Domain name speculation
Encyclopedia
Domain name speculation is the practice of identifying and registering or acquiring Internet domain name
s with the intent of selling them later for a profit.
The main targets of domain name speculation are generic words which can be valuable for type-in traffic
and for the dominant position they would have in any field due to their descriptive nature. Hence generic words and phrases such as poker, insurance, travel, creditcards, sex and others are attractive targets of domain speculation in any top-level domain
.
The speculative characteristics of domain names may be linked to news reports or current events. However, the effective period during which such opportunities exist may be limited. Quick turnaround in the resale of domains is often called domain flipping
.
and business.com
have sold for millions of US dollars.
The COM
top-level domain
(or 'TLD') is the focus of most domain speculation activity as it is the largest TLD. Domain speculation occurs in other TLDs as well, such as NET
and to a lesser extent in ORG
, INFO
, and BIZ
. Of the gTLD
s, INFO
is the most popular by registration volume compared to BIZ
gTLD due to the low cost of initial registration and the recognisability of 'info' as being an abbreviation of 'information'.
Domain name speculation also occurs in country code top-level domain
s (ccTLDs) such as .uk
, .de
and .us
. The German TLD consists of over 12 million domains. The UK's domain has over 7.7 million domains registered according to Nominet's domain registration statistics webpage, mainly in its commercial sub-domain co.uk. These TLDs are mature markets where good domain names may command high prices. The EU
ccTLD is an example of what happens when speculative activity overtakes "ordinary" domain registrations. A combination of an inept registry (EURid
) and excessive speculation by businesses exploiting a poorly structured regulatory framework meant that, according to EURid
's own statistics at the end of 2006, over 50% of the registrations could be considered at best speculative and at worst domain name warehousing
.
Specialist and repurposed ccTLDs have also seen elements of domain name speculation. One of the best examples is that of the .tv
ccTLD which has found the fact that TV is an abbreviation for the word television to be rather lucrative. The .mobi
TLD is a good example of a specialist TLD in that it is specifically targeted at mobile phones and similar mobile technology. The operators of .mobi, mTLD, have reserved some of the premium generic words which will be auctioned off. The intent is to create a more level playing field for those interested in developing websites. The .mobi premium generic words and phrases list is a good example of the domain names that are at the heart of most early-market domain name speculation.
Domain name speculators, sometimes known as domainers, also register domain names based on seemingly generic phrases such as propertyforsale in the hope that these domain names could be sold later to businesses. Typically, domain name speculators will try to stay away from domain names containing trademarks as this could be considered cybersquatting
.
Some country code TLDs or sponsored TLD
s will have what is referred to as an eligibility or nexus requirement to limit registration to specific geographical or national regions. However this does not deter domain name speculation as various options such as using a local agent or company to enable people to register domains in such TLDs exist and have been used.
TLD was gathering momentum owing to the growth of the Dot-com bubble
. This inevitably attracted the attention of those who saw potential value in domain names, and by this time many of the most valuable generic domain names like sex.com
and business.com
had been registered. The problem was that there was no clear legal position on what was purely domain name speculation and what was cybersquatting. The open nature of the TLDs meant that anyone could effectively register any domain name. This led to the development of the Uniform Domain-Name Dispute-Resolution Policy
in 1999.
is defined as registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else. The key element in this definition is that the intellectual property rights of another's trademark are infringed by the cybersquatter. For a UDRP action to succeed one of the things that the complainant has to establish is that the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights. Legitimate domain name speculation tends to steer clear of trademarks and concentrate on generic words and phrases as domains based on trademarks can be subject of UDRP actions by the trademark owners. As the number of registered domain names has increased, the number of UDRP cases has also increased. Trademark and service mark
owners now use brand protection services that monitor TLDs for newly registered domains that potentially infringe on their trademarks. This is due in part to typosquatting
, a form of cybersquatting where variations of the spelling of a brand's domain will be registered in an attempt to profit from users mistyping the URL of the site they wish to visit.
