The Wacky World of Expired Domain Names

Let’s say you’re a novice Internet user, or even fairly experienced. You figure out how to register a domain name. You put up a Web page. Over the course of the next year, you change your email address, and you miss the notices from your registrar warning you that your domain will expire unless you pay to renew it. Perhaps the registrar even calls you to remind you to re-register the name (Go Daddy took this step with me last year), but you fail to listen to your voice mail or just blow it off. Upon the expiration date for that name, you have basically given up your rights to that address.

Many large registrars used to offer a so-called redemption grace period (RGP) that gave the domain owner about a month to correct the problem and get the name back. (I won’t get into all the particulars of the expiration and deletion schedule, because they’re very complex.) The RGP was created at ICANN, which oversees the name space, because of concerns that registrants might have legitimate reasons for failing to renew their domain by the expiration date. However, registrars have never been obligated to adhere to it. And what many registrars have done is create language in their voluminous (and I suspect rarely read) terms-of-service agreements with registrants allowing them shortly after the expiration date to transfer the domain to an auction service like SnapNames, auction it off themselves, or keep it for themselves (more on the latter below). The time frames for that vary. Go Daddy, for instance, says in its terms of service that it currently offers a 12-day grace period but that it could be subject to change. Network Solutions says in its terms of service that it might, but is not obligated to, offer a grace period. Demand Media’s eNom has similar language.

Many people say it’s “tough cookies” if a registrant fails to renew a domain by the expiration date. And it’s a fair contention. But in the past, a number of advocates for registrants argued for the creation of the RGP at ICANN, and perhaps in the future they will push for a uniform, mandatory policy in light of the continued confusion among registrants about domain renewals and what happens after the clock strikes midnight on an expiration date.

Now, one of the many things that intrigues me in looking closely at the domain space is how some registrars snap up some of the names their registrants fail to renew. Many Web users certainly are cognizant of the possibility their names could be snagged by domain speculators or investors (some call them “domainers”), a group that now includes public companies, as well as closely held firms backed by hundreds of millions of dollars in private equity. But are many Web users aware that registrars have become some of the biggest speculators out there? I doubt it.

But if you think about it, it makes all kinds of sense. Registrars operate in a highly competitive industry with thin margins. They’re constantly clawing for new sources of revenue. (The dizzying array of services listed on most registrar home pages attests to this.) And while a number of people I’ve interviewed, including Larry Seltzer at eWeek, say it’s a blatant conflict of interest for registrars to horde domains for themselves, the activity is not barred under their accreditation agreement with ICANN. The agreement includes a clause saying registrars must “abide by any ICANN adopted specifications or policies prohibiting or restricting warehousing of or speculation in domain names by registrars.” No such policies have been adopted, however, and I recently interviewed executives from eNom and directNIC who said they see no conflict of interest in registrars compiling domain portfolios. (Speculating, it should be noted, is different than registering a few domains for business purposes, which all registrars, of course, must do.)

So what’s happening to some of those expired domains? Before deciding whether to release the name so that anyone can register it, the registrars point it to a so-called parked page (a page full of pay-per-click ads relevant to the domain) and see how much traffic the domain gets and how much ad revenue it generates. If the registrar likes what it sees, it keeps the domain for itself. Many of the ones that are discarded are inevitably scooped up by “domain tasters.” To “taste” a domain is to register the name for five days at no cost and evaluate how much traffic it gets and how much money it makes from ads. If it’s profitable, the investor keeps it; if not, he lets it go. 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 by mistake. Tasting is a highly controversial practice that has become a subject of much discussion in recent ICANN meetings.

John Berryhill, a lawyer who represents domain owners, gave me a colorful report on the chain of events involving many expired domains in an interview last fall. Here’s what he said (initially he is speaking from the point of view of a registrar):

After your domain-name registration contract with me expires, about a month before I even have to delete it, I’ll throw it into my traffic system. So I’ll have a full month to look at the traffic to your domain name and how much money it makes before making a decision as to whether I’m going to actually delete it, put it into my auction system, or keep it for myself.

There are still some remnant of names that exit out (the registrar). It’s like an Eskimo fishing village with a whale, right? Every part gets used, there’s this whole food chain, and there’s nothing left. With the top registrars basically, what comes out the anus is this turd of names nobody wants, and believe it or not there are dung beetles … that then try to (taste) all that. And here’s the worst part. Drop-catching registrars (such as a SnapNames) get the detritus that comes out of this system … And when they’re done with it and they spit it out, the domain tasters sometimes say, ‘Here are the names that were deleted last month. Let’s check them out for five days.’ So even the corpses get dug up and played with.

Who’s “tasting” the refuse? Well, you can’t taste without the cooperation of a registrar. The tasters are registrars and some of their major clients. Close readings of VeriSign’s monthly reports on domain activity reveal which registrars allow extensive tasting. If a registrar has a high ratio of deleted domains to retained domains, that reflects tasting. Following is a list of the registrars with the highest volume of tasted .com and .net domains from September 2006:

Registrar

Total names on September 30

Names deleted in September

NameKing.com

1,619,672

6,554,531

Belgiumdomains

319,408

5,822,407

Domaindoorman

408,263

5,812,451

Capitoldomains

340,583

5,769,287

Name.net

218,036

2,014,880

ItsYourDomain.com

615,276

1,775,538

Spot Domain

342,110

1,774,635

Name.com

163,849

1,230,831

 

The No. 1 registrar on the list, NameKing.com, is owned by Oversee.net, owner of more than 500,000 domains and a profitable domain-parking service, DomainSponsor, that has a lucrative revenue-sharing agreement with Google. I’ll have more information on tasting and the part of tasting that raises the most concerns — when the names tasted in massive quantities match trademarks of large corporations — in the coming months.

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