THE BITTER TASTE OF DOMAINS?
Posted June 13th, 2008
As some of you may know, Domain Tasting is the practice of Domainers who register a gTLD and then “taste” it during a five day “Add Grace Period” by assessing the volume of traffic the domain attracts. (The Add Grace Period was originally introduced by ICANN to allow registrars who make a
mistake while registering a domain name to cancel it without penalty). If traffic to the domain is high, the Domainers who practice Domain Tasting will register the domain, pay a fee to the registry and then “monetize” it, usually by putting up a website with Pay-Per-Click advertising links (offered by companies like Google, Oversee.net, etc.) If traffic is low during the five days, the Domainer will drop the name (where it will probably be seized by a so-called Drop Catcher who will either taste
the name himself or pass the name onto another Domainer to taste.) Go it?
The members of the commercial interests at ICANN– the Intellectual Property Constituency, the Business Constituency and the ISPC Constituency have long decried Domain Tasting as an abuse of the Add Grace. The problem is that Domain Tasting places a strain on registries, confuses Internet users and often is an infringement of IP rights, especially when Domainers exploit typo-squatting variations of well-known trademarks. In April 2007, according to the GNSO Initial Report on Domain Tasting published in January 2008, three registrars tasted 10 million domains every day.
The money that can be made from Domaining is as extraordinary as the scale. Demand Media, a Domaining company launched two years ago in California, has raised over $320 million from investors, including $100 million from Goldman Sachs to support its work as a Domainer, while Oversee.net, which owns 700,000 domains and maintains another 2.4 million for clients, received $150 million in funding from Oak Hill Capital Partners in 2007. Oversee.net’s sales in that year were over $200 million.
Now, the future of Domaining is in doubt. First the Public Interest Registry, which runs .org, started charging registrars an “Excess Deletion Fee” of $0.05 in June 2007. This reduced the number of tasted domains down from 2.5 million in May 2007 to 150,000 the following month.
Following this example, the .Biz registry operator Neustar proposed changing their registrar agreements in January of this year so that each registrar will only get a credit for up to 10% of their deletions. Afilias, the operator of the .Info registry has followed suit.
Google then chipped in with an announcement on January 24, 2008, that its Adsense business would stop monetizing any domains that are less than five days old. This was probably stimulated by lawsuits brought by Dell, Yahoo and BMW against several Domainers at the end of 2007 under the U.S. forgery laws, which carry much larger penalties than trademark law.
Sensing that the tide was turning against Domaining, the ICANN Board reacted to the GNSO Domain Tasting Report at the Delhi Meeting in February 2008 by starting the process to make the $0.20 charge per domain per year levy that they impose on gTLD registries non-refundable. This would effectively end Domain Tasting, though it might take up to a year to implement.
What does the future hold for those who earn their living by Domain Tasting or those who have invested in it? Will they move to the ccTLDs that allow tasting or will they chase after good generic terms, paying more and more for the right term that they can monetize without fear of prosecution? Watch this space.
This article originally appeared in the Marksmen Gazette and has been reprinted with the permission of the author.
Tags: Domain Tasting
Posted in Domain Tasting by Nick Wood