Generic terms, such as the term "salt" when used in connection with sodium chloride, are not capable of serving the essential trademark function of distinguishing a product or service. This means that generic terms are generally not afforded any legal protection. The Canned Foods, Inc Versus Ult Search, Inc decision specifically deals with a case involving a generic term, "Grocery Outlet" and the domain name "groceryoutlet.com". The decision contains the key sentence "Generic terms receive no protection in US trademark law when they are used to label the goods and services that they describe."
One of the earliest examples of a written definition of cybersquatting was the Intermatic Inc. v. Toeppen, 947 F. Supp. 1227 (N.D. Ill. 1996). The definition was "These individuals attempt to profit from the Internet by reserving and later reselling or licensing domain names back to the companies that spent millions of dollars developing the goodwill of the trademark."
As domain name speculation has evolved alongside the domain name system, the most memorable and shortest domains tend to be amongst those registered first in any TLD. For old TLDs like COM
(introduced in 1985), these domains will be long gone and people registering their first domains are often frustrated at the lack of short and memorable domains in this and other mature TLDs.
One of the main problems concerning trademarks and domain names in unrestricted TLDs and gTLDs is that of trademarks in general: the rights of the trademark owner have to be asserted in order to protect the trademark. The trademark owner has to take legal action, typically a UDRP, to defend the trademark after the potentially infringing
domain has been registered. The UDRP action has to follow a procedure of notifying the respondent, receiving a reply from the respondent, appointing an adjudication panel and awaiting a decision. The process can take two months or more.
The global and unrestricted nature of TLDs and gTLDs effectively means that anyone in any country can register a domain name in them regardless of whether they have any intellectual property rights in that name. With country code TLDs the jurisdiction is more clearly defined. The affected intellectual property rights owner would have to take a legal action, typically a UDRP case to transfer or cancel the domain unless the registrant is in the same jurisdiction as the affected intellectual property rights owner. In this case, local law may be sufficient as the action may be considered as Common law
tort
of Passing off
.
). Other more organised domainers or domain name speculators register trademarks in advance of the launch of new TLDs specifically in order to register these short, memorable and potentially high value domains in the Sunrise period of new gTLD launches. The Sunrise period is when intellectual property rights owners (trademark owners etc) can register their trademark in the new gTLD in advance of the gTLD being opened for general registrations. In the last three years the main new TLDs launched were .eu
ccTLD, .mobi
TLD and .asia
sTLD
. All of these had landrush periods of varying success.
The business of registering the domain names as they are deleted by the registries is known as drop catching. It is a highly competitive business. The main operators in this business typically set up a number of front companies as registrars. VeriSign
, in the case of TLDs COM
and NET
, allows each registrar a slice of the resources that may be used to register dropped domains. VeriSign drops domains in a random order, giving registrars only a vague idea of the particular drop time of a particular domain. Sometimes a group of drop registrar
s often work in confederation to increase their possibility of registering a dropped domain immediately after it is deleted by the registry. If the domain is caught by a confederation of registrars attempting to fulfill a domain backorder, then whichever domain registrar caught the domain will register it to the entity who backordered the domain. If the newly reregistered domain is captured by a company that has no customers who backordered it, the domain may be auctioned to the highest bidder by the registrar who captured it or an auction intermediary. The time between a drop and a capture is often measured in seconds or fractions thereof.
Some registrars do not allow domains to drop in the normal fashion, instead introducing an intermediary (e.g., Snapnames and Namejet) that auction the domain prior to their deletion. If nobody buys the domain at auction, it will pass through the normal deletion process.
('PPC') advertising and nothing else. It is often assumed that such a domain is "cybersquatted", especially when the person is searching for the domain in order to register it.
