Domain name speculation

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Domain name speculation, popular as domain investing, domain flipping or domaining in professional jargon, [1] is the practice of identifying and registering or acquiring generic Internet domain names as an investment with the intent of selling them later for a profit.

Contents

The main targets of domain name speculation are generic words which can be valuable for type-in traffic and for the dominant position they would have in any field due to their descriptive nature. Hence generic words and phrases [2] such as poker, insurance, travel, creditcards, loan and others are attractive targets of domain speculation in any top-level domain, the most popular of which is .com.

The speculative characteristics of domain names may be linked to news reports or current events. However, the effective period during which such opportunities exist may be limited. Quick turnaround in the resale of domains is often called domain flipping . Domain flipping may also involve the process of buying a valuable domain name and building a related website around it, all this with the objective of selling the domain and newly built website to an interested party.

Concept

Sometimes, domain name speculation involves finding domain names early in a market, particularly when a new top-level domain is launched, registering them and waiting until the market grows to sell them. Domains such as voice.com, sex.com, and fund.com have sold for millions of US dollars. [3] [4]

The COM top-level domain (or 'TLD') is the focus of most domain speculation activity as it is the largest TLD. Domain speculation occurs in other TLDs as well, such as NET and to a lesser extent in ORG, INFO, and BIZ. Of the Generic top-level domains, INFO is the most popular by registration volume compared to BIZ gTLD due to the low cost of initial registration and the recognizability of INFO as being an abbreviation of information. [5]

Domain name speculation also occurs in country code top-level domains (ccTLDs) such as .uk, .de and .us. [6] The German TLD consists of over 12 million domains. [7] The UK's domain has over 7.7 million domains registered according to Nominet's domain registration statistics webpage, [8] mainly in its commercial sub-domain co.uk. These TLDs are mature markets where good domain names may command high prices. The EU ccTLD is an example of what happens when speculative activity overtakes "ordinary" domain registrations. [9] A combination of an inept registry (EURid) [10] and excessive speculation by businesses exploiting a poorly structured regulatory framework [11] [12] meant that, according to EURid's own statistics at the end of 2006, over 50% of the registrations could be considered at best speculative and at worst domain name warehousing. [13]

Specialist and repurposed ccTLDs have also seen elements of domain name speculation. One of the best examples is that of the .tv ccTLD which has found the fact that TV is an abbreviation for the word television to be rather lucrative. The .mobi TLD is a good example of a specialist TLD in that it is specifically targeted at mobile phones and similar mobile technology. The operators of .mobi, mTLD, have reserved some of the premium generic words which will be auctioned off. The intent is to create a more level playing field for those interested in developing websites. The .mobi premium generic words and phrases list is a good example of the domain names that are at the heart of most early-market domain name speculation.

Domain name speculators, sometimes known as domainers or domain investors, also register domain names based on seemingly generic phrases such as propertyforsale in the hope that these domain names could be sold later to businesses. Some (but not all) domain name investors will try to stay away from domain names containing trademarks as this could be considered cybersquatting.

Some country code TLDs or sponsored TLDs will have what is referred to as an eligibility or nexus requirement [14] [15] [16] [17] to limit registration to specific geographical or national regions. However this does not deter domain name speculation as various options such as using a local agent or company to enable people to register domains in such TLDs exist and have been used.

Evolution

Domain name speculation has evolved with the expansion of the domain name system. Domain names were registered primarily for business purposes. In the 1990s, much of the ccTLD landscape had yet to appear, and the growing public awareness of the COM TLD was gathering momentum owing to the growth of the Dot-com bubble. This inevitably attracted the attention of those who saw potential value in domain names, and by this time many of the most valuable generic domain names, such as sex.com and business.com, had been registered. No clear legal position existed to distinguish domain name speculation and cybersquatting. Due to the open nature of most TLDs, anyone could register a domain name. This led to the development of the Uniform Domain-Name Dispute-Resolution Policy in 1999. [18]

