The ICANNblog

Five Days in Domain Name Heaven – Tastes Good to Some Folks

November 7th, 2006

What has been buzzing around the Internet lately is that the top-level domain name registrar agreements provide for a mandatory five-day grace period before the registrars have to pay the registries for the domain names. This policy was put in place by ICANN to protect clients who may have made a mistake in a registration (or a spelling error), allowing them to get a total refund for the domain name. However, domainers, those that wheel and deal in buying and selling domains (many of them multi-registrars) have taken advantage of this business opportunity by registering many thousands of the expiring domains that are released every day and using the grace period to see if a domain generates traffic and revenue over the base registration fee. If it appears that a domain doesn’t generate enough real traffic to warrant a monetization process, the domain is returned to the registries within the five-day grace period for the refund. If the domain does appear to attract traffic, it’s linked to pay-per-click advertising from one of the prominent providers typically seen at a conference like TRAFFIC.The operators of the registries are spending time and effort to process these temporary registrations, and they aren’t complaining as they benefit from access to the increased credit deposits they hold on behalf of their many registrar clients that are participating as domain tasters. If it weren’t for a high degree of automation, this business technique would not work.

As usual, the trademark owners are the primary critics of the current system, as they complain that it creates a unfair secondary market for marks that might otherwise be available and registered to them. They feel this propagates cyber and typo-squatting, an ongoing yet important issue to be resolved. It has been proposed that a restocking charge might curtail the behavior. I think there is a “neutral space” where a minor fee might slow the tasting down, and yet the domainers can still profit from what some people call a valid opportunity.

For more information about what’s going on in the domain name and ICANN community, go to http://www.ICANNwiki.org and participate.

Entry Filed under: TLDs, domaining, Business Strategy