The ease with which PPC
revenue could be derived from parked domains effectively created a situation where domains were being registered purely for their type-in traffic
. Many of exact phrases that people were searching for in search engines were being registered for the sole purpose of serving PPC
advertising. The COM
TLD grew from 23,662,001 registered domains 1 January 2003 to 80,759,835 registered domains as of 1 January 2009. While part of that increase in the number of registered domain names is due to the increase in ecommerce and business conducted online, some of the increase is due to the ease of generating revenue from PPC
and type-in traffic
. Domain tasting
, a practice by which millions of domains would be registered for a limited period ((the five day Add Grace Period during which a domain could be deleted without the registrar effectively having to pay a registration fee to ICANN) and only those generating sufficient revenue from PPC
advertising would be retained, also served to increase the number of domains registered. This practice involved domain name registrar
s being created purely for the purpose of domain tasting
. The situation became so bad in 2007 that ICANN
was forced to take action. In June 2008 ICANN added a provision to its Fiscal Year 2009 budget to limit the number of domains that a registrar could delete using the Add Grace Period before having to pay the ICANN fee. The effect of this was to massively curtail the number of domains deleted in .com and .net during the Add Grace Period. From June 2008 to April 2009, AGP deletions fell by 99.7%.
The March 2006 Verisign Domain Brief stated that out of approximately 57.37 million COM
and NET
websites spidered, 26% were single page websites, 60% were multipage websites and 14% had no associated websites. Numerically, the number of single page websites was approximately 14.91 million. The single page websites websites include under-construction, brochure-ware
and parked pages in addition to online advertising revenue generating (PPC
) parked pages.
The latest statistics for domain name usage quoted in the Verisign Domain Brief for June 2009 states that of the 92 million COM
and NET
domain names, 24 % of these domains have one page websites, 64% have multipage websites and 12% have no associated websites. In purely numerical terms, those single page websites would account for approximately 22 million COM
and NET
websites. The survey quoted in the Verisign Domain Brief does not explain the methodology or provide anything other than a summary of the results. However this is effectively a rise in single page websites of just over 7 million websites.
Some hosters such as Godaddy have their own domain parking
systems and allow unused domains to be parked with the registrant receiving a share of the PPC
revenue earned. Other hosters have similar systems.
Domain name
A domain name is an identification string that defines a realm of administrative autonomy, authority, or control in the Internet. Domain names are formed by the rules and procedures of the Domain Name System ....
s with the intent of selling them later for a profit.
The main targets of domain name speculation are generic words which can be valuable for type-in traffic
Type-in traffic
Type-in traffic is a term describing visitors landing at a web site by entering a keyword or phrase in the web browser's address bar Type-in traffic is a term describing visitors landing at a web site by entering a keyword or phrase (with no spaces or a hyphen in place of a space) in the web...
and for the dominant position they would have in any field due to their descriptive nature. Hence generic words and phrases such as poker, insurance, travel, creditcards, sex and others are attractive targets of domain speculation in any top-level domain
Top-level domain
A top-level domain is one of the domains at the highest level in the hierarchical Domain Name System of the Internet. The top-level domain names are installed in the root zone of the name space. For all domains in lower levels, it is the last part of the domain name, that is, the last label of a...
.
The speculative characteristics of domain names may be linked to news reports or current events. However, the effective period during which such opportunities exist may be limited. Quick turnaround in the resale of domains is often called domain flipping
Flipping
Flipping is a term used primarily in the United States to describe purchasing a revenue-generating asset and quickly reselling it for profit...
.
Overview
Sometimes, domain name speculation involves finding domain names early in a market, particularly when a new top-level domain is launched, registering them and waiting until the market grows to sell them. Domains such as sex.comSex.com
Sex.com is an Internet domain name and web portal currently owned by Clover Holdings LTD. The domain name was the focus of one of the most publicized legal actions about ownership of domain names...
and business.com
Business.com
Business.com is a business search engine and web directory and pay per click advertising network. It includes Work.com, a business-to-business community publishing platform where experts share advice on common business topics in the form of how-to guides....
have sold for millions of US dollars.
The COM
.com
The domain name com is a generic top-level domain in the Domain Name System of the Internet. Its name is derived from commercial, indicating its original intended purpose for domains registered by commercial organizations...
top-level domain
Top-level domain
A top-level domain is one of the domains at the highest level in the hierarchical Domain Name System of the Internet. The top-level domain names are installed in the root zone of the name space. For all domains in lower levels, it is the last part of the domain name, that is, the last label of a...