Distinction from cybersquatting

A common accusation against domain name speculation is that it is cybersquatting. [19] Cybersquatting is defined as registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else. The key element in this definition is that the intellectual property rights of another's trademark are infringed by the cybersquatter. For a UDRP action to succeed one of the things that the complainant has to establish is that the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights. [20] Legitimate domain name speculation tends to steer clear of trademarks and concentrate on generic words and phrases[ citation needed ] as domains based on trademarks can be subject of UDRP actions by the trademark owners. As the number of registered domain names has increased, the number of UDRP cases has also increased. [21] Trademark and service mark owners now use brand protection services that monitor TLDs for newly registered domains that potentially infringe on their trademarks. This is due in part to typosquatting, a form of cybersquatting where variations of the spelling of a brand's domain will be registered in an attempt to profit from users mistyping the URL of the site they wish to visit. [22] [23] [24]

Generic terms, such as the term "salt" when used in connection with sodium chloride, are not capable of serving the essential trademark function of distinguishing a product or service. This means that generic terms are generally not afforded any legal protection. [25] The Canned Foods, Inc. v. Ult Search Inc. decision [26] specifically deals with a case involving a generic term, "Grocery Outlet" and the domain name "groceryoutlet.com". The decision contains the key sentence "Generic terms receive no protection in US trademark law when they are used to label the goods and services that they describe."

Cybersquatting was first used as a legal term in March 1998 by a U.S. District Court in California in the case of Avery Dennison vs Sumpton. [27] An early definition of the practice was given in Intermatic Inc. v. Toeppen, 947 F. Supp. 1227 (N.D. Ill. 1996). The definition was "These individuals attempt to profit from the Internet by reserving and later reselling or licensing domain names back to the companies that spent millions of dollars developing the goodwill of the trademark." [28]

As domain name speculation has evolved alongside the domain name system, the most memorable and shortest domains tend to be amongst those registered first in any TLD. For old TLDs like COM (introduced in 1985), these domains will be long gone and people registering their first domains are often frustrated at the lack of short and memorable domains in this and other mature TLDs. [29]

One of the main problems concerning trademarks and domain names in unrestricted TLDs and gTLDs is that of trademarks in general: the rights of the trademark owner have to be asserted in order to protect the trademark. The trademark owner has to take legal action, typically a UDRP, to defend the trademark after the potentially infringing domain has been registered. The UDRP action has to follow a procedure of notifying the respondent, receiving a reply from the respondent, appointing an adjudication panel and awaiting a decision. The process can take two months or more [30] and all costs (typically more than $1,000 even for a single domain) are borne by the complainant, while the infringing party stands to lose nothing except the registration fee (usually under $10) for the original domain and the registrar of the infringing name incurs no penalty at all.

The global and unrestricted nature of TLDs and gTLDs effectively means that anyone in any country can register a domain name in them regardless of whether they have any intellectual property rights in that name. With country code TLDs the jurisdiction is more clearly defined. The affected intellectual property rights owner would have to take a legal action, typically a UDRP case to transfer or cancel the domain unless the registrant is in the same jurisdiction as the affected intellectual property rights owner. In this case, local law may be sufficient as the action may be considered as common law tort of passing off. [31] [32]

Primary market speculation

The primary market for domain name speculation covers newly registered domain names that have not been registered before. Such domain names are often linked to news and current events. The launch of a new TLD encourages primary market speculation as domainers rush to register generic terms and also phrases that make a pun on the TLD name (domain hack). Other more organised domainers or domain name speculators register trademarks in advance of the launch of new TLDs specifically in order to register these short, memorable and potentially high value domains in the sunrise period of new gTLD launches. The Sunrise period is when intellectual property rights owners (trademark owners etc.) can register their trademark in the new gTLD in advance of the gTLD being opened for general registrations. In the last three years the main new TLDs launched were .eu ccTLD, [33] .mobi TLD and .asia sTLD. [34] [35] All of these had landrush periods of varying success.

Secondary market speculation

The secondary market for domain names covers previously registered domain names that have not been renewed by registrants or are available for resale. [6] Sometimes these dropped domain names can be more valuable due to their having had high-profile websites associated with them. They will have links from other websites and could still have users searching for the websites because of these links. Others can be valuable because of the generic nature of the domain name or the length of the domain name, with two and three character names being the most sought after.

