monetising

This page considers domain name monetization, in particular domaining.

It covers -

• introduction
• domaining
• tasting and front running
• ghouls
• legality and regulation

It is complemented by more detailed notes on domain name portfolios and domain name tasting.

     introduction

What is domain name monetisation? Does it matter? Is it legal? Should it be discouraged?

Monetisation has attracted impassioned criticism, in particular from people whose vision of the net eschews commercialisation of domain names or whose ideal is that each domain would be uniquely identified by a discrete name (ie would not resolve to another domain) and would be used to enable access to resources or for promotion of an organisation rather than as a "billboard on the information highway".

Unfortunately, there is disagreement about the nature of monetisation. Less surprisingly there is disagreement about its significance and about potential responses. Definitions of monetization and of domaining vary, as do responses to the practice of domaining.

Some purists consider that monetization involves 'purchase' and 'sale' - particularly purchase for resale - of domain names, on a speculative basis or otherwise.

Strictly speaking domain names are licences to use a particular address, with the licence being issued under contract law by ICANN or by a ccTLD administrator. In practice names in many gTLDs and ccTLDs are traded in a commercial manner, with for example auction sites for the 'resale' of dot-com names. Prices in such trade and valuation methodologies are discussed in more detail elsewhere on this site.

Trading has been attacked as encouraging speculative registration, cybersquatting and hoarding of names, with critics arguing that any transfer of a name between registrants should not involve a payment to the individual or organisation that relinquishes the name. Proponents have responded that trade is simply an expression of the free market, a self-evident good that should not be restricted by gTLD or ccTLD administrators.

Others consider that domain name monetisation can be independent of buying/selling names, instead involving revenue generation for the registrant (or an entity that has acquired a name from that registrant or a third party) through provision of online advertising space.

That space may encountered by visitors in different ways, for example because someone -

• mis-types an URL, accordingly being directed by their browser to a different site than the one they were expecting
• correctly types an URL, uses a link from an old email message, uses an old link from a web page or uses an old bookmark without reaising that the content of the site has changed when control passed to the monetiser (eg because the original registrant did not renew the registration or transferred rights to the monetiser on a commercial basis)
• intuits that a particular domain name will give access to the product/service that person is seeking, ie using domain names as a search mechanism.

The visitor may arrive at a page that has one or more advertisements, including advertisements that have no relationship to what the person was looking for. The visitor may instead be automatically directed to a page identified with a different domain name; some adult site operators for example use several hundred or even thousand pages to funnel traffic to a particular site, on the basis that larger number of eyeballs mean larger revenue from advertisers.

Proponents of such monetisation have commented that with sufficient traffic there is no need to sell a domain name. Instead, they use mechanisms such as domain name tasting - highlighted below and discussed in more detail in a separate note - to systematically determine what names will get the most traffic and thus generate the highest profits.

     domaining

Domainers - individuals or businesses engaged in domaining - have amassed portfolios of domain names, whether through registration or through transfer from registrants for a consideration (ie what some people refer to as 'sale' of a domain name). Such portfolios may be quite large - for example with over 200,000 names - and have a claimed value of over US$100 million.

Much of that activity is speculative, with the portfolio owner oprating on the basis that particular names can be transferred for a subtantial profit or that a competitor will buy the overall portfolio.

Some portfolio-building (and domain name tasting) involves domainers, with the expectation that all/most revenue will be gained through payment from advertisers for opportunities to appear on sites that web users find through accident (eg a mis-spelt domain name) or through a poor search.

Holding costs mean that demarcations between speculative portfolio building and domaining are blurred, with speculators typically using their domains for discrete ad pages or as redirections funnelling traffic to a selected site (eg an adult content site). Demarcations between registrars and portfolio operators may also be blurred, with some portfolio builders having common financial interests with registrars, particularly in the ruthlessly competitive dot-com and dot-net markets.

