Archive for November, 2006

Yun Ye: Merely Human (But Very Smart)

In the late 1990s and early 2000s, a man named Yun Ye scooped up tens of thousands of domain names as their owners let them expire. His company was called Ultimate Search Inc. Ye, a shy man who kept an extremely low profile, was a hero to other domain investors, particularly after he scored a $164 million deal two years ago to sell his portfolio to Marchex Inc. Until journalists started reporting on the Chinese-born Ye (my favorite piece is here), some domain investors didn’t believe he was a real person; perhaps, they thought, there were 10 people working for Ultimate Search, and Ye was really just an alias for the firm. Still, little was known about Ye the man. Now, some new details are slowly emerging, thanks largely to the power of public records. Here are a few of those details:

  • Ye was born in June 1972, which means he was merely 32 when he negotiated the sale of his portfolio to Marchex.
  • In 1995, he received a bachelor’s degree in computer science and economics from Brandeis University, a very good private school in Waltham, Mass. He graduated magna cum laude and was elected to Phi Beta Kappa.
  • In 1998, he earned a master’s degree in computer science from the University of Maryland in College Park. That certainly helps explain why he was so good at writing computer programs to snag freshly expired domain names.
  • Not long after he finished graduate school, Ye and Jin Lu, his wife, started a domain-name business called noname.com. They lived in a condo in Fremont, Calif., in the San Francisco Bay Area. Lu has played a major role in Ye’s business ventures; interestingly, she once did an interview with the Denver Business Journal — in May 2001 — for a feel-good story about how noname.com donated childabuse.org to a Colorado nonprofit. A month later, Ye and Lu sold their Fremont condo, by which time they’d formed Ultimate Search, which listed a Hong Kong address and was incorporated in the British Virgin Islands.
  • In recent years, Ye and his family lived for at least some of the time at One Wall Centre, a skyscraper in downtown Vancouver, British Columbia, shown here. His specific whereabouts these days are unknown.
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Marchex-owned Names Might Raise Infringement Concerns

A follow-up to my last blog post …

After fielding a number of queries from readers, I took a closer look at domain names owned by Marchex. The company owns — and is seeking to derive advertising revenue — from several names that might prompt complaints of trademark infringement from large corporations. They include ibmlaptops.com, ibestbuy.com, chasemortgagega.com, cheapdisneytickets.com and carnivalsinglescruises.com. Each site features a link at the bottom that says “advertise on this network”; the link explains the Marchex pay-per-click advertising network. In an email, Marchex’s general counsel, Ethan Caldwell, said: “Thanks for bringing these domains to our attention. As we have mentioned before, Marchex continues to review and analyze domain names it purchased in bulk for the express purpose of identifying and subsequently eliminating any which do not fit into our long-term strategy. The domains you have identified do not fit into our core strategy of building sites from domains which are either commercially descriptive or have generic characteristics which enable Marchex to build highly relevant, useful and compelling content in targeted commercial verticals, such as newyorkdining.com and seattleautorepairs.com. I can further share with you that the domains are the subject of a dispute between Marchex and the third party from whom we purchased the domains in bulk.” He said he couldn’t elaborate on the dispute, and declined to disclose that third party, but it’s clear who it is. A review of the Whois history for the domains shows they were owned by Ultimate Search Inc. That, of course, is the company Yun Ye ran with his wife, Jin Lu. They sold their portfolio of about 100,000 domains to Marchex last year for $155 million in cash and an estimated $9 million worth of stock. The company they formed prior to that transaction, apparently with the help of private-banking firm Rothschild, was called Name Development Ltd. Like Ultimate Search, Name Development was incorporated in the British Virgin Islands. I’ll post more information on this subject as I gather it.

Latest: A review of Marchex’s latest quarterly report with the SEC suggests as much as $24 million of the purchase price in the Name Development acquisition is being held in escrow pending the dispute over potentially trademark infringing domains. Marchex says in the filing: “The escrow agent is holding the balance of the escrow amount pending a determination related to potential indemnification obligations. In the event any indemnification obligations are so determined, the purchase price will be reduced accordingly.”