The business of registering the domain names as they are deleted by the registries is known as drop catching . [36] It is a highly competitive business. The main operators in this business typically set up a number of front companies as registrars. VeriSign, in the case of TLDs COM and NET, allows each registrar a slice of the resources that may be used to register dropped domains. VeriSign drops domains in a random order, giving registrars only a vague idea of the particular drop time of a particular domain. Sometimes a group of drop registrars often work in confederation to increase their possibility of registering a dropped domain immediately after it is deleted by the registry. [37] If the domain is caught by a confederation of registrars attempting to fulfill a domain backorder, then whichever domain registrar caught the domain will register it to the entity who backordered the domain. If the newly reregistered domain is captured by a company that has no customers who backordered it, the domain may be auctioned to the highest bidder by the registrar who captured it or an auction intermediary. The time between a drop and a capture is often measured in seconds or fractions thereof.

Some registrars do not allow domains to drop in the normal fashion, instead introducing an intermediary (e.g., Snapnames and Namejet) that auction the domain prior to their deletion. If nobody buys the domain at auction, it will pass through the normal deletion process. [38]

Domain name speculation and the rise of Pay per click websites

Cybersquatting has a clear legal definition, but this definition tends to be lost when people open a webpage with only pay per click ('PPC') advertising. It is often assumed that such a domain is "cybersquatted", especially when the person is searching for the domain in order to register it.[ citation needed ]

The ease with which PPC revenue could be derived from parked domains effectively created a situation where domains were being registered purely for their type-in traffic. Many of exact phrases that people were searching for in search engines were being registered for the sole purpose of serving PPC advertising. The COM TLD grew from 23,662,001 registered domains 1 January 2003 to 80,759,835 registered domains as of 1 January 2009. [39] While part of that increase in the number of registered domain names is due to the increase in ecommerce and business conducted online, some of the increase is due to the ease of generating revenue from PPC and type-in traffic. Domain tasting, a practice by which millions of domains would be registered for a limited period (the five-day Add Grace Period during which a domain could be deleted without the registrar effectively having to pay a registration fee to ICANN) and only those generating sufficient revenue from PPC advertising would be retained, also served to increase the number of domains registered. This practice involved domain name registrars being created purely for the purpose of domain tasting. The situation became so bad in 2007 that ICANN was forced to take action. [40] In June 2008 ICANN added a provision to its Fiscal Year 2009 budget to limit the number of domains that a registrar could delete using the Add Grace Period before having to pay the ICANN fee. The effect of this was to massively curtail the number of domains deleted in .com and .net during the Add Grace Period. From June 2008 to April 2009, AGP deletions fell by 99.7%. [41]

The March 2006 Verisign Domain Brief [42] stated that out of approximately 57.37 million COM and NET websites spidered, 26% were single page websites, 60% were multipage websites and 14% had no associated websites. Numerically, the number of single page websites was approximately 14.91 million. The single page websites include under-construction, brochure-ware and parked pages in addition to online advertising revenue generating (PPC) parked pages.

The latest statistics for domain name usage quoted in the Verisign Domain Brief for June 2009 states that of the 92 million COM and NET domain names, 24% of these domains have one page websites, 64% have multipage websites and 12% have no associated websites. [43] In purely numerical terms, those single page websites would account for approximately 22 million COM and NET websites. The survey quoted in the Verisign Domain Brief does not explain the methodology or provide anything other than a summary of the results. However this is effectively a rise in single page websites of just over 7 million websites.

Some hosters such as Godaddy have their own domain parking systems and allow unused domains to be parked with the registrant receiving a share of the PPC revenue earned. Other hosters have similar systems.

See also

Related Research Articles

<span class="mw-page-title-main">ICANN</span> American nonprofit organization

The Internet Corporation for Assigned Names and Numbers is a global multistakeholder group and nonprofit organization headquartered in the United States responsible for coordinating the maintenance and procedures of several databases related to the namespaces and numerical spaces of the Internet, ensuring the Internet's stable and secure operation. ICANN performs the actual technical maintenance work of the Central Internet Address pools and DNS root zone registries pursuant to the Internet Assigned Numbers Authority (IANA) function contract. The contract regarding the IANA stewardship functions between ICANN and the National Telecommunications and Information Administration (NTIA) of the United States Department of Commerce ended on October 1, 2016, formally transitioning the functions to the global multistakeholder community.

