The logic behind leasing or renting subdomains/subfolders to third parties:
A subdomain is basically a child domain under a larger parent domain name. For example: webpro.in is the parent domain but webshop.webpro.in is the subdomain of webpro.in.
The subdomains are mostly used by people if they have a lot of content about a certain service or product and would like to give more importance to it. This can be done via a sub folder also. A subfolder is a ‘child directory’ (a folder beneath another folder) that lives under a parent (Home) directory, as is a Subdomain.
Subdomains and subfolders are similar in a lot of ways. They’re both file locations inside of a server’s ‘Home’ directory structure and the Home directory. We refer to them differently in the URL.
For example: webshop.webpro.in is a subdomain but webpro.in/webshop is a subfolder.
If the parent domain has a good search presence and a good domain authority then the subdomain/subfolder can get some SEO benefit from it. Here I don’t mean the domain authority metric as used by Open Site Explorer but, the actual popularity and the search presence the domain has achieved over a period of time by earning the online trust. This may be because of the age of the domain, quality content on the domain, quality inbound links, good social media presence and mentions across the web on various social media sites, etc.
In short if the domain has earned a good reputation online then, the subdomains and subfolders also get the benefit of that reputation and authority. This helps the subdomain/subfolder get a good search presence faster as compared to any other new domain.
Due to this many people started renting or leasing the subdomains to third parties. This definitely helps them to make some additional income but can be very misleading for the users. Mainly because, the company using the subdomain may not be as genuine or trustworthy as the parent domain company.
Google has warned publishers about leasing out portion of their sites so that third-parties can benefit from the site's authority and trust and rank their content better. Google has started penalizing some of those sections on the web sites that are leased out in late August.
This is what Google has to say about the renting or leasing of subdomains:
We’ve been asked if third-parties can host content in subdomains or subfolders of another’s domain. It’s not against our guidelines. But as the practice has grown, our systems are being improved to better know when such content is independent of the main site & treat accordingly.
— Google Webmasters (@googlewmc) August 14, 2019
Overall, we'd recommend against letting others use subdomains or subfolders with content presented as if it is part of the main site, without close supervision or the involvement of the primary site.
— Google Webmasters (@googlewmc) August 14, 2019
Overall, we'd recommend against letting others use subdomains or subfolders with content presented as if it is part of the main site, without close supervision or the involvement of the primary site.
— Google Webmasters (@googlewmc) August 14, 2019
Hence, Google is overall against such practices, unless its activities are closely observed or monitored by the primary domain owners. It clearly says if you want the best success with Search, provide value-added content from your own efforts that reflect your own brand. Google has started penalizing subdomains/subfolders following this practice.
Here is a tweet from Glenn Gabe showing how CNN's efforts to lease out subdomains has got affected for some coupon partners now:
If you've been watching the leased subdomain situation, then you know that subdomains weren't impacted as much yet (and specific big sites in the US weren't either). Well, looks like that changed as of 9/5. Check out the drop for CNN's coupon subdomain. pic.twitter.com/ukuQ4hYvNJ
— Glenn Gabe (@glenngabe) September 11, 2019
Replying to Glen Gabe Keith Fraley also shared his observation regarding coupons.businessinsider.com
Can see similar impact to the coupons.businessinsider domain as well. pic.twitter.com/HWB82khXJJ
— Keith Fraley (@FraleyKeith) September 11, 2019
Frankly speaking, this was new to me. I was not aware of people leasing subdomain or subfolders. Are you aware of any such domain following this practice?