(or 'TLD') is the focus of most domain speculation activity as it is the largest TLD. Domain speculation occurs in other TLDs as well, such as NET
.net
The domain name net is a generic top-level domain used in the Domain Name System of the Internet. The name is derived from network, indicating its originally intended purpose for organizations involved in networking technologies, such as Internet service providers and other infrastructure companies...
and to a lesser extent in ORG
.org
The domain name org is a generic top-level domain of the Domain Name System used in the Internet. The name is derived from organization....
, INFO
.info
The domain name info is a generic top-level domain in the Domain Name System of the Internet, The name is derived from information indicating that the domain is intended for informative Internet resources, although registration requirements do not prescribe any theme orientation.The info TLD was...
, and BIZ
.biz
biz is a generic top-level domain in the Domain Name System of the Internet. It is intended for registration of domains to be used by businesses...
. Of the gTLD
Generic top-level domain
A generic top-level domain is one of the categories of top-level domains maintained by the Internet Assigned Numbers Authority for use in the Domain Name System of the Internet....
s, INFO
.info
The domain name info is a generic top-level domain in the Domain Name System of the Internet, The name is derived from information indicating that the domain is intended for informative Internet resources, although registration requirements do not prescribe any theme orientation.The info TLD was...
is the most popular by registration volume compared to BIZ
.biz
biz is a generic top-level domain in the Domain Name System of the Internet. It is intended for registration of domains to be used by businesses...
gTLD due to the low cost of initial registration and the recognisability of 'info' as being an abbreviation of 'information'.
Domain name speculation also occurs in country code top-level domain
Country code top-level domain
A country code top-level domain is an Internet top-level domain generally used or reserved for a country, a sovereign state, or a dependent territory....
s (ccTLDs) such as .uk
.uk
.uk is the Internet country code top-level domain for the United Kingdom. , it is the fourth most popular top-level domain worldwide , with over 9.5 million registrations....
, .de
.de
.de is the country code top-level domain for the Federal Republic of Germany. DENIC does not require specific second-level domains, as it is the case with the .uk domain range which require .co.uk domain for example.The name is based on the first two letters of the German name for Germany...
and .us
.us
.us is the Internet country code top-level domain for the United States and was established in 1985. Registrants of .us domains must be United States citizens, residents, or organizations, or a foreign entity with a presence in the United States...
. The German TLD consists of over 12 million domains. The UK's domain has over 7.7 million domains registered according to Nominet's domain registration statistics webpage, mainly in its commercial sub-domain co.uk. These TLDs are mature markets where good domain names may command high prices. The EU
.eu
.eu is the country code top-level domain for the European Union . Launched 7 December 2005, the domain is available for organisations in and residents of EU member states. The TLD is administered by EURid, a consortium consisting of the national ccTLD registry operators of Belgium, Sweden, Italy...
ccTLD is an example of what happens when speculative activity overtakes "ordinary" domain registrations. A combination of an inept registry (EURid
EURid
EURid vzw/asbl is a non-profit organisation established on 8 April 2003 by the European Commission as the domain name registry to operate the new .eu top-level domain....
) and excessive speculation by businesses exploiting a poorly structured regulatory framework meant that, according to EURid
EURid
EURid vzw/asbl is a non-profit organisation established on 8 April 2003 by the European Commission as the domain name registry to operate the new .eu top-level domain....
's own statistics at the end of 2006, over 50% of the registrations could be considered at best speculative and at worst domain name warehousing
Domain name warehousing
Domain name warehousing is the common practice of registrars obtaining control of domain names with the intent to hold or “warehouse” names for their use and/or profit...
.
Specialist and repurposed ccTLDs have also seen elements of domain name speculation. One of the best examples is that of the .tv
.tv
The domain name .tv is the Internet country code top-level domain for the islands of Tuvalu.Except for reserved names like com.tv, net.tv, org.tv and others, any person may register second-level domains in tv...
ccTLD which has found the fact that TV is an abbreviation for the word television to be rather lucrative. The .mobi
.mobi
The domain name mobi is a top-level domain in the Domain Name System of the Internet. Its name is derived from the adjective mobile, indicating its use by mobile devices for accessing Internet resources via the Mobile Web....