<span class="mw-page-title-main">Domain name</span> Identification string in the Internet

In the Internet, a domain name is a string that identifies a realm of administrative autonomy, authority or control. Domain names are often used to identify services provided through the Internet, such as websites, email services and more. Domain names are used in various networking contexts and for application-specific naming and addressing purposes. In general, a domain name identifies a network domain or an Internet Protocol (IP) resource, such as a personal computer used to access the Internet, or a server computer.

A domain name registry is a database of all domain names and the associated registrant information in the top level domains of the Domain Name System (DNS) of the Internet that enables third party entities to request administrative control of a domain name. Most registries operate on the top-level and second-level of the DNS.

The domain com is a top-level domain (TLD) in the Domain Name System (DNS) of the Internet. Created in the first group of Internet domains at the beginning of 1985, its name is derived from the word commercial, indicating its original intended purpose for subdomains registered by commercial organizations. Later, the domain opened for general purposes.

<span class="mw-page-title-main">.org</span> Generic top-level domain

The domain name .org is a generic top-level domain (gTLD) of the Domain Name System (DNS) used on the Internet. The name is truncated from 'organization'. It was one of the original domains established in 1985, and has been operated by the Public Interest Registry since 2003. The domain was originally "intended as the miscellaneous TLD for organizations that didn't fit anywhere else." It is commonly used by non-profit organizations, open-source projects, and communities, but is an open domain that can be used by anyone. The number of registered domains in .org has increased from fewer than one million in the 1990s, to ten million in 2012, and held steady between ten and eleven million since then.

<span class="mw-page-title-main">.eu</span> Internet country-code top level domain for the European Union

.eu is the country code top-level domain (ccTLD) for the European Union (EU). Launched on 7 December 2005, the domain is available for any person, company or organization based in the European Union. This was extended to the European Economic Area in 2014, after the regulation was incorporated into the EEA Agreement, and hence is also available for any person, company or organization based in Iceland, Liechtenstein and Norway. The TLD is administered by EURid, a consortium originally consisting of the national ccTLD registry operators of Belgium, Sweden, and Italy, joined later by the national registry operator of the Czech Republic. Trademark owners were able to submit registrations through a sunrise period, in an effort to prevent cybersquatting. Full registration started on 7 April 2006.

Domain hijacking or domain theft is the act of changing the registration of a domain name without the permission of its original registrant, or by abuse of privileges on domain hosting and registrar software systems.

<span class="mw-page-title-main">.info</span> Generic top-level domain

.info is a generic top-level domain (gTLD) in the Domain Name System (DNS) of the Internet. The name is derived from information, although registration requirements do not prescribe any particular purpose.

A domain name registrar is a company, person, or office that manages the reservation of Internet domain names.

<span class="mw-page-title-main">.tk</span> Country code top-level domain for Tokelau

.tk is the Internet country code top-level domain (ccTLD) for Tokelau, a territory of New Zealand in the South Pacific.

<span class="mw-page-title-main">.co</span> Internet country-code top level domain for Colombia

.co is the Internet country code top-level domain (ccTLD) assigned to Colombia.

The Uniform Domain-Name Dispute-Resolution Policy (UDRP) is a process established by the Internet Corporation for Assigned Names and Numbers (ICANN) for the resolution of disputes regarding the registration of internet domain names. The UDRP currently applies to all generic top level domains, some country code top-level domains, and to all new generic top-level domains.

<span class="mw-page-title-main">.tel</span> Top-level domain

The domain name .tel is a top-level domain (TLD) in the Domain Name System (DNS) of the Internet. It was approved by ICANN as a sponsored top-level domain, and is operated by Telnic. Telnic announced in January 2011 that over 300,000 domains had been registered since the start of general availability on 24 March 2009. A substantial drop of mostly IDN .tel's occurred at the beginning of 2014. The total number of registered websites under .tel as of 9 October 2023 is approximately 43,227.

The sunrise period of domain name registration is a special period during which trademark holders may preregister names that are the same or similar to their trademarks in order to avoid cybersquatting. This occurs prior to the general launch of the top-level domain (TLD). To register, the group or individual must be able to prove their prior right to the name. The sunrise period serves as a test period, and is followed by the landrush period and/or General Availability.

<span class="mw-page-title-main">.me</span> Internet top level domain for Montenegro

.me is the Internet country code top-level domain (ccTLD) for Montenegro.

