In a few days, I’m starting a new job at The Wall Street Journal and will no longer be blogging here. I want to thank all of you who’ve read the blog, posted comments and sent me tips and other information to assist me with my reporting on the domain-name market. I’ll continue to keep abreast of developments in the market for my book, which is slated to be published next year. You can still reach me at the email address listed under the “contact” heading on this blog.
Verizon, the phone giant, has filed a federal lawsuit accusing Internet REIT, one of the world’s largest investors in domain names, of massive cybersquatting and trademark infringement.
The suit, filed in iREIT’s hometown of Houston, accuses the closely held company of operating more than 90 domains that are typographical variations of its trademarks, including verizonwirelessgames.com, virizonpcs.com, virizonwirles.com and verizonwirelessreabates.com. Verizon says iREIT has been displaying pay-per-click ads on the sites for various products that compete with Verizon’s. The phone company is seeking an injunction barring iREIT’s use of the names, as well as damages of $100,000 per name under the Anticybersquatting Consumer Protection Act, which was enacted in 1999.
The suit, filed March 23, also claims iREIT owns thousands of other domains corresponding to other companies’ trademarks, such as bankofanmerica.com, disnelyland.com and ebayonlineauctions.com. In addition, the suit claims iREIT has intentionally provided “material and misleading false contact information” when registering some of its names.
Bob Martin, the chief executive of iREIT, said in an email that “we are already in contact with Verizon representatives and plan to have a thoughtful response to them soon.” iREIT’s financial backers include Maveron LLC, a Seattle venture-capital firm co-founded by Starbucks Chairman Howard Schultz; Perot Investments, a Dallas investment company founded by billionaire and former presidential candidate H. Ross Perot; and Jacobson Family Investments, the investment vehicle of a wealthy New York Family.
Earlier this year, I first reported iREIT’s ownership of large numbers of Web addresses that correspond with major corporate trademarks, including those of Google, its paid-search advertising partner. iREIT, co-founded by Martin and Marc Ostrofsky, who’s famous for selling business.com for $7.5 million in 1999, owns roughly 400,000 sites, including bands.com and officesupply.com.
Neiman Marcus, a century-old, high-end retail chain, has sued Name.com, Name.net and Spot Domains, accusing the ICANN-accredited registrars of cybersquatting and trademark infringement. It says the companies registered names such as neimanmarco.com, neimancmarcus.com and neimanmarcusl.com for themselves, displayed advertisements on the sites and offered them for sale. The Associated Press reported on the suit, filed in a Denver federal court March 15, earlier today.
The lawsuit is the latest by Neiman Marcus accusing registrars of cybersquatting. Earlier this week, Dotster, a seven-year-old registrar, agreed to a permanent injunction barring it from registering variations of Neiman Marcus trademarks, after being sued by the retailer last spring. Amid a boom in domain names, registrars have become some of the biggest speculators in Web addresses, competing with their own customers. Some have been snapping up scores of names corresponding with trademarks while engaging in a controversial domain-evaluation process known as “domain tasting.”
ICANN rules don’t bar registrars from speculating in Web addresses, but critics say the practice is a blatant conflict of interest. Some domain investors have created their own ICANN-accredited registrars, in part, they say, because they don’t trust registrars, some of which own hundreds of thousands of names, with their portfolios.
The $1 million sale of Topix.com this year to Topix.net made my Top 25 list of all-time domain sales that have been publicly reported. Here’s the updated list:
The 25 Largest Reported Sales of Domain Names*
Domain Name, Price, Year
business.com, $7,500,000, 1999
diamond.com, $7,500,000, 2006
asseenontv.com, $5,000,000, 2000
korea.com, $5,000,000, 2000
altavista.com, $3,350,000, 1998
loans.com, $3,000,000, 2000
vodka.com, $3,000,000, 2006
wine.com, $3,000,000, 1999
creditcards.com, $2,750,000, 2004
autos.com, $2,200,000, 1999
express.com, $2,000,000, 1999
mortgage.com**, $1,800,000, 2000
cameras.com, $1,500,000, 2006
tandberg.com, $1,500,000, 2007
men.com, $1,300,000, 2003
bingo.com, $1,100,000, 1999
wallstreet.com, $1,030,000, 1999
fish.com, $1,020,000, 2005
beauty.cc, $1,000,000, 2000
if.com, $1,000,000, 2000
linux.com, $1,000,000, 1999
rock.com, $1,000,000, 1998
topix.com, $1,000,000, 2007
bills.com, $964,500, 2005
forsalebyowner.com, $835,000, 2000
* This information is based on published news reports, as well as data collected starting in 2004 by DNJournal.com, the industry’s main trade publication. It should be emphasized that this list only contains sales that have been publicly reported. Most domain sales occur privately, and often the parties are prohibited from disclosing the details. It should also be noted that in some transactions, the buyer acquires not just a domain, but also other assets. This list is focused on sales of domains only.
