Domain name speculation

Domain name speculation is the practice of identifying and registering

or acquiring Internet domain names as an investment with the intent of
selling them later for a profit.

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[1] such as poker, insurance, travel, creditcards, loan
and others are attractive targets of domain speculation in any top-level
domain.

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.

Contents
1 Concept
2 Evolution
3 Distinction from cybersquatting
4 Primary market speculation
5 Secondary market speculation
6 Domain name speculation and the rise of Pay per click websites
7 See also
8 References

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.[2][3]

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.[4]

Domain name speculation also occurs in country code top-level domains

(ccTLDs) such as .uk, .de and .us.[5] The German TLD consists of over 12
million domains.[6] The UK's domain has over 7.7 million domains
registered according to Nominet's domain registration statistics webpage,
[7] 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.[8] A combination of an inept registry
(EURid)[9] and excessive speculation by businesses exploiting a poorly
structured regulatory framework[10][11] 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.
[12]

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[13][14][15][16] 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.[17]

Distinction from cybersquatting

A common accusation against domain name speculation is that it is
cybersquatting.[18] 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.[19] 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.[20] 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.[21][22][23]

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.[24] The Canned
Foods, Inc. v. Ult Search Inc. decision[25] 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.[26]
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."[27]
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.[28]

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[29] 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.[30][31]

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,[32] .mobi TLD and .asia
sTLD.[33][34] All of these had landrush periods of varying success.

Secondary market speculation

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See also: Domain aftermarket

The secondary market for domain names covers previously registered

domain names that have not been renewed by registrants or are available
for resale.[5] 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.[35] 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.[36] 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.[37]

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.[38] 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.[39] 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%.[40]

The March 2006 Verisign Domain Brief[41] 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.[42] 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
Domain Name System
List of most expensive domain names

References
1. 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
2. "MicroStrategy Sells Voice.com Domain Name for $30 Million".
Business Wire. 18 June 2019. Retrieved 18 June 2019.none
3. Irvine, Chris (10 March 2010). "Top 10 most expensive domain
names". The Telegraph. Retrieved 23 November 2011.none
4. "ICANN Registry Status Domain Counts (.aero to .mobi)".
Forms.icann.org. 19 January 2011. Retrieved 15 November 2011.none
5. ^ a b "Nominet (.UK Registry) document discusses Domaining,
dropcatching and the secondary market in .uk ccTLD" (PDF).
Retrieved 15 November 2011.none
6. "DE Registration figures". Denic.de. Retrieved 15 November
2011.none
7. "UK Registration figures". Nominet.org.uk. Archived from the original
on 16 July 2012. Retrieved 15 November 2011.none
8. .eu ccTLD Landrush period controversy.
9. "Cybersquatters can get rich if they're quick, says .eu registry". Out-
law.com. Retrieved 15 November 2011.none
10. 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.none
11. McCarthy, Kieren (24 July 2006). "74000 .eu domains suspended".
 TheRegister.co.uk. Retrieved 15 November 2011.none
12. "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.none
13. "us Nexus requirements" (PDF). Nic.us. Retrieved 15 November
2011.none
14. ".eu Registration Eligibility" (PDF). Archived from the original (PDF)
on 28 September 2011. Retrieved 15 November 2011.none
15. "asia Registration Requirements". Asia.asia. Retrieved 15 November
2011.none
16. "de German administrative contact requirement". Denic.de. 11
February 2007. Archived from the original on 25 November 2010.
Retrieved 15 November 2011.none
17. "Timeline for the Formulation and Implementation of the Uniform
Domain-Name Dispute-Resolution Policy". Icann.org. Retrieved 15
November 2011.none
18. ""Domain restrictions target cybersquatters" news.com 03 May
1999". News.cnet.com. Retrieved 15 November 2011.none
19. "UDRP rules". Icann.org. Retrieved 15 November 2011.none
20. WIPO. "WIPO Press Release on Rise of UDRP Cases". Wipo.int.
Retrieved 15 November 2011.none
21. http://www.eweek.com/c/a/Security/Microsoft-Ships-URL-Tracer-to-
Hunt-Down-TypoSquatters/ [dead link]
22. "Microsoft's Strider URL Patrol". Research.microsoft.com. Archived
from the original on 13 November 2011. Retrieved 15 November
2011.none
23. "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.none
24. Why generic marks are not generally afforded legal protection.
25. "Canned Foods, Inc. v Ult. Search Inc. National Arbitration Forum
Decision". Adrforum.com. Retrieved 15 November 2011.none
26. Isenberg, Doug. "The Origins of 'Cybersquatting'". Retrieved 15 June
2016.none
27. "Intermatic Inc. v. Toeppen, 947 F. Supp. 1227 (N.D. Ill. 1996)".
Retrieved 15 June 2016.none Cite journal requires |journal= (help)
28. "Good Domain Names Grow Scarce – Inc Magazine, 01 July 2009".
Inc.com. 1 July 2009. Retrieved 15 November 2011.none
29. "How long does it take to decide a UDRP case?". Internic.net.
Retrieved 15 November 2011.none
30. "(UK Registry) The "One in a Million" Court Case which dealt with
domain names and passing off". Nominet. Retrieved 15 November
2011.none
31. ""One In A Million" Judgement. 28 November 1997". Nominet.org.uk.
28 November 1997. Retrieved 15 November 2011.none
32. .eu Landrush period controversy.
33. "asia Landrush and auction. – Circleid.com 27 July 2007".
Circleid.com. 27 July 2007. Retrieved 15 November 2011.none
34. .asia Landrush period controversy
35. "Drop-Catching". ICANNWiki. Retrieved 24 November 2015.none
36. 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.none
37. Cole, Mason. "The Domain Name Secondary Market" (PDF). ICANN.
SnapNames. Retrieved 24 November 2015.none
38. "ICANN Registry Statistics (.aero to .mobi)". Forms.icann.org. 19
January 2011. Retrieved 15 November 2011.none
39. "GNSO Council Report to the ICANN Board Recommendation for
Domain Tasting" (PDF). Retrieved 15 November 2011.none
40. "The End Of Domain Tasting. ICANN Report on AGP Measures 12
August 2009" (PDF). Retrieved 15 November 2011.none
41. "Verisign Domain Brief August 2006 Page 5" (PDF). Verisign.com.
Retrieved 15 November 2011.none
42. "Verisign Domain Brief June 2009 Page 5" (PDF). Verisign.com.
Retrieved 15 November 2011.none

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Domain name speculation

Reverse domain hijacking
Cybersquatting
Domain name drop list
Domain name speculation
Domain sniping
Domain parking
General
Domain tasting
Domain name warehousing
Type-in traffic
Typosquatting
Domain name front running

Anticybersquatting Consumer Protection Act (Truth in

Legal Domain Names Act)

Domain hack
"Catchall" typosquatting
Technical Wildcard DNS record
Fast flux