Domain tasting is the practice of temporarily registering a domain under the five-day Add Grace Period at the beginning of the registration of an ICANN-regulated second-level domain. During this period, a registration must be fully refunded by the domain name registry if cancelled. This was designed to address accidental registrations, but domain tasters have used the practice for illicit purposes.

<span class="mw-page-title-main">.biz</span> Generic top-level Internet domain

.biz is a generic top-level domain (gTLD) in the Domain Name System of the Internet. It is intended for registration of domains to be used by businesses. The name is a phonetic spelling of the first syllable of business.

A landrush period is the time during which domain names are available for registration, usually to a closed group, to entities that do not own a trademark in the name they wish to register, for example generic terms like loan or car, and thus would not qualify for registration during the sunrise period. Orders may or may not be treated on a first-come-first-served basis. This period follows the sunrise period just after the launch of a new top-level domain or second-level domain during which, for example, owners of trademarks may register a domain name containing the owned mark, but a landrush period precedes a period of general availability, when any qualifying entity can register any name on a first come first-served basis.

The domain name Dot Chinese Website (.中文网) is a new generic top-level domain (gTLD) in the Domain Name System (DNS) of the Internet. Dot Chinese Website is among many listed top level domains. Created along with the partner domain name Dot Chinese Online (.在线) by TLD Registry through Internet Corporation for Assigned Numbers and Names (ICANN)’s new gTLD program launched in April 28, 2014. TLD Registry was founded in June 2008 in Finland with the mission to create essential new Chinese TLDs - intended mainly towards a Chinese-speaking audience. Because it is displayed in a simplified Chinese character language specific script, Dot Chinese Website is known as an Internationalized Domain Name (IDNs).

<span class="mw-page-title-main">Trademark Clearinghouse</span> Database of trademarks for gTLDs

The Trademark Clearinghouse is a database of validated and registered trademarks established by ICANN to assist trademark holders prevent infringing behavior in the Domain Name System. In combination with the Uniform Rapid Suspension System (URS), it is the second significant attempt by ICANN to handle the "Trademark Dilemma". The first attempt was the Uniform Domain-Name Dispute-Resolution Policy.

