July 21, 2010 7:08 PM   Subscribe

One of my clients was purchased by their competitor. It was a surprise. That (now former) client is is overdue on multiple invoices to me/my company. Kiss the money goodbye, right? Normally yes, but I own my former client's domain name, and have been hosting it. How do I come up with a number for how much the URL is worth, when "globally" it's not worth much, but regionally and within the industry, it is very identifiable?

First off, I dont like owning my clients URLS, so If they need to, I will walk them through the process of registering it themselves. I had this client (I'll call them MyClient)for 11 years. Because they insisted, and it was the late 90s, I registered it for them. I did ask them over the years if they wanted to transfer it, and they always declined. no problem. I would just pay the renewal fee, hosting charge and send them and invoice which they paid super promptly, untill about a year ago.

About a year ago, one of the principals of the husband/wife team that owned MyClient died. Their son took over in his place. After that, invoices (for web work and other design work) would regularly be overdue, usually requiring a statement and a phone call to "mom" for them to get paid, but ultimately they did.

Then about 4 months ago, they were two months (and several hundred dollars overdue) I started making phone calls and kept getting transferred to voice-mails. Their hosting plan was about to expire, and not wanting my decade-plus client to be adversely effected, I renewed the hosting for their usual term, 1 year, and added it ($100) to the bill.

I kept trying to contact them to no avail.

Jump to three weeks ago. After having sent multiple statements I sent them a stern, but loving letter telling MyClient that I would be turning off their website at the end of July. No response.

So yesterday I was in MyClient's town and decided to stop in to their main location and say "hi". I find out from the girl behind the counter that MyClient was sold to "TheirMainCompetitor" as of last Monday.

Well, that's all fine and dandy, I guess I'm eating it,but here is the rub. My MyClient was bigger than TheirMainConpetitor. Both MyClient and TheirMainConpetitor were retail operations that used their websites as brochures and not point-of-sale commerce. But there is certainly a traffic consideration. These are not internationally-known brands, but certainly regional/statewide known brands.

I'm sure that TheirMainCompetitor thought that MyClient owned MyCilent's website, www.MyClient.com. But MyClient does not own it. I do.

There is a significant amount of traffic going to it and I realize a certain amount of business from MyClient's site because I am listed and linked on it as the business that designed it.

I'm sure once TheirMainCompetitor realized that they do not own that site, they will want it. I have left a voicemail with TheirMainCompetitors business office to give me a call about the overdue invoices of MyClient. I did not broach the URL ownership issue, but I did identify myself as the company that built and maintained MyClient's site.

This URL is not worth thousands of dollars, but it is worth something. It's not valuable outside of their industry, but inside their industry it certainly is.

I want to come up with a number that is fair should they want the URL (which I'm pretty sure they will), being as now i have something of value to someone other than myself and no relationship with TheirMainCompetitors. Also, I will not get any future work from TheirMainCompetitor because they farm out what I do to someone else.

How do I come up with a number for how much the URL is worth, when "globally" it's not worth much, but regionally and within the industry, it is very identifiable?

Anonymous because of the identifiable nature of the business through my account.
posted by anonymous to Computers & Internet (14 answers total) 1 user marked this as a favorite
That (now former) client is is overdue on multiple invoices to me/my company. Kiss the money goodbye, right?

IANAL, but I'm pretty sure this is wrong. The company's debts do not disappear just becuase the company has been sold. If that were true, companies would be sold a lot more frequently...
posted by jon1270 at 7:13 PM on July 21, 2010

It depends, jon1270. TheirMainCompetitors could have purchased all the assets without assuming any debts (like what happened with imeem and Myspace, leaving imeem artists in the lurch)
posted by mkb at 7:19 PM on July 21, 2010

We buy companies on a regular basis. The debts don't magically disappear. Pursue THAT avenue with NewOwners.

You registered the domain name on their behalf. They paid you for it. YOU DO NOT OWN IT. You simply hold it. And you should have updated the contacts on it years ago. You knew better.

If you proceed in the course of action you're considering you will be trying to extort them. The company that purchased your client can and SHOULD drop a UDRP on you at the very least. You will lose. And you'll likely be out any attorney fees to boot.

They could, of course, take it further and sue you.

I hope you think better of this.
posted by FlamingBore at 7:31 PM on July 21, 2010 [8 favorites]

This is not legal advice, and I am not your lawyer, but you can't just sell the assets of a company and leave creditors in the lurch--that's smack in the crosshairs of a fraudulent conveyance issue. If it's structured as a sale out of an entity, the entity has the sale proceeds out of which to satisfy claims of creditors. Moreover, many creditors may have liens (materialmen's, mechanics', etc.) on the assets. You certainly can structure a purchase so that you don't assume DEBT (i.e., because the sale is net of debt, and sale proceeds go to satisfying indebtedness), but the law does not abandon the rights of creditors generally, unless in bankruptcy.

Talk to a lawyer. Really. They owe you money; you likely have a right to it, regardless of who owns the company now. Holding their URL hostage is a really terrible idea. If you tried to sell me my company's IP back to me, I would make sure you are royally fucked, and I doubt you have leg to stand on. This has reputational dimensions as well--do you want to be they guy who forced Matthowie to buy back metafilter.com because he owed you a few hundred bucks? Ugh. That's bad news.

