This article was co-written by David Barnett and Daniel Smith-Juggins.

Summary 

For many organisations and events, their domain name is the key element behind their public-facing website. However, domains can be managed in a range of ways, despite most frequently being purchased specifically for the use-case in mind. In this article, we explore the model of domain leasing, which can be a practical alternative for usage with short-lived events, competitions or marketing initiatives, and provides the potential for one party to retain ownership of a domain whilst allowing another to make use of it. 

Overview  

Leasing of domains is a practice whereby the owner (registrant) of a domain name enters into a contractual paid agreement with a third party to utilise that domain for a period of time. In such an agreement, the listed registered owner of the domain remains unchanged, but the arrangement typically involves the reconfiguration of the domain’s DNS settings to point at the lessee’s desired content (potentially including use of e-mail functionality and creation of subdomains). The practice may also be referred to as domain ‘renting’, a term which is normally utilised for shorter-term agreements. 

From a lessor’s point of view, this type of agreement allows them to retain ultimate control and ownership of the domain name whilst generating revenue from their asset, while the lessee is able to make use of a (potentially high-value) domain (perhaps just for a limited period of time) without needing to provide a sizeable upfront payment – say, for a newly-launched business or short-term campaign. In some cases, a leasing agreement might also include an option for subsequent purchase. A leasing agreement also potentially involves a lower level of legal liability for the lessee against infringement claims. The model might typically also be appropriate for a brand owner working with franchisees or local representatives, and can lend itself to application for dot-brand domains. 

Domain leasing is most usually carried out via dedicated platforms (such as venture.com) or domain marketplaces, or through legal service providers, domain brokers or direct negotiation. Leasing costs are highly variable but might typically range up to thousands of dollars per month (plus associated costs) for a premium domain – such as a short, memorable dictionary word on a popular TLD. For example, as of the time of writing (the 3rd July 2024), domains featured on Venture's website include chatroom.org ($2.5k/mon), wishes.com ($3k/mon), eyelashes.com ($5k/mon) and driver.com ($15k/mon). For comparison, purchase of premium domains can involve multi-million-dollar prices; Wikipedia lists over 40 domains which have sold for over $3M over the last twenty-plus years, including shop.com ($3.55M), clothes.com ($4.9M), casino.com ($5.5M), hotels.com ($11M), sex.com ($13M) and voice.com ($30M). More recently (reported in March 2023), OpenAI bought AI.com for $11M.

As an indicator of the types of domains typically associated with leasing agreements, we consider a sample set of (alphabetically, the first-listed) 1,000 domains under the management of leasing service provider Venture (as determined by nameserver analysis). The domains are overwhelmingly dominated by .com examples (984 instances), with the remainder comprised of .org (14) and .net (2). The domains range in length from 3 to 25 characters, with four-character domain names by far the most popular (Figure 1). 

Figure 1: Distribution of SLD lengths of a sample of 1,000 domains under management by Venture 

The longest domains in the dataset comprise entirely of examples where the SLDs are phrases consisting of dictionary words, with the three longest examples found to be americanconservativeunion.com (25 characters), adjustablemortgagerates.com (23) and automobiletransmissions.com (23). The vast majority of the mid-length examples also have SLDs consisting of phrasal word-pairs, with examples such as ‘activefamily’, ‘airlinemeals’, ‘ancientworld’, ‘atlanticcity’, ‘baseballcaps’, ‘bathcabinets’, ‘bigdiscounts’ and ‘budgetprices’ (all 12-character names). 

Practical considerations 

For brand owners, there are some key overall points to bear in mind when considering domain leasing. Some useful questions to consider prior to any contractual arrangement include: 

• Aim – is the domain being used as a revenue generator (e.g. from a premium domain) or a short-term campaign/ project run by a corporate entity? 

• History – how has the domain been used previously? 

• Ownership – who should retain ultimate control?  

• Payment – how much is the lessee paying the lessor and when are the payments expected?  

• Term – how long will the lease last? If a term is specified, is there a clear end date in any agreement? Should there be a provision for an outright purchase at the end?  

• Indemnity – is there a clause indemnifying the lessor for any liability by the lessee in using the domain?  

• Licence – what type of licence is needed (e.g. non-exhaustive, exhaustive, or a sole licence)?  

• Termination – are there provisions in place for early termination?  

Conclusion 

Domain leasing can be a useful alternative to purchasing, offering a brand owner a model whereby they can retain ownership of the (potentially high-value) asset, whilst giving a partner entity the opportunity to make use of its functionality. This operational framework, which generally requires a pre-defined contractual agreement, can be of particular applicability in situations where a franchising model is in place, or for short-lived events and campaigns.