Part 2 – Domain Name Landscape
The Good, Bad, and The Ugly
Whenever an operation reaches a certain size, it is impossible to avoid some friction. Think of McDonalds and Wal-Mart in the offline world or Datran in the online world. The percentage of complaints each receives is low in comparison to their overall operations, but if one were to focus solely on the potential negative you have everything from screamers in email marketing to Supersize Me if you are McDonalds to towns banning the opening of your stores if you are Wal-Mart.
The domain name business certainly has issues of its own. One is perception related. Just as all commercial email is often referred to, colloquially, as spam, people will often refer to domainers who own parked domains as squatters. As is the case with spam, there is truth in some of the accusations, but so many are people not always understanding the model or applying the business through too strict of a filter. Some domains are definitely the equivalent of spam, and these are the ones that deserve to be lumped under domain squatting. These are the ones that willingly infringe upon and leverage of a trademark.
People registering infringing names will happen. To assist trademark holders combat true cybersquatters, the non-profit non-governmental body that sits at the center of the domain world, ICANN, created the Uniform Domain Name Dispute Resolution Policy that most registrars (ex: all offering .biz, .com, .info, .name, .net, and .org) have adopted. The UDRP Policy as it is known sets out the legal framework for the resolution of disputes between a domain name registrant and a third party. The procedure is administered by dispute resolution service providers accredited by ICANN, one of which is the WIPO Arbitration and Mediation Center (WIPO Center). And, any person or company in the world can file a domain name complaint concerning a .com, .net, .org, .biz, .info and .name domain name using the UDRP Administrative Procedure.1
Companies that offer domain name monetization will often service hundreds of thousands, if not more, domains. These parking companies create dynamically generated, ad driven, web content for domains using some combination of semantic and/or behavior technology. Similar to how a web site will often test between networks, domainers will often move a domain from one parking company to another in order to try and maximize their revenue. The sheer volume of domains and their transient nature means that parking companies cannot be the enforcers of trademark policy, but similar to Google, they do their best to assist trademark holders when instances arise.
An Industry in Flux
Creating a domain name portfolio from scratch, one domain at a time, is not any easy business. It’s hyper competitive and involves a lot of risk. As mentioned earlier, doing it in scale requires creating sophisticated technology to help minimize the risk of purchasing non-revenue generating domain names. Today’s domainers want names with traffic, and unlike years past you need some data as you won’t figure out these names on your own.
How domainers acquire data is one of the secret sauces, much like optimization is for a network. A recent article on one company seemed to think they were “hijacking” information. Knowing the intricacies of this unit, (it is affiliated with Oversee) I can say that is not the case, not even remotely close, but the eWeek piece and related articles only highlight the lack of general understanding. That company owns several hundred thousand names and has received complaints, including the recent incident, on less than 0.1% of its names.
The article did more than bring to light an incident that occurred closer to home than I’m used to; it also started to focus more attention on an industry that has for more than 10 years remained relatively anonymous and out of public scrutiny. Domain name speculation is among the oldest practices, and like any practice it evolves over time based on the accepted practices. Companies constantly look for opportunities whereby they can increase their efficiency and scale. For example, when a user registers a name, there is a five day window that registrars have before they have to pay for the name. The average user does not have access to that. If I buy a domain at GoDaddy and decide I do not want it, I do not get my money back. But, if GoDaddy wanted to, they could make it available so that if people decided they did not want to keep the name, it could technically be released back into the pool of available domains.
The big buyers in any industry almost always earn advantages not available to the general public. The relationship that big domain buyers have with registrars is anything but illegal. It’s a business relationship based on scale, much like LowerMyBills paying a lower CPM on Yahoo than an advertiser who wants to spend a few hundred dollars with them. It may or may not last, and for now it has altered the metrics of domain ownership. This is to say that on any given day there are many more names registered than before this grace period was used.
No one knows exactly where the domain name industry will head. Domain name ownership and direct navigation will continue to evolve and has the potential to become a value-add medium to advertisers and end users. It is the duty of any in the industry to continue to push relevancy and value forward. That is the only way the industry will have a future. Those in domains have a deep commitment to the notion of Internet real estate and plan on being around for at least another 10 years.
1 source: http://www.wipo.int/amc/en/domains/guide/index.html
