What You Buy When You Buy a Domain Name (Licence)

Posted by on 10 December 2018

Most people, when they talk about them at all, talk about buying “domain names”. 

However, referring to them like this  - and we’re sometimes guilty of it too - isn’t correct.

We should be referring to domain name licences.

While it seems like a minor technical detail, it speaks to a number of misconceptions about what “domain names” are and what you actually pay for when you register one.

About your domain name (licence)

A domain name, at its most basic, is a memorable string used for identifying IP addresses of resources and services on the internet -  most commonly websites and email addresses. The Domain Name System (DNS) is the service which translates domain names to IP addresses so data gets to and from the right places.

When you pay to register a domain name, you’re actually paying for a licence to use the DNS with a name of your choice, for a specified period of time.

The crucial distinction is that it’s not a licence for a particular name, it’s a licence for use of the DNS.

It’s similar to setting up an email account with a provider like Google. You can use whatever name you want, as long as it is available, but Google doesn’t give you the name from a ‘pool’ of possible names, it gives you the use of its services. The name is just how you choose to access them.

This distinction also plays into other important fundamental principles that apply to domain names and their use. 

You can’t ‘own’ a domain name

Domain names aren’t property - they’re not something that can be owned to the exclusion of everyone else. If they were, domain names would cost huge amounts of money to acquire, the logistics of keeping track of who owned what name would be immense and it would seriously affect the revenue for DNS operators.

Part of the reason for this is the recognition that there may be more than one person eligible for a domain name – which leads to another important principle of domain names that’s often misunderstood.

There’s no automatic right to a domain name

Domain names are allocated to the first eligible registrant, not on the basis of who owns a related business name, trademark or other domain name.

However there are protections in place to ensure that someone else can't pass themselves off as your brand or trademarks. 

Why should I think of it as a licence?

If you’re a registrant, it’s useful to think of it as a domain name licence because licences expire. And just like other kinds of licences, it’s up to you to renew it.

But it’s also important, and a big part of auDA’s role, for there to be wider awareness of the fundamental principles of domain names – particularly around eligibility and allocation  - which can help avoid issues down the track.