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NameKing.com Suspends Domain Tasting

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”

I’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 Sues Maltuzi, Others

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 Trouble With Switching Web Addresses

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: We Halted Domain “Tasting” in November

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.

$4 Million in Domains Sold in Sin City

A live auction of Internet addresses at the Traffic West industry trade show in Las Vegas yielded more than $4 million in sales. Families.com fetched $650,000 (please see comments below, however), the biggest deal of the event, which was run by Moniker.com. Following is a list of the 10 largest sales, but you can see an entire list compiled by Richard Lau, who was there.

1. Families.com, $650,000

2. Greeting.com, $350,000

3. Blogster.com, $275,000

4. ET.com, $225,000

5. Settlement.com, $200,000

6. OL.com, $150,000

7. PX.com, $120,000

8. HomeForeclosures.com, $90,000

9. RealEstate.mobi, $85,000

10. Mozambique.com, $82,500

Nye Lands Big Investment, Talks With Domain-Name Legend

Frank Schilling, one of the world’s most successful domain investors, has a must-read Q&A with Tim Nye, founder of Geosign, on his blog. Geosign is a new media company that just announced it has raised $160 million in private equity from American Capital. Guelph, Ontario-based Geosign has been selectively buying generic domains from smaller investors to enhance its list of content sites, which include DietNation.com and ThinkFashion.com.

In the Q&A, Nye opines on the frequent disconnect between domain investors and private-equity investors:

The challenge for the typical domainer is that the investors want to invest in companies and not portfolios. A large PE firm is not going to give 100M to a guy who works in his basement in his underwear no matter how clean their portfolio is. I also don’t think they really get the underlying brand value. It’s definitely getting better, but it’s still not a mature investing community. Multiples are understood, but the typos and adult, and trademark issues are scaring people a little.

Domain Registrations Hit 120 Million

The number of domain names registered world-wide reached 120 million in the fourth quarter, up 32 percent from a year earlier, according to the latest report on the domain industry by VeriSign, which manages the database of .com and .net addresses.

The boost in registrations is indicative of the healthy Web economy and the recent boom in online advertising and domain resales. Many domain investors continue to point their addresses to so-called parked pages showing lists of pay-per-click ads related to the address. VeriSign says 23 percent of all domains in the .com and .net extensions are parked. It defines a parked page as a one-page site that’s either “under construction” or lists PPC ads.

Country-code domains, such as .cn for China, experienced strong growth, reflecting increased commercial use of the Web world-wide, as well as speculative investments in those domain extensions.

Addresses in the .com and .net extensions account for more than half of all domains.

VeriSign gets much of its data from Zooknic, run by University of Kentucky geographer Matthew Zook. For the full, six-page industry brief from VeriSign, click here.

Tandberg.com Cracks Top 15 of All-Time Domain Sales

I finally got around to checking DNJournal.com’s list of the top domain sales of 2007, now already two months old. Tandberg.com is the biggest publicly reported sale of the year, fetching $1.5 million in a private deal. The buyer and seller apparently are both Norwegian companies. According to my running list of the biggest reported domain sales in history, Tandberg.com ties Cameras.com, which sold at the live auction at the Traffic East domain conference last October, for 11th all time. Keep in mind that most domain sales are not publicly disclosed for reasons of privacy or competition. The sources for my list are DNJournal.com, which closely tracks the domain market, and published reports in newspapers and books. Here it is:

Name, Price
diamond.com, $7,500,000
business.com, $7,500,000
korea.com, $5,000,000
altavista.com, $3,350,000
vodka.com, $3,000,000
loans.com, $3,000,000
wine.com, $3,000,000
creditcards.com, $2,750,000
autos.com, $2,200,000
express.com, $2,000,000
cameras.com, $1,500,000
tandberg.com, $1,500,000
men.com, $1,300,000
bingo.com, $1,100,000
wallstreet.com, $1,030,000
fish.com, $1,020,000
if.com, $1,000,000
beauty.cc, $1,000,000
linux.com, $1,000,000
websites.com, $975,000

Who Owns eBayInc.com?

A tipster points out to me that it’s not eBay Inc., the San Jose-based online auction company, one of the most brilliant businesses ever created on the information superhighway. Instead, it’s Houston-based Internet REIT. The giant domain speculator, backed by private-equity investors such as Maveron LLC, which was co-founded by Starbucks Chairman Howard Schultz, has owned the domain name for at least 10 months, according to DomainTools.com. It’s among thousands of domains Internet REIT has acquired that are variations of famous trademarks. A visit to eBayInc.com shows that the domain is parked with advertising broker Oversee.net. Among the marketers whose ads appear on the site is none other than eBay itself.