washingtonpost.com
New Policy Aims to Curb Web Site Name Abuse

By Brian Krebs
washingtonpost.com Staff Writer
Wednesday, January 30, 2008 2:01 PM

Consumers and businesses may soon find it easier to register an attractive Web site name, now that the nonprofit organization that oversees the global domain name system has agreed to a policy change.

In a meeting last week, board members of the Internet Corporation for Assigned Names and Numbers voted unanimously to make the Web site name registration process more expensive for "domain tasters," who take advantage of loopholes in the process to register -- and profit from -- millions of domain names without paying for them.

Under the current rules, domain registrars have up to five days to sample domains before committing to purchase them, typically at a cost of around $6.25 per domain. An additional 20-cent surcharge per domain goes to ICANN, but the group has always refunded that fee if the registrar failed to purchase the domain within five days of claiming it.

Until now. The new policy would not refund the 20-cent fee.

The idea behind the so-called "add grace period" was to allow people who made a spelling or other mistake to get their money back and return the domain. But some registrars have built their entire business around abusing that well-intentioned policy, snatching up millions of domains at a time and only paying for and registering a tiny fraction of them that earn enough money through pay-per-click advertising traffic to justify the registration cost.

John Levine, former member of ICANN at-large advisory committee and author of "The Internet for Dummies," hailed the board's decision, calling it a win for consumers and businesses who are merely looking to register a decent domain name.

"What domain tasting means is that at any one time there are millions of domains that are not really registered but not really available either," he said.

Levin said he believes the policy change will, once implemented at the registrar, effectively kill the domain tasting business.

"Remember, most tasters only keep about one domain for 100,000 they taste, but until now the tasting cost them nothing," Levin said.

Using Levin's example of 100,000 domains bought in bulk, tasters would lose 20 cents on every domain they taste but do not register. That means the cost of that transaction could suddenly jump from the cost of the single domain name they may decide to keep, to $20,000.

To date, most domain tasting abuses have been committed by a relatively small number of registrars. According to VeriSign, which manages the dot-com registry, the top 10 domain tasting registrars deleted more than 45.4 million domain names out of a total 47.8 million total deletes for all of dot-com and dot-net domains deleted in January 2007.

"It will kill domain tasting because this is a practice that is predicated on the ability to get rid of a vast majority of the [registration] fees for free, and tasters aren't going to be able to get rid of the loser domains for free anymore," Levin said.

ICANN has not said when the new policy might take effect, but Levin said he thinks it could be in place later this summer.

Instituting small surcharges per domain has already shown to discourage domain tasting. Up until the middle of last year, the Public Interest Registry, which manages the registry of dot-org domain names, was dealing with multiple registrars tasting millions of domains a month but dropping nearly all of them before the five-day grace period expired.

In June, the PIR added a five-cent surcharge for registrars that deleted or dropped more than 90 percent of their registered domains after the five-day grace period. In the month before that policy took effect, nearly 92 percent of the dot-org Web site names registered were dropped after the five-day grace period. By August, that figure had fallen to less than 30 percent, indicating that the domain restocking fee was indeed having its intended effect.

Beyond causing frustration among those who have a more legitimate reason to secure a domain name, is the overall impact domain tasters are having on the Internet advertising industry.

Some of the largest domain tasters also have been accused of "typo squatting," registering domains that contain slight misspellings of corporate trademarks, with the aim of siphoning traffic to pay-per-click Web sites, many of which often serve ads for the trademark holder's competitors. Many of those registrars are also behind a more egregious form of domain tasting known as "domain kiting," in which registrars drop tasted domains after the five-day grace period, and then immediately re-register them.

Search engine and advertising giant Google has long been criticized for profiting from domain tasting and kiting, as a large percentage of domains snatched up by tasters are populated with Google's Adsense pages. Google makes money whenever someone clicks on one of its Adsense links, and a portion of that money is shared with the site that referred the visitor.

A recent court case involving computer maker Dell is beginning to offer a peek at just how much money domain tasting is generating -- not only for the tasters, but for Google and other online advertisers.

Late last year, Dell sued registrar Belgiumdomains.com and two of its sister registrars -- entities which collectively make up the three largest domain tasting registrars in business today. Dell accused the companies of infringing on its trademarks by placing Google Adsense pages on thousands of kited domain names.

A federal judge overseeing that case, earlier this month, approved a stipulated agreement between all three parties. Under the terms of the order, the first $1 million the domain tasting registrars receive from Google Adsense ads each month will be paid into a special escrow fund to be held for Dell's benefit should the computer maker win at trial. The second $1 million earned from the ads on tasted domains each month will go to the defendants. All additional advertising proceeds that exceed $2 million each month will be split between the escrow fund and the defendants.

Bret Fausett, an intellectual property lawyer and a former member of an ICANN advisory committee who now blogs about the Internet governance organization, called the dollar figures behind the Dell order "staggering."

"I think it shows that the domain tasting problem was probably bigger and more lucrative than we thought it was," Fausett said. "I think those who will be most surprised by these numbers are the Adsense advertisers, because if Google has been paying millions to these [domain tasting] guys, that means the advertisers have been paying Google even more to advertise on these sites, and it really makes you wonder what value these advertisers are really getting."

In an announcement last week, Google said that as of Feb. 11, it plans to begin blocking Adsense from running on domains found to be implicated in domain kiting. That policy would not necessarily apply to sites belonging to registrars involved in pure domain tasting, Google spokesperson Daniel Rubin said.

"We discourage domain kiting as a practice. In order to more effectively deter it, we are launching a new domain kiting detection system," Rubin said in a statement e-mailed to washingtonpost.com. "If we determine that a domain is being kited, we will not allow Google ads to appear on the site. We believe that this policy will have a positive impact for users as well as large and small domain purchasers across the Web."

John Berryhill, an intellectual property lawyer who litigates trademark infringement cases, called Google's new policy a clever public relations stunt.

"Google is seeing the smoke and knows there's a forest fire coming their way," Berryhill said. "It's really a very wise PR move for them."

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