References

  1. ↑ Oprendek, Greg (25 November 2019). "Domaining 101: Domain investing startup guide". GoDaddy Blog. Retrieved 23 September 2022.
  2. ↑ A 242 page list of premium generic words and phrases reserved by the .mobi registry, mTLD during the Sunrise phase of the launch of .mobi TLD Archived 31 December 2007 at the Wayback Machine
  3. ↑ "MicroStrategy Sells Voice.com Domain Name for $30 Million". Business Wire . 18 June 2019. Retrieved 18 June 2019.
  4. ↑ Irvine, Chris (10 March 2010). "Top 10 most expensive domain names". The Telegraph. Retrieved 23 November 2011.
  5. ↑ "ICANN Registry Status Domain Counts (.aero to .mobi)". Forms.icann.org. 19 January 2011. Retrieved 15 November 2011.
  6. 1 2 "Nominet (.UK Registry) document discusses Domaining, dropcatching and the secondary market in .uk ccTLD" (PDF). Retrieved 15 November 2011.
  7. ↑ "DE Registration figures". Denic.de. Retrieved 15 November 2011.
  8. ↑ "UK Registration figures". Nominet.org.uk. Archived from the original on 16 July 2012. Retrieved 15 November 2011.
  9. ↑ .eu ccTLD Landrush period controversy.
  10. ↑ "Cybersquatters can get rich if they're quick, says .eu registry". Out-law.com. Retrieved 15 November 2011.
  11. ↑ Bobbie Johnson, technology correspondent (8 April 2006). ""Thousands lose out to touts in sale of .eu addresses" Guardian Newspaper, London, UK 8 April 2006". The Guardian. UK. Retrieved 15 November 2011.{{cite news}}: |author= has generic name (help)
  12. ↑ McCarthy, Kieren (24 July 2006). "74000 .eu domains suspended". TheRegister.co.uk. Retrieved 15 November 2011.
  13. ↑ "Eurid 2006 annual report, Page 20. Numbers of domains per registrant" (PDF). Archived from the original (PDF) on 10 November 2011. Retrieved 15 November 2011.
  14. ↑ "us Nexus requirements" (PDF). Nic.us. Retrieved 15 November 2011.
  15. ↑ ".eu Registration Eligibility" (PDF). Archived from the original (PDF) on 28 September 2011. Retrieved 15 November 2011.
  16. ↑ "asia Registration Requirements". Asia.asia. Retrieved 15 November 2011.
  17. ↑ "de German administrative contact requirement". Denic.de. 11 February 2007. Archived from the original on 25 November 2010. Retrieved 15 November 2011.
  18. ↑ "Timeline for the Formulation and Implementation of the Uniform Domain-Name Dispute-Resolution Policy". Icann.org. Retrieved 15 November 2011.
  19. ↑ ""Domain restrictions target cybersquatters" news.com 03 May 1999". News.cnet.com. Retrieved 15 November 2011.
  20. ↑ "UDRP rules". Icann.org. Retrieved 15 November 2011.
  21. ↑ WIPO. "WIPO Press Release on Rise of UDRP Cases". Wipo.int. Retrieved 15 November 2011.
  22. ↑ http://www.eweek.com/c/a/Security/Microsoft-Ships-URL-Tracer-to-Hunt-Down-TypoSquatters/ [ dead link ]
  23. ↑ "Microsoft's Strider URL Patrol". Research.microsoft.com. Archived from the original on 13 November 2011. Retrieved 15 November 2011.
  24. ↑ "Examples of typosquatted domains detected by Microsoft's Strider project". Research.microsoft.com. Archived from the original on 7 March 2012. Retrieved 15 November 2011.
  25. ↑ Why generic marks are not generally afforded legal protection.
  26. ↑ "Canned Foods, Inc. v Ult. Search Inc. National Arbitration Forum Decision". Adrforum.com. Retrieved 15 November 2011.
  27. ↑ Isenberg, Doug. "The Origins of 'Cybersquatting'" . Retrieved 15 June 2016.
  28. ↑ "Intermatic Inc. v. Toeppen, 947 F. Supp. 1227 (N.D. Ill. 1996)" . Retrieved 15 June 2016.{{cite journal}}: Cite journal requires |journal= (help)
  29. ↑ "Good Domain Names Grow Scarce – Inc Magazine, 01 July 2009". Inc.com. 1 July 2009. Retrieved 15 November 2011.
  30. ↑ "How long does it take to decide a UDRP case?". Internic.net. Retrieved 15 November 2011.
  31. ↑ "(UK Registry) The "One in a Million" Court Case which dealt with domain names and passing off". Nominet. Retrieved 15 November 2011.
  32. ↑ ""One In A Million" Judgement. 28 November 1997". Nominet.org.uk. 28 November 1997. Retrieved 15 November 2011.
  33. ↑ .eu Landrush period controversy.
  34. ↑ "asia Landrush and auction. – Circleid.com 27 July 2007". Circleid.com. 27 July 2007. Retrieved 15 November 2011.
  35. ↑ .asia Landrush period controversy
  36. ↑ "Drop-Catching". ICANNWiki. Retrieved 24 November 2015.
  37. ↑ Jackson, Ron. "Inside a Drop Catcher's War Room: How eNom Arms Maker Chris Ambler Is Turning The Tide for Club Drop". Domain Name Journal. Retrieved 24 November 2015.
  38. ↑ Cole, Mason. "The Domain Name Secondary Market" (PDF). ICANN. SnapNames. Retrieved 24 November 2015.
  39. ↑ "ICANN Registry Statistics (.aero to .mobi)". Forms.icann.org. 19 January 2011. Retrieved 15 November 2011.
  40. ↑ "GNSO Council Report to the ICANN Board Recommendation for Domain Tasting" (PDF). Retrieved 15 November 2011.
  41. ↑ "The End Of Domain Tasting. ICANN Report on AGP Measures 12 August 2009" (PDF). Retrieved 15 November 2011.
  42. ↑ "Verisign Domain Brief August 2006 Page 5" (PDF). Verisign.com. Retrieved 15 November 2011.
  43. ↑ "Verisign Domain Brief June 2009 Page 5" (PDF). Verisign.com. Retrieved 15 November 2011.
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