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05 Mar 2007
So-called domain tasting is one of the more unpleasant developments in the domain business in the past year. Domain speculators are registering millions of domains without paying for them, in a business model not unlike running a condiment business by visiting every fast food restaurant in town and scooping up all of the ketchup packets.
Since 2003, the contract between ICANN and each unsponsored TLD registry (.biz, .com, .info, .net, .org, and .pro) has added an Add Grace Period (AGP) of five days during which a registrant can delete a newly registered domain and get a full refund. Although this provision was clearly intended to allow registrars to correct the occasional typo and spelling error in registrations, speculators realized that this allows them to try out any domain for five days for free.
As soon as the speculators (who call themselves "domainers") figured this out, they started using automated software to register domains like crazy. They put up web pages full of pay-per-click ads, keep the few that make money during the five days, and refund the rest. Many of the speculative domains are expiring ones, since those might already be indexed in Google and have some traffic, others are slightly misspelled versions of existing domains to catch traffic from people who make typing errors.
Registries are close-mouthed about the number of domains that are refunded, but informed estimates from Bret Fausett, citing Verisign's Stratton Scavlos, and from Godaddy's Bob Parsons say that it's grown in recent months to be about 99% of them. That's bad.
The minor problem is that the vast speculative traffic makes it hard for normal registrants to get names they want, although there's no particular reason to think that there's much overlap between the recycled and typo domains the speculators favor, and the new domains that new registrants want. A related and slightly more serious problem is that domains are repurposed to new, different, and often sleazy uses, with the standard example being a rape crisis site that turned into a sex toy store. The big problem is that it puts a severe load on the registries, and the speculators are being subsidized by the real registrants. Assuming the 99% number is reasonably accurate, that means that for every normal paid registration, there are 100 speculative registrations and then 100 refunds, that is, 200 unpaid registry transactions for every paid one. Management at PIR, which runs the .ORG registry, have told me what a problem it's been to keep up with the growing load of speculative registrations. Last month they wrote a letter to the ICANN Security & Stability Advisory Committee expressing their concern both about the load on the registry and showing the example of the crisis center site suddenly sprouting ads for butt plugs. Yet, Karl Auerbach noted that Verisign hasn't complained about the load on .com, so they can evidently afford the 200 free transactions for every $6 paid one, telling us that the actual cost to handle a registration is under three cents.
Fixing this problem would be easy--keep some of the money when a domain is refunded. Bob Parsons suggests keeping the 25 cent fee paid to ICANN but refunding the full registry fee, to avoid giving registries any incentive to encourage refunds.
Many other people have reported on this situation, but what I haven't seen brought out is that this problem was both completely unnecessary and completely predictable. The AGP was added to registry contracts at the same time as the redemption period and other items to make it easier for a registrant to reclaim a domain that expired by mistake. Mistaken expiration problems were real, and there was considerable discussion at ICANN and elsewhere about them, but mistaken registrations simply are not a significant problem. There aren't very many of them, and unlike a mistaken expiration, the most you lose from a mistaken registration is the ten bucks or so you paid for it. So where did the AGP come from? As far as I can see, nobody asked for it, some member of the ICANN staff added it, the board never debated it, and it went through on auto-pilot.
Anyone who registered domains back in the pre-ICANN era, which I hope would include some of the ICANN board members, should remember what went on back in the good old days. You e-mailed a registration form to NSI who did the registration within a day or so and sent you a bill for $100 or later $70. Unpaid domains were deleted after a couple of weeks. Domain speculators took advantage of that loophole, too, registering thousands of domains (limited by the slow e-mail based system), and, before the era of pay per click trying to resell them at a profit before they expired. It is my distinct recollection that the new multi-registrar system started in 1999 required prepayment to stop that speculation. I realize that 1999 was an aeon ago in Internet years, but it's only seven people years. Have we really forgotten our history that fast?
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