September 28, 2012    


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DigiPawn.com Opens First Pawn Shop For Domains

By Ron Jackson
Editor/Publisher

 


Many domain name owners dream of the day when banks will recognize the value of their assets in the same way they do real estate, automobiles or other objects of value in the real world. It would open up a whole new world of financing options if you could use your domains as collateral for a college or home loan, or any other purpose that might suit your needs. That day may still be a long way off, but veteran Internet entrepreneur Rick Latona may be bringing it a bit closer with his latest enterprise, DigiPawn.com.

 

Rick Latona
DigiPawn.com

The 33-year-old businessman, who is based in Atlanta, Gerorgia, once owned a real world pawn shop. With DigiPawn.com he is grafting the pawn business model onto domains and other intellectual property. If your domains are good enough (in DigiPawn’s judgment – not yours) you can get a cash loan on them. However, unlike a traditional bank loan, you give up ownership rights when you get the cash which allows the lender to sell the property if you default on the terms of your loan. On the plus side, since the lender is paying out only what he thinks he could quickly get back on the property if he were forced to sell it, your credit history is immaterial.  

 

Latona said, “We take physical possession of the property during the pawn (we become the registrant but the client keeps the DNS record so their site is unaffected). Georgia law requires that we do that. Technically when accepting a pawn we are making a purchase but the buyer has a right to buy the property back for the amount loaned plus an additional amount that is agreed upon at the time of the pawn. “It is similar to an automobile title loan where the pawnee can continue driving his car but leaves the ownership with the pawn broker.”   

Latona and his partner, attorney Matt Collins, are believed to be the first ones to apply the pawn model to domains. That has its pluses and minuses. “The problem with being first is that no one understands what you are doing!” Latona said. “Right now we have a lot more money than customers. Originally I thought this model would be a good way to acquire domains at low cost, but no one defaults!  I am trying to create a market for this service but it may end up being more like a bank account with high-interest returns.” 

A pawn operation is a cash intensive business, but Latona, who owns more than 11,000 domains and many successful active web sites, said DigiPawn.com has millions of dollars available to lend. One of the biggest problems with domains is that it is not as easy to determine market value as it is with other assets such as automobiles. So how much can a DigiPawn customer expect to get for their domains? “We offer 100% or less of what we think the liquid value would be, which is probably much less than what domain owners think their names are worth," Latona said. That’s the tough part of our business.  Someone may reasonably think  their domain is worth $100,000, but it’s likely we couldn’t wholesale it for more than $15,000-20,000. We need to be able to get the cash back if the customer defaults. Regardless of how much cash we have that’s the way pawn shops are run. 

Latona has set up an interesting arrangement with Moniker.com that will provide customers of Moniker’s appraisal service his pawn value for the domain as well as Moniker’s market value estimate. Latona hopes to strike agreements with other appraisal services to do the same thing.  

Latona believes that the day is coming when banks will accept domains as collateral but he thinks it may still be up to 15 years away. “It isn’t that I think it will take that long for domains to reach high enough value,” Latona said. “It’s that banks will want to see the domain market has reached stability and stayed that way for a significant period of time. DigiPawn.com will remain a pawn shop, not a bank. We want our service to be the one people turn to as the last stop for instant cash in a dire situation. We are here to save the day, not finance growth.”

 

 

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