TLD is a good example of a specialist TLD in that it is specifically targeted at mobile phones and similar mobile technology. The operators of .mobi, mTLD, have reserved some of the premium generic words which will be auctioned off. The intent is to create a more level playing field for those interested in developing websites. The .mobi premium generic words and phrases list is a good example of the domain names that are at the heart of most early-market domain name speculation.
Domain name speculators, sometimes known as domainers, also register domain names based on seemingly generic phrases such as propertyforsale in the hope that these domain names could be sold later to businesses. Typically, domain name speculators will try to stay away from domain names containing trademarks as this could be considered cybersquatting
Cybersquatting
Cybersquatting , according to the United States federal law known as the Anticybersquatting Consumer Protection Act, is registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else...
.
Some country code TLDs or sponsored TLD
Sponsored top-level domain
A sponsored top-level domain is one of the categories of top-level domains maintained by the Internet Assigned Numbers Authority for use in the Domain Name System of the Internet....
s will have what is referred to as an eligibility or nexus requirement to limit registration to specific geographical or national regions. However this does not deter domain name speculation as various options such as using a local agent or company to enable people to register domains in such TLDs exist and have been used.
Evolution of domain name speculation
Domain name speculation has evolved in parallel with the domain name system. In the early 1990s, the web and internet access were not as prominent as they are today. Domain names were still being registered, however, even though the focus was almost entirely on business. At that time much of the ccTLD landscape had yet to appear, and the growing public awareness of COM.com
The domain name com is a generic top-level domain in the Domain Name System of the Internet. Its name is derived from commercial, indicating its original intended purpose for domains registered by commercial organizations...
TLD was gathering momentum owing to the growth of the Dot-com bubble
Dot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
. This inevitably attracted the attention of those who saw potential value in domain names, and by this time many of the most valuable generic domain names like sex.com
Sex.com
Sex.com is an Internet domain name and web portal currently owned by Clover Holdings LTD. The domain name was the focus of one of the most publicized legal actions about ownership of domain names...
and business.com
Business.com
Business.com is a business search engine and web directory and pay per click advertising network. It includes Work.com, a business-to-business community publishing platform where experts share advice on common business topics in the form of how-to guides....
had been registered. The problem was that there was no clear legal position on what was purely domain name speculation and what was cybersquatting. The open nature of the TLDs meant that anyone could effectively register any domain name. This led to the development of the Uniform Domain-Name Dispute-Resolution Policy
Uniform Domain-Name Dispute-Resolution Policy
The Uniform Domain-Name Dispute-Resolution Policy is a process established by the Internet Corporation for Assigned Names and Numbers for the resolution of disputes regarding the registration of internet domain names...
in 1999.
Domain name speculation versus cybersquatting
One of the most common accusations against domain name speculation is that it is simply cybersquatting. CybersquattingCybersquatting
Cybersquatting , according to the United States federal law known as the Anticybersquatting Consumer Protection Act, is registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else...
is defined as registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else. The key element in this definition is that the intellectual property rights of another's trademark are infringed by the cybersquatter. For a UDRP action to succeed one of the things that the complainant has to establish is that the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights. Legitimate domain name speculation tends to steer clear of trademarks and concentrate on generic words and phrases as domains based on trademarks can be subject of UDRP actions by the trademark owners. As the number of registered domain names has increased, the number of UDRP cases has also increased. Trademark and service mark
Service mark
A service mark or servicemark is a trademark used in some countries, notably the United States, to identify a service rather than a product. When a service mark is federally registered, the standard registration symbol ® or "Reg U.S. Pat & TM Off" may be used...
owners now use brand protection services that monitor TLDs for newly registered domains that potentially infringe on their trademarks. This is due in part to typosquatting
Typosquatting
Typosquatting, also called URL hijacking, is a form of cybersquatting, and possibly brandjacking which relies on mistakes such as typographical errors made by Internet users when inputting a website address into a web browser...
, a form of cybersquatting where variations of the spelling of a brand's domain will be registered in an attempt to profit from users mistyping the URL of the site they wish to visit.
