Domain leasing is the practice of allowing another website to use your domain name in exchange for money, similar to if you were leasing a car. There are several ways this can happen:
The domain leasing industry is relatively new. There aren’t too many sites that offer the option and the ones who do haven’t yet built up enough reputation to fill their catalogs with great names. As a matter of fact, a newcomer with a large offering of high quality domain names could easily dominate the current market.
The few sites that do offer leasing (the most significant one being LeaseThis.com) try to match advertisers up with domain name owners. The domain owners set the prices for each of their domains, so it’s easy for them to make sure they get more money from the lease than from parking the domain. What’s more, the domain owner can park a domain until a suitable ‘tenant’ can be found. So no matter what, the domain name will continue to earn money.
One of the greatest things about renting a domain name out to an advertiser is that they will put relevant content on the site, thereby increasing the Search Engine value of the domain. If your tenant ever decides to stop renting with you, they leave the highly-valued traffic that other renters (or buyers) will want. Even if you end up re-parking the domain name, you will still earn substantially more from PPC than you would have otherwise.
Best of all, if a business starts renting a domain and builds a viable enterprise around it, they’ll be much more likely to buy the domain since it has become a part of their structure. This drives the value of the domain up even higher.
Why would a business rent a domain instead of purchasing one?
If a business wants to test a domain’s viability before purchasing it, renting first can provide a first-hand view of visitors and conversion possibilities as opposed to relying on data collected by other parties. A business could avoid spending thousands of dollars by sampling a few different domains and deciding on a purchase after seeing real results.
A business might also have a time-sensitive plan for a domain that would expire long before an actual purchase would pay for itself. Any time a company runs a short-term promo, a rented site with lots of type-in traffic definitely has its advantages.