ICANN Ends Domain Tasting
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If you've been buying domains in quantity, speculating on how much money they'll bring you, you need to read this article. Likewise, if you've tried to buy a domain name and been frustrated because the domain that wasn't taken when you checked earlier got grabbed before you tried to buy it mere hours later, guess what? Things are about to change for the better.
The Internet Corporation for Assigned Names and Numbers (ICANN) announced a major development this summer that will greatly affect the process of acquiring a domain name. The corporation, which is responsible for managing and assigning domain names, has won what is considered to be a major battle over a practice commonly referred to as "domain tasting."
Essentially, domain tasting is a scheme often used by registrars. This is how it works: a person purchases a large number of domain names, though their intention isn't really to keep every single one of them. They try them out first and then ditch the unprofitable ones without losing any of their money.
Some of you may be wondering how that's possible. They can dump domains they've purchased without losing any money because of a mandatory five-day grace period known as the "Add Grace Period" or AGP. If a domain name is dropped during this time period, a full refund must be given.
The Controversy
Some people may be thinking, "So what's the big deal? Who cares if they don't purchase the domain name for long term use?" The problem is that domain tasters were making money off of the domain's they purchased -- even if for just a few days -- without actually having to spend their money on the domain permanently.
They did this in a couple of different ways. By registering variations of similar domain names in bulk, domain tasters were able to direct Internet users to a mediocre, generic web page that generated revenue through the use of advertising services, such as Google AdSense. These generic websites were being used to quickly and dishonestly grab Internet users looking for something in particular, such as a current event. Some of these domain names would even include typos made while searching for very popular websites, such as Perez Hilton. Basically, any names with any amount of staying power could and would be kept, while the rest of the domain names would be ditched after a few days during the grace period at no cost to the registrar.
Domain tasters also made money off of their scheme by tracking users who searched for the availability of different domain names. In turn, the domain taster would then register anything others had repeatedly tried or considered. If a person seeking out one of these often-searched domain names had tried to register one, domain tasters were discovered to be offering the domain name -- which they had in their possession -- at an incredibly inflated price. If, for example, nothing happened in a few days, the domain name would be returned by the domain taster.
Originally, the AGP was designed and put in place by ICANN as a way to assist registrars who had for some reason or another made errors in their domain names. Unfortunately, shortly after being implemented, the grace period refund was abused excessively by websites that cluttered their domains with tons of ad links, all of which redirected visitors to other, sometimes harmful, sites. The AGP also inadvertently rewarded these domain tasters, as often the most popular domain names were swept up en masse by scheming tasters who'd purchased and dumped other names in bulk.
Perhaps if domain tasting wasn't as prevalent, it wouldn't be such as issue for ICANN, but it's a major problem that occurs more frequently than the legitimate purchase of domains. Some registrars have been known to drop thousands of domain names over the course of a few weeks. The number they drop usually greatly exceeds the number of domains they legitimately purchase and intend to use.
According to Bob Parsons, the CEO and Founder of Go Daddy, during the month of April 2006 there were 35 million domain registrations ... but only 2 million were actually purchased. The numbers only got worse in February of 2007. Out of 55.1 million domain names registered with Go Daddy, Parsons says 51.5 million were canceled and refunded during the AGP. That means that out of 55.1 million registered, only 3.6 million were actually permanently purchased.
Next: The Backlash >>
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