Generic terms, such as the term "salt" when used in connection with sodium chloride, are not capable of serving the essential trademark function of distinguishing a product or service. This means that generic terms are generally not afforded any legal protection. The Canned Foods, Inc Versus Ult Search, Inc decision specifically deals with a case involving a generic term, "Grocery Outlet" and the domain name "groceryoutlet.com". The decision contains the key sentence "Generic terms receive no protection in US trademark law when they are used to label the goods and services that they describe."
One of the earliest examples of a written definition of cybersquatting was the Intermatic Inc. v. Toeppen, 947 F. Supp. 1227 (N.D. Ill. 1996). The definition was "These individuals attempt to profit from the Internet by reserving and later reselling or licensing domain names back to the companies that spent millions of dollars developing the goodwill of the trademark."
As domain name speculation has evolved alongside the domain name system, the most memorable and shortest domains tend to be amongst those registered first in any TLD. For old TLDs like COM
.com
The domain name com is a generic top-level domain in the Domain Name System of the Internet. Its name is derived from commercial, indicating its original intended purpose for domains registered by commercial organizations...
(introduced in 1985), these domains will be long gone and people registering their first domains are often frustrated at the lack of short and memorable domains in this and other mature TLDs.
One of the main problems concerning trademarks and domain names in unrestricted TLDs and gTLDs is that of trademarks in general: the rights of the trademark owner have to be asserted in order to protect the trademark. The trademark owner has to take legal action, typically a UDRP, to defend the trademark after the potentially infringing
Trademark infringement
Trademark infringement is a violation of the exclusive rights attaching to a trademark without the authorization of the trademark owner or any licensees...
domain has been registered. The UDRP action has to follow a procedure of notifying the respondent, receiving a reply from the respondent, appointing an adjudication panel and awaiting a decision. The process can take two months or more.
The global and unrestricted nature of TLDs and gTLDs effectively means that anyone in any country can register a domain name in them regardless of whether they have any intellectual property rights in that name. With country code TLDs the jurisdiction is more clearly defined. The affected intellectual property rights owner would have to take a legal action, typically a UDRP case to transfer or cancel the domain unless the registrant is in the same jurisdiction as the affected intellectual property rights owner. In this case, local law may be sufficient as the action may be considered as Common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
tort
Tort
A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
of Passing off
Passing off
Passing off is a common law tort which can be used to enforce unregistered trademark rights. The tort of passing off protects the goodwill of a trader from a misrepresentation that causes damage to goodwill....
.
Primary market speculation
The primary market for domain name speculation covers newly registered domain names that have not been registered before. Such domain names are often linked to news and current events. The launch of a new TLD encourages primary market speculation as domainers rush to register generic terms and also phrases that make a pun on the TLD name (Domain hackDomain hack
A domain hack is an unconventional domain name that combines domain levels, especially the top-level domain , to spell out the full "name" or title of the domain. Examples include del.icio.us , goo.gl and fold.it...
). Other more organised domainers or domain name speculators register trademarks in advance of the launch of new TLDs specifically in order to register these short, memorable and potentially high value domains in the Sunrise period of new gTLD launches. The Sunrise period is when intellectual property rights owners (trademark owners etc) can register their trademark in the new gTLD in advance of the gTLD being opened for general registrations. In the last three years the main new TLDs launched were .eu
.eu
.eu is the country code top-level domain for the European Union . Launched 7 December 2005, the domain is available for organisations in and residents of EU member states. The TLD is administered by EURid, a consortium consisting of the national ccTLD registry operators of Belgium, Sweden, Italy...
ccTLD, .mobi
.mobi
The domain name mobi is a top-level domain in the Domain Name System of the Internet. Its name is derived from the adjective mobile, indicating its use by mobile devices for accessing Internet resources via the Mobile Web....
TLD and .asia
.asia
.asia is a sponsored top-level domain sponsored by the DotAsia Organization, with the back-end registry operated by Afilias. It was approved by ICANN on 19 October 2006 as a sponsored TLD...
sTLD
Sponsored top-level domain
A sponsored top-level domain is one of the categories of top-level domains maintained by the Internet Assigned Numbers Authority for use in the Domain Name System of the Internet....
