Namejet.com announced last week it would be auctioning off some new gTLD domain names in the strings .XYZ and .College, even before either new gTLD has been delegated to the root by ICANN.
Some readers have questioned, exactly what they are bidding on since they can’t get the new gTLD domain if they win the auction and may not get the domain name.
Namejet.com just updated its Terms Of Service last week in conjunction with the new gTLD domain auction and NameJet.com has specific rules covering these new gTLD’s auctions which they are calling an advanced auction.
Since most people don’t bother reading through the TOS I figured I would answer the readers questions of what exactly they are bidding on by publishing NameJet.com own terms and conditions on these “Advance Auctions”:
“Advance Auction:”
“An Advance Auction is an auction for a new gTLD domain name where the applicable registry operator (the “Registry Operator”) has either not yet been delegated by ICANN or otherwise has not yet begun allocating domain names to registrants, and therefore the Registry Operator may not be able to provide a winning bidder with any rights to a particular domain name until some uncertain time following the applicable auction, if at all.
Participation is open to all NameJet users that have agreed to these Terms of Use.
If no one else places a bid that is more than your bid at the expiration of the auction time, you will be awarded an option to purchase the right to be allocated to the domain name for the price of your highest bid (plus the additional fees described further below) if and once the Registry Operator is able to allocate the relevant domain name, and following the applicable Sunrise period.
By placing a bid in an Advance Auction, you acknowledge and agree that you are bidding on an option to purchase rights to the domain name at the price of the highest bid.
The option cannot be exercised until the Registry Operator is able to make such rights available to you and in no case before the end of the Sunrise period of the launch of the relevant gTLD.
The option will be contingent on the Registry Operator successfully completing the process of being delegated the related gTLD and will be further contingent on the domain name not being registered during the Sunrise period.
If you are the winning bidder you will be notified if and when the option can be exercised. Once you are notified that the option can be exercised, you will then have ten (10) business days to exercise the option, which will be by submitting payment to NameJet.
If payment is not received within ten (10) business days, you will forfeit the rights under the option at which point the domain name may be allocated to another party or scheduled for re-auction. In order to exercise any Advance Auction option, you shall pay to NameJet the price of your highest bid in addition to the registration fee set by the Registry Operator and/or any necessary registrar at the point the domain name becomes available for registration.
Neither NameJet nor the Registry Operator can guarantee that any Advance Auction domain names will be available on any specific time frame or that any such domain name will ultimately be available for allocation to you. If at any point before the exercising of an option and the tendering payment to NameJet, NameJet and/or the Registry Operator shall have the right to cancel the option upon notice to you. In this case, you will be under no obligation to remit any further payment to NameJet related to that domain name.”
Well, I appreciate NameJet addressing this issue, but I have some follow up questions –
“If you are the winning bidder you will be notified if and when the option can be exercised. Once you are notified that the option can be exercised, you will then have ten (10) business days to exercise the option, which will be by submitting payment to NameJet.”
1.) Am I correct in assuming the auction winner is not billed when the auction ends?
They would only be billed when the domain is available, if they choose to exercise their option?
2.) If they choose not to exercise the option does it cost them anything? Can the high bidder just walk away without paying anything? If so then the bid is non-binding to the buyer.
Brad
“you shall pay to NameJet the price of your highest bid in addition to the registration fee set by the Registry Operator and/or any necessary registrar at the point the domain name becomes available for registration.”
That is a complete unknown. You could win an auction then the registry could set the registration fee at $10, $500, $1,000, $5,000, or more.
“If at any point before the exercising of an option and the tendering payment to NameJet, NameJet and/or the Registry Operator shall have the right to cancel the option upon notice to you.”
So a registry can just cancel the option purchased at auction if they don’t like the prices they achieve.
Brad
Brad:
Thanks for your interest and questions. I have provided some answers below.
Yes, you are correct that winners would be billed when the domain becomes available rather than when the auction ends. The high bidder has the option to purchase domain when it becomes available, not the obligation.
The registration fee mentioned refers to the standard ‘retail’ price for a .xyz/.College domain at the given registrar. This retail price will, by the nature of domain pricing, be based upon the ‘wholesale’ price set by XYZ as the registry operator. While XYZ is not publicly disclosing its pricing yet, it has said that the wholesale price will be below $9.99 for .xyz and that .College will be within the normal range for TLDs.
Auctions will not be cancelled based on dissatisfaction with the auction price. In the case where some unforeseen event occurs that prevents XYZ or NameJet from being able to provide to the option holder the domain name as anticipated, XYZ or NameJet will be able to cancel the option — in which case the option holder will be released from all obligations under the option and will not have to pay the auction price.
Thanks again and feel free to reach out to me directly if you have any additional questions.
-Matt Overman, GM, NameJet
@Matt
Why get involved in this slippery slope of legal mumbo jumbo for an extension which fails to resolve to date. There are so many more domains, you could sell from private portfolios that customers on your site would happily bid on, yet you choose to possible create a nightmare experience for a potential bidder, along with all the PR that will go along with it.
Seriously .xyz is is worthless, why can’t anyone see this, maybe their is a cash incentive to market this auction, hmmmmmmm
@ Matt
Can you please clarify a few more things? There is some contradictory wording in your response.
“Yes, you are correct that winners would be billed when the domain becomes available rather than when the auction ends. The high bidder has the option to purchase domain when it becomes available, not the obligation.”
So this is basically a non-binding pre-order for the high bidder. Since there is no obligation for the buyer, it is possible that the results could easily be manipulated.
What is to stop a bidder from just bidding an absurd price knowing there is no obligation?
“Auctions will not be cancelled based on dissatisfaction with the auction price. In the case where some unforeseen event occurs that prevents XYZ or NameJet from being able to provide to the option holder the domain name as anticipated, XYZ or NameJet will be able to cancel the option — in which case the option holder will be released from all obligations under the option and will not have to pay the auction price. ”
What obligation are they released from?
You said above that the buyer has the option, not the obligation, but in this wording you say the buyer will be released from all obligations under the option and will not have to pay the auction price.
Brad
“You said above that the buyer has the option, not the obligation, but in this wording you say the buyer will be released from all obligations under the option and will not have to pay the auction price.”
Excellent point, Brad. I think in order to try to move into a “grey area”, they threw around the term “options” recklessly, without actually understanding what an option really is — an option gives the holder the RIGHT, but *not* the OBLIGATION to do something. It’s the option holder’s choice whether or not to exercise that right.