fusu.com to collect the parking revenue or track the accuracy of the figures.

What if a domain is subject to a UDRP action or other legal proceedings? Will the shareholder lose their investment, if the domain is taken? Will the shareholders have a claim against the domain owner for failing to protect their interest in the domain? What level of protection will a court place upon a domain owner to protect the interest of the shareholders? A court might find that the domain holder has a duty to appeal any negative decision? Moreover the court may place a fiduciary duty on the domain owner to protect the other shareholders

Speaking of a UDRP action or worse, an action filed in federal court, who is responsible for paying the cost of fighting an action? Even though the domain owner sells 45% of his domain, it would seem to me, the domain owner will be 100% responsible for the payment of the costs of defense. There does not seem to be any basis to require shareholders to pay their share of any costs of protecting the domain. But the issue is far from clear.

What if Fusu.com closes? In Paragraph 5.4 of its terms and conditions, it states:

“FUSU may elect to discontinue offering the Site or the Services, or any portion thereof, at any time for any reason, with or without advance notice.”

Or what if a US governmental entity, such as the SEC orders that the exchange stop operating in the US?

Although I think the shareholders would still own their share of the domain, how would they enforce their rights, and since there are so many small shareholders, owning a small portion of any particular domain, it may not be cost effective for them to attempt to enforce their rights.

Fusu.com has potential to be a very powerful player in the domain market.

There is tremendous potential.

But there are many questions.

The questions have been asked, now we need them answered.