. All of these had landrush periods of varying success.
Secondary market speculation
The secondary market for domain names covers previously registered domain names that have not been renewed by registrants or are available for resale. Sometimes these dropped domain names can be more valuable due to their having had high-profile websites associated with them. They will have links from other websites and could still have users searching for the websites because of these links. Others can be valuable because of the generic nature of the domain name or the length of the domain name, with two and three character names being the most sought after.The business of registering the domain names as they are deleted by the registries is known as drop catching. It is a highly competitive business. The main operators in this business typically set up a number of front companies as registrars. VeriSign
VeriSign
Verisign, Inc. is an American company based in Dulles, Virginia that operates a diverse array of network infrastructure, including two of the Internet's thirteen root nameservers, the authoritative registry for the .com, .net, and .name generic top-level domains and the .cc and .tv country-code...
, in the case of TLDs COM
.com
The domain name com is a generic top-level domain in the Domain Name System of the Internet. Its name is derived from commercial, indicating its original intended purpose for domains registered by commercial organizations...
and NET
.net
The domain name net is a generic top-level domain used in the Domain Name System of the Internet. The name is derived from network, indicating its originally intended purpose for organizations involved in networking technologies, such as Internet service providers and other infrastructure companies...
, allows each registrar a slice of the resources that may be used to register dropped domains. VeriSign drops domains in a random order, giving registrars only a vague idea of the particular drop time of a particular domain. Sometimes a group of drop registrar
Drop registrar
A drop registrar is a domain name registrar who registers expiring Internet domain names immediately after they expire and are deleted by the domain name registry. A drop registrar will typically use automated software to send up to 250 simultaneous domain name registration requests in an attempt...
s often work in confederation to increase their possibility of registering a dropped domain immediately after it is deleted by the registry. If the domain is caught by a confederation of registrars attempting to fulfill a domain backorder, then whichever domain registrar caught the domain will register it to the entity who backordered the domain. If the newly reregistered domain is captured by a company that has no customers who backordered it, the domain may be auctioned to the highest bidder by the registrar who captured it or an auction intermediary. The time between a drop and a capture is often measured in seconds or fractions thereof.
Some registrars do not allow domains to drop in the normal fashion, instead introducing an intermediary (e.g., Snapnames and Namejet) that auction the domain prior to their deletion. If nobody buys the domain at auction, it will pass through the normal deletion process.
Domain name speculation and the rise of Pay per click websites
Cybersquatting has a clear legal definition. The problem is that the legal arguments of what constitutes cybersquatting tend to be lost when people land on a webpage with only Pay per clickPay per click
Pay per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
('PPC') advertising and nothing else. It is often assumed that such a domain is "cybersquatted", especially when the person is searching for the domain in order to register it.
The ease with which PPC
Pay per click
Pay per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
revenue could be derived from parked domains effectively created a situation where domains were being registered purely for their type-in traffic
Type-in traffic
Type-in traffic is a term describing visitors landing at a web site by entering a keyword or phrase in the web browser's address bar Type-in traffic is a term describing visitors landing at a web site by entering a keyword or phrase (with no spaces or a hyphen in place of a space) in the web...
. Many of exact phrases that people were searching for in search engines were being registered for the sole purpose of serving PPC
Pay per click
Pay per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
advertising. The COM
.com
The domain name com is a generic top-level domain in the Domain Name System of the Internet. Its name is derived from commercial, indicating its original intended purpose for domains registered by commercial organizations...
TLD grew from 23,662,001 registered domains 1 January 2003 to 80,759,835 registered domains as of 1 January 2009. While part of that increase in the number of registered domain names is due to the increase in ecommerce and business conducted online, some of the increase is due to the ease of generating revenue from PPC
Pay per click
Pay per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
and type-in traffic
Type-in traffic
Type-in traffic is a term describing visitors landing at a web site by entering a keyword or phrase in the web browser's address bar Type-in traffic is a term describing visitors landing at a web site by entering a keyword or phrase (with no spaces or a hyphen in place of a space) in the web...