** included the sale of hipoteca.com, Spanish for “mortgage”
Schilling: It Ain’t Too Late to Invest in Domain Names
Published March 19, 2007 Uncategorized 0 CommentsIf you’re interested in investing in Web addresses, Frank Schilling, one of the world’s most successful investors, has a must-read entry on his blog. He raises the question of whether it’s too late for neophytes to enter the market, and answers with a resounding “no.” Schilling, owner of such sites as spavacations.com, triathlons.com and mapas.com (Spanish for maps), writes: “The opportunities will roll out very easily and predictably to those who keep a cool head and understand that the maturation of the industry will take time.”
Domain-name registrar NameKing.com has suspended “domain tasting” in the wake of a federal lawsuit by Microsoft Corp. accusing NameKing customer Maltuzi LLC of cyber-squatting, trademark infringement and unfair competition.
With NameKing’s consent, Maltuzi, based in Mountain View, Calif., has been one of the most prolific domain tasters. To taste a name is to register it for a maximum of five days and evaluate how much traffic it gets and how much revenue it generates from paid-search ads. If the name generates more revenue than the annual cost to register it, the taster keeps it. Tasting exploits a rule that allows registrars to return to VeriSign within a five-day grace period any .com or .net name that was registered for a customer by mistake, and to recoup the $6 wholesale price.
Redmond, Wash.-based Microsoft accused Maltuzi of registering more than 450 Web addresses corresponding to its trademarks as part of domain-tasting binges.
“Upon review, NameKing has suspended domain tasting for all customers while we assess best practices surrounding this activity,” the registrar, owned by Los Angeles-based Oversee.net, says on its FAQ page. “We will likely re-open tasting only to registrants that have demonstrated sufficient rules and procedures to significantly reduce the occurrence of trademark violations.”
Last fall, NameKing customer Chesterton Holdings was sued by Wilmington Trust for trademark infringement in connection with tasting. Wilmington Trust dropped the suit after Chesterton Holdings agreed to transfer the names to the financial-services company. An employee of Oversee.net was a manager at Chesterton Holdings, according to Josh Armstrong, general counsel for Oversee.net.
Topix.com Deal Shows Power of Type-In Traffic, “.com”
Published March 15, 2007 Uncategorized 0 CommentsI’m tardy in linking to this, but Rich Skrenta, CEO of Topix.net, has a great explanation of why Topix.net decided to buy Topix.com for $1 million. The news site recognized that its brand recognition has suffered because its name ended in “.net,” rather than “.com,” which some liken to the Rodeo Drive or Park Avenue of domain extensions.
Frank Schilling, a highly successful domain investor, has said that the “one constant since the dawn of the commercial Internet has been type-in traffic” to .com addresses. Many Web users search for information in the address bar. If a person heard about a site called “Topix” that aggregated news from around the world while, say, at a cocktail party, do you think they’d try typing in “Topix.net” in their browser the next day? Not likely.
Skrenta attests to the critical role .com plays in Web branding in his discussion of why his company wound up paying $1 million for Topix.com. Skrenta writes:
So I brought up the question with our board. This is going to be expensive, should we look into it? They were very supportive. Their take was, if we were going to invest in our brand, and in having a better connection with our users, as opposed to remaining a geek-tool or just getting SEO traffic, that we’d want to make sure the brand was top-tier.
Microsoft Corp. has filed a federal lawsuit in San Francisco accusing “domain taster” Maltuzi LLC of violating the Anti-Cybersquatting Consumer Protection Act, trademark infringement and unfair competition. It’s part of a renewed effort by the Redmond, Wash., software giant to combat alleged cyber-squatting. The company detailed a list of suits and settlements in a news release this morning.
Maltuzi, based in Mountain View, Calif., is one of the most prolific domain tasters. To taste a name is to register it for a maximum of five days and evaluate how much traffic it gets and how much revenue it generates from paid-search ads. If the name generates more revenue than the annual cost to register it, the taster keeps it. Tasting exploits a rule that allows domain-name registrars to return to VeriSign within a five-day grace period any .com or .net name that was registered for a customer by mistake, and to recoup the $6 wholesale price.