Marchex Tests Domain-Parking Waters, and They’re Murky

Marchex Inc., the Seattle-based online marketing company, has been testing its own “domain-parking” program. When I took a look at some of the sites participating in the service this week, I found dozens that appear to infringe on the trademarks of major corporations, including American Airlines, Alaska Airlines, Adobe Systems and 1-800 Contacts. More than 50 other sites are adult-oriented, such as adult-sex-fetishpics.com and adultxxxgalleries.com. Marchex doesn’t own the domains, but shares pay-per-click advertising revenue generated through the program with the domain owners and other online-advertising partners, such as Yahoo Inc. The “parked” sites feature text ads related to the domain name. (For a description of how domain parking works, go here.)

Ethan Caldwell, general counsel for Marchex, a public company, said the program, known as Marchex SiteBox, is in “fairly early” beta testing. He said the company doesn’t have all the controls it ultimately plans to have in place to screen names that may infringe on trademarks. He said Marchex planned to look into a list of domains I sent it, which included americannairlines.com, adobeacrobet.com and 888travelocity.com. Those three domains, and scores of similar names in the program, are owned by Digi Real Estate Foundation, which has been accused on a number of occasions of “typosquatting,” a type of cybersquatting in which famous brands are misspelled. Cybersquatting is the act of registering domains associated with the trademarks of others, and seeking to profit from it.

Caldwell pointed out that other companies offering domain owners the opportunity to “park” their domains have wrestled with similar issues. “None of the parking services are deploying an army of trademark attorneys or manually previewing domains prior to entering them” into their systems, he said. Still, he said, Marchex believes “third-party intellectual-property rights should be respected online,” and its parking program will reflect that.

Caldwell said the company also planned to take a look at its policy regarding adult names. He said Marchex has said for a long time that “adult has always been an insignificant part of Marchex’s business.” Many of the adult names in the parking program used to be owned by Marchex (more on that below).

The potentially trademark-infringing names, as well as some of the graphic adult names (which I won’t print here) appear at odds with the requirements listed on the terms-of-use page for partners in Marchex SiteBox. The page says the program requires that “none of the domain names submitted for inclusion is inappropriate, including, but not limited to, domain names that infringe intellectual property or privacy rights of others and domain names that are obscene, vulgar, pornographic or sexually explicit in nature.”

Marchex, which has about 220,000 of its own domain names, describes the parking program as invitation-only. I asked if the initial partners had gone through a vetting process, and Caldwell said they had not. He declined to comment on Digi Real Estate Foundation. When I called the phone number listed for Digi Real Estate Foundation in the domain-registration records for several of its names, I learned it was not a working phone number. An email to the address listed was not immediately returned.

Many of the adult-oriented domains in Marchex’s program are owned by Grant Media LLC, a San Francisco-based adult company run by Gary Kremen, who founded Match.com and used to run Sex.com. He was recently profiled here. Grant Media has purchased many adult-oriented domains from Marchex, which acquired them when it paid more than $160 million for the portfolio of domains owned by legendary domain investor Yun Ye. Caldwell said Marchex made a conscious decision to unload the adult names in that portfolio. (Ye’s list included tens of thousands of controversy-free generic names, such as debts.com and lasvegasvacations.com.)

Caldwell didn’t have a number at his fingertips for how many of the adult monikers had been sold to Grant Media. He said the company was close to finishing selling all of the adult domains. He declined to discuss how much money Marchex had made from the transactions. “I will tell you, once we bought these domains and we stopped monetizing them, any kind of dollar figures went way down,” he said. “Getting value was not our priority.”

Grant Media did not immediately respond to an interview request. The launch page for its sites involved in the Marchex program warns users that if they hit “enter,” they’ll see sexually explicit content.

Marchex still owns some domains, such as gettingsome.com, that might be considered “adult” by some observers. But Caldwell said such domains featured advertising mostly for personal ads and were not “adult” in nature. Other dating-oriented domains Marchex owns include extremepersonals.com, alllesbian.com, latinhookup.com, exoticmate.com, easyadultads.com and adult-comix.com.

For a list of some of the domains Marchex has discussed publicly, check out this recent press release.

 

 

Quiet on the Blog Front

I haven’t posted anything in two weeks, and it’s going to remain quiet for some time, as I’m entering a critical stretch in my book project and have little time for anything else.