. Domain tasting
Domain tasting
Domain tasting is the practice of a domain name registrant using the five-day "grace period" at the beginning of the registration of an ICANN-regulated second-level domain to test the marketability of the domain...
, a practice by which millions of domains would be registered for a limited period ((the five day Add Grace Period during which a domain could be deleted without the registrar effectively having to pay a registration fee to ICANN) and only those generating sufficient revenue from PPC
Pay per click
Pay per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
advertising would be retained, also served to increase the number of domains registered. This practice involved domain name registrar
Domain name registrar
A domain name registrar is an organization or commercial entity, accredited by both ICANN and generic top-level domain registry to sell gTLDs and/or by a country code top-level domain registry to sell ccTLDs; to manage the reservation of Internet domain names in accordance with the guidelines of...
s being created purely for the purpose of domain tasting
Domain tasting
Domain tasting is the practice of a domain name registrant using the five-day "grace period" at the beginning of the registration of an ICANN-regulated second-level domain to test the marketability of the domain...
. The situation became so bad in 2007 that ICANN
ICANN
The Internet Corporation for Assigned Names and Numbers is a non-profit corporation headquartered in Marina del Rey, California, United States, that was created on September 18, 1998, and incorporated on September 30, 1998 to oversee a number of Internet-related tasks previously performed directly...
was forced to take action. In June 2008 ICANN added a provision to its Fiscal Year 2009 budget to limit the number of domains that a registrar could delete using the Add Grace Period before having to pay the ICANN fee. The effect of this was to massively curtail the number of domains deleted in .com and .net during the Add Grace Period. From June 2008 to April 2009, AGP deletions fell by 99.7%.
The March 2006 Verisign Domain Brief stated that out of approximately 57.37 million COM
.com
The domain name com is a generic top-level domain in the Domain Name System of the Internet. Its name is derived from commercial, indicating its original intended purpose for domains registered by commercial organizations...
and NET
.net
The domain name net is a generic top-level domain used in the Domain Name System of the Internet. The name is derived from network, indicating its originally intended purpose for organizations involved in networking technologies, such as Internet service providers and other infrastructure companies...
websites spidered, 26% were single page websites, 60% were multipage websites and 14% had no associated websites. Numerically, the number of single page websites was approximately 14.91 million. The single page websites websites include under-construction, brochure-ware
Brochureware
A brochureware website is a business website that has very infrequently updated content. Often the site has been developed as a direct translation of existing printed promotional materials, hence the name...
and parked pages in addition to online advertising revenue generating (PPC
Pay per click
Pay per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
) parked pages.
The latest statistics for domain name usage quoted in the Verisign Domain Brief for June 2009 states that of the 92 million COM
.com
The domain name com is a generic top-level domain in the Domain Name System of the Internet. Its name is derived from commercial, indicating its original intended purpose for domains registered by commercial organizations...
and NET
.net
The domain name net is a generic top-level domain used in the Domain Name System of the Internet. The name is derived from network, indicating its originally intended purpose for organizations involved in networking technologies, such as Internet service providers and other infrastructure companies...
domain names, 24 % of these domains have one page websites, 64% have multipage websites and 12% have no associated websites. In purely numerical terms, those single page websites would account for approximately 22 million COM
.com
The domain name com is a generic top-level domain in the Domain Name System of the Internet. Its name is derived from commercial, indicating its original intended purpose for domains registered by commercial organizations...
and NET
.net
The domain name net is a generic top-level domain used in the Domain Name System of the Internet. The name is derived from network, indicating its originally intended purpose for organizations involved in networking technologies, such as Internet service providers and other infrastructure companies...
websites. The survey quoted in the Verisign Domain Brief does not explain the methodology or provide anything other than a summary of the results. However this is effectively a rise in single page websites of just over 7 million websites.
Some hosters such as Godaddy have their own domain parking
Domain parking
Domain parking is the registration of an Internet domain name without using it for services such as e-mail or a website i.e without placing any content on the domain. This may be done to reserve the domain name for future development, to protect against the possibility of cybersquatting, or to...
systems and allow unused domains to be parked with the registrant receiving a share of the PPC
Pay per click
Pay per click is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
revenue earned. Other hosters have similar systems.