Domain Name Tasting
In recent months and years there has been a phenomenon known as domain name tasting. It tends to happen in the .com top level domain, but not exclusively. It is a great example of how well intentioned policy can have dire consequences.
Most top level domains (including .nz) have what is commonly called a grace period where a registration can be cancelled without charge. It is usually five days and the intention behind the policy is to protect registrants from paying a fee when they accidentally register the wrong name.
But what has happened is that domain name speculators register basically every name which becomes available in .com, and during the five day grace period place Google ads on a website at that domain name. If the name was previously used it may have enough links and traffic to generate sufficient advertising revenue to cover the annual domain name fee (which can be under US$10).
If the first speculator decides to cancel within the five day period, a second one will register it, and so on with the net effect being that millions and millions of names are perpetually locked up. For example one registrar has reported that of 55.1 million names registered, 51.5 were cancelled during the five day grace period.
As domainspace reports, the ICANN board has passed a resolution indicating they intend to change the fees policy for generic top level domains so that one has to pay a registration fee, even if you cancel within five days. This will probably kill off the domain tasting industry which was very anti-consumer as it both locked up millions of domain names, but also imposed extra costs on registrars and registries which ultimately get passed onto consumers.
As I said at the beginning it is a great example of a well intentioned policy backfiring. The idea of a five day grace period was to help registrants, but as if often the case the lack of any fees creates incentives for people to game the system. It is worth considering how many government policies suffer from the same problem – well intentioned but ultimately counter-productive as they give people incentives to rort the system.
February 4th, 2008 at 4:15 pm
I have to admit (and it goes against the grain to do so) annoyance with the people who hoard good domain names in the hope that “one of these days” someone will pay them a fortune to use them. I’ve lost count of the number of times I’ve been presented with “this domain is for sale” and not even any useful links to alternative sites.
I know this sort of speculation is the free market at work, but good domain names – like radio frequencies – are a finite resource and it’s annoying to see so many sitting unused. It’s also not a great rteurn for the speculators. To me it’s akin to buying up, say, houses and then leaving them empty till they sell at a huge profit rather than renting them out.
The prices these hoarders are asking for a transfer are usually well beyond what a start-up could afford. Maybe it’s time someone set up a “domain leasing” operation – they hold the rights to good domains, lease use of them to a start-up or someone else with a small budget, and pass a percentage of the return to the owner.
February 4th, 2008 at 4:54 pm
Are you sure .nz supports a grace period?
I recall that the SRS Working Group (Hine Report) that I was part of strongly recommended NOT for this to happen. I am sure that we also wrote that in the proposed framework.
Even 6 years ago we saw the fate of the grace period would have on the registry.
February 4th, 2008 at 7:06 pm
Yeah there is a five day grace period. The less desirable value of .nz plus the fact registrars can not buy domain names for themselves seems to have avoided the problem to date.
You may have seen the stories that NSI were also using the five day grace period to register a name if one did a whois on it, using their site. Hence look a name up via them, and you then have to pay them an inflated price for it.