Maltuzi has at times tasted hundreds of thousands of names a week, according to people familiar with the matter. Microsoft claims Maltuzi has profited by registering more than 450 names that are typographical variations of its trademarks — including the addresses winowsmediaplayer.com, winowslivemessenger.com and microoutlook.com — and displaying paid-search ads on the sites. Microsoft is seeking an injunction blocking Maltuzi’s use of the names. It also seeks monetary damages, and to have the domains in question transferred to it.
One cannot taste without a registrar’s consent. Maltuzi has used the registrar NameKing.com, owned by Oversee.net, a Los Angeles-based company. Oversee is one of the biggest players in the domain market, owning more than 500,000 names itself.
Maltuzi’s name registrations have raised concerns from bloggers and a credit-union trade group, among others. The company did not immediately respond to a request for comment on the Microsoft suit sent via email.
In a recent BusinessWeek article discussing the controversy surrounding tasting, a person called “T. Salonen” was named as the manager of Maltuzi. Salonen told BusinessWeek that there’s nothing wrong with the company’s tasting efforts. In an email, he told the magazine: “We … purchase those domain names which have certain traffic levels or pay-per-click viability and return those which do not meet those and other criteria.”
The Wall Street Journal’s Kevin Delaney discusses how the quirky rules of Google and other search engines can cause Internet sites to slide in search-engine rankings when they switch domain names. (Full disclosure: I’ll soon begin a freelance editing job for the Online Journal.) Delaney also reports that news site Topix.net recently paid $1 million to a Canadian company for Topix.com. Delaney writes of the search-engine rules:
Among the most common reasons for unpredictable changes in rankings are frequent updates to search engines’ algorithms. These mathematical formulas analyze billions of Web pages for dozens of factors, such as the most prominent words on the pages and what other sites link to the pages, in order to determine how to rank them for relevance to a query. Search companies change algorithms partly to frustrate people who try to inappropriately boost their sites in the results, but legitimate businesses sometimes feel they’re caught in the crossfire.
Dotster, the domain-name registrar, said in recent court documents that it stopped the controversial practice of domain “tasting” in November, six months after a federal lawsuit by Neiman Marcus accused the company of massive cyber-squatting. The case has been settled, and details may emerge soon.
Court documents reveal details of how Dotster began tasting, stopped it, and then resumed it. To “taste” a name is to register it for a maximum of five days and evaluate how much traffic it gets and how much revenue it generates from paid-search ads. If the name generates more revenue than the annual cost to register it, the taster keeps it. Tasting exploits a rule that allows registrars to return to VeriSign within a five-day grace period any .com or .net name that was registered for a customer by mistake, and recoup the $6 wholesale price paid to the registry.
Dotster CEO Clint Page said in a court filing that the company has built a “significant” portfolio of domain names of its own. ICANN-accredited registrars are not barred from speculating in large numbers of domains under ICANN rules, though some in the domain market consider the activity a conflict of interest because their principal reason for existence is to serve customers wanting to register names.
Page said Dotster began tasting names for itself on a limited basis in December 2004, then stopped in early 2005 after the “applicable registry” — apparently VeriSign — disallowed registrars to do tasting. Dotster resumed tasting in June 2005, he said, “when the registry again permitted this practice.” Page said Dotster used automated systems to taste names that had not previously been registered, but that “had been typed into Web browsers on multiple occasions.” This indicates it had access to its own data, or obtained other data, on the surfing activities of Internet users. To earn revenue off its domains, Dotster served up pay-per-click ads sold by Google, which works closely with the domain industry.
“Dotster adopted a screening system in an attempt to ensure that the domains identified by its automatic process did not include third-party trademarks or clear misspellings of any such trademarks,” he said. It not only used computer programs to “scrub” names, but also had employees review names that it wanted to retain before the five-day tasting period expired. However, Dotster failed in its screening efforts. “Because of the volume of names and the time in which the employees had to complete their review, the process was not as effective as it should have been,” Page said.
Neiman Marcus accused the company of registering hundreds of domains infringing on its trademarks, as well as other large companies’ marks. The names included nemimarcus.com, neimanmarisu.com, neumanmarcos.com, and newmenmarcus.com.
Page said Neiman Marcus has “tried to create the impression that (Dotster’s) names all consist of typo-variants of trademarks,” but “this is not the case.” For instance, he said, Dotster owns generic addresses such as headlice.com, babyfun.com, laboratoryexperts.com, lowestpriceclothing.com and nailpolishfacts.com. (Update: A reader points out that Dotster no longer owns headlice.com, according to the Whois. Also, it appears the ownership of lowestpriceclothing.com may have changed hands.)
Dotster continued tasting even after the lawsuit, but put a stop to it in November and has no plans to resume the practice, Page said.