Again, this is not legal advice, and I am not your lawyer. You need a lawyer, stat.
posted by Admiral Haddock at 7:33 PM on July 21, 2010 [1 favorite]

Take them to small claims court over the unpaid invoices.

IANAL but your ownership of the domain doesn't seem so clear cut. Shutting it down and replacing it with a placeholder saying it's been suspended due to unpaid bills might give you leverage to get them to pay.

Once they've paid what they owe i'd just transfer the domain to them and get on with life.
posted by onya at 7:37 PM on July 21, 2010

First off, your time is worth something, so decide if pursuing this is worth the hassle. I'm assuming it is or you wouldn't be making this post. Next, I'd probably want to talk to a lawyer. You maintain you own the URL. A case could be made that you don't. If you'd been paying the registration fee and passing that cost along the client probably viewed it as his. The people who bought that company probably view it as an asset they purchased. Etc. I'm just saying that it's possible that a judge could see it as an asset of the business that is behind in payment.

Next, if you are getting decent referral business from the site then let it ride and forget it until you're contacted. You're probably the whois contact. I know if I bought a company I'd get a hold of the web guy eventually. For sure when I wanted it updated.

I think you're conflating two issues. You're owed money. Can you get that from the people who bought the company or do you have to go after the original owners? And you have control of a domain. Do you own it and can you use this as leverage to get paid?

If this were me I'd probably send the new company a letter telling them I'd like to progress with moving control of the URL to them and that I'm willing to work with them on getting this done, but that if I don't have paid invoices and a reasonable consulting fee for the time it'll take to do this that I will be contacting my lawyer to see about putting the domain up for sale to recoup my losses.

Or more or less what FlamingBore said.
posted by cjorgensen at 7:38 PM on July 21, 2010

If it were me, I'd prepare an invoice detailing what the old client owes and add a (not greedy, but fair) bit of fees which would compensate me for the time and expense of collecting on this overdue bill. I'd then either make an appointment to speak with their billing dept or send the new owner a certified letter to let them know that the domain will be up for sale on XX/XX/2010 if I don't receive payment for my previous services. Keep the letter brief and to the point. You did a job and you simply want to get paid for your services; if you they won't pay you, then you will try to recoup your losses in the most feasible way possible. It's not personal, just business.

Then, if you don't hear anything from them in a reasonable period of time, contact their competitor and see if they want to buy the domain.
posted by LuckySeven~ at 7:39 PM on July 21, 2010

New invoice to new owners, showing all monies owed with dates, with late fees/interest if you have that stipulated, a fair estimate of how much time it will take to transfer the credentials and the cost, and a very firm deadline. Possibly face-to-face with new owners. Possibly letter from lawyer. Small claims court.

Anything that has even the faintest whiff of extortion is likely to end badly, even if you have a cast-iron paper trail showing your continued 'ownership' at their insistence, given that you were re-billing them for the domain registration and hosting costs.

(It's not entirely clear whether OP was actually providing the hosting through either a shared account or on his/her own server. If that's the case, OP is completely justified in taking the site down so that MyDomain.com 404s.)
posted by holgate at 8:03 PM on July 21, 2010

From a search engine perspective, I might not take down the old domain. Once Teh Goog figures out that the site is dead, your ranking will begin to plummet. The value of a domain is a function of links to it, ranking, etc. Once you start 404ing stuff, people start taking down links.
posted by adipocere at 8:05 PM on July 21, 2010

If the clients paid for the yearly cost of the domain, I don't really see how you can claim to really own it. You have it, yeah, but when push comes to shove, proof is readily available that someone else paid for it, it was just in your name. Who would win the legal battle there is anyone's guess, but before you try to quasi-extort someone into paying you, I would think about how this will be perceived.
posted by elpea at 8:08 PM on July 21, 2010

As a practical matter, if they're having trouble paying their bills (especially ones that are a few hundred dollars), they aren't going to pay a lawyer a few thousand bucks to sue for a domain name's return, either. Rather than trying to sell the domain to the new owner, I'd approach it more as collecting the overdue invoice from them.

Depending on how desperate you are for the money, you could just sit on the issue for a while and wait until the new owner contacts you, whenever they get around to wanting to use it. Then you can always say, "They left me with an overdue invoice and I will be happy to assist you with any transfers as soon as that balance is paid."
posted by MegoSteve at 8:54 PM on July 21, 2010

You say yourself it isn't worth anything outside of a niche that consists of Not Much. Just get yourself paid, transfer the domain and hosting back to them and fire them as a client. It may be a chunk of change but is this really how you want to be spending your energy? Put it into acquiring a less-stressful client. To this end I say flip the switch, fuck 'em. You have to speak to people in a language they understand and as you amply document you've tried the standard forms. You told them you were going to cut them off at the end of July, so just do what you said you were going to do.
posted by rhizome at 9:48 PM on July 21, 2010 [1 favorite]

Pursue the invoice with new owners. Tell them you will transfer domain name to them as soon as invoice up-to-date. Do not shake them down for anything for domain name that you are billing them for. Not a lawyer, but would bet big money you lose in a court of law any claim that you own the site.
posted by JohnnyGunn at 10:14 PM on July 21, 2010 [1 favorite]

Status code 402?
posted by harmfulray at 8:30 AM on July 22, 2010

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