Discussion of domain name portfolios, issues, industry practice and statistics features in a more detailed profile elsewhere on this site.

     tasting and front running

Domain name tasting, discussed in a more detailed note, involves automated registration of names by domain name registrars in order to identify whether particular names can be retailed to consumers at premium prices or to generate revenue through payment by advertisers who appear on the domain.

The registrations are typically 'live' during a grace period, ie only for a few days (after that time the registrar would have to pay a registration fee to the registry). That period is sufficient for the registrar to verify whether there is sufficient traffic to justify a permanent registration, with such registrations often forming a basis of domain name portfolios.

Some registrars are engaging in very large scale and systematic tasting in particular TLDs.

'Front running' does not involve actual registration, although it is perceived by many as an abuse of the favoured position enjoyed by a registry/registrar. It centres on those entities identifying names in demand by observing searches made on their sites for what names are available. In 2008 Network Solutions for example attracted criticism by 'locking up' names that people search for on its site but did not immediately register. Such names were 'locked' for about four days. During that time the person who made the search could acquire it directly from Network Solutions at a premium price; thereafter the name returns to the 'pool' and can be registered by anyone through any registrar.

Network Solutions problematically characterised its practice as a benefitting consumers by preventing speculators and others with "questionable intentions" from grabbing the name -

We are not front running. 'We are not monetizing the page. We have no intent in keeping it. We have no intent in selling it in secondary markets at inflated prices - that is front running.

     ghouls

The ease with which names can be registered in some TLDs and the scope for monetising traffic after a natural disaster or other news event has encouraged individuals and corporations to engage in opportunistic registration.

Exploitation of tragedies is not new: it is evident in broadsheets about the 1666 Great Fire of London and 1755 Great Lisbon Earthquake, in Lizzie Borden and Peter Kurten dolls, and in yellow journalism from the time of the Illustrated London News to 60 Minutes. Domain name ghouls have, however, attracted criticism from parts of the community and media.

One example is the aftermath of the 2007 killing spree at Virginia Tech in the US, which saw immediate registration of domain names such as vatechbloodbath.com, vtechkilling.com and virginiatechmurders.com. Several of the names were up for grabs on eBay later the same day. The registrant of vamassacre.com sought US$100,000 for five sites: it is unclear whether the statement "our Hearts go out to all the victims and families of Virginia Tech Massacre!" was going to be reflected in a donation of any proceeds to the grieving families.

Other ghouls, as discussed elsewhere on this site, have avoided registration of names and instead exploited links on blogs or link farms.

     legality and regulation

Is domain name monetisation legal?

Legality varies, depending on rules established by the gTLD or ccTLD administrator and specifics of the monetisation.

Regulation of domain name monetisation has taken three forms -

• action under common and statute law regarding typosquatting, breach of personality rights and other perceived infringements, highlighted in the preceding page of this profile and in discussion of trademarks
• restrictions on 'prohibited' names in some jurisdictions, eg statutory constraints on use of words such as 'university', 'Olympics' and 'ANZAC' in Australia
• restrictions by domain name administrators, registries and registrars

Responses by registries and registrars have been inconsistent. In Australia some registrars have indicated that they would simply refuse to handle particular registration applications, with the potential registrant being free to visit a competitor. Government agencies and auDA have dealt with what were seen to be egregiously exploitative registrations in the dot-au ccTLD but monetisers were free to register a name in a gTLD or another ccTLD.

In the laissez-faire gTLDs and ccTLDs, such as dot-com and dot-ws, the main requirement is possession of an active credit card. Following the 2007 Virginia Tech incident major registrar GoDaddy thus indicated that its policy is to allow "any name to be registered at any time", on the expectation that rights owners will address concerns through action against the registrant under the UDRP, ACPA or other law. GoDaddy noted that it intervenes if it learns that a name is being used for "morally objectionable or illegal purposes", typically when a complaint is filed through its abuse department.

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