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.