On 17/02/07, Roberto Gaetano < roberto@icann.org> wrote:

I believe this is the message that John sent to the alac public list about
the domain name monetization.
RG

(didn't ask for explicit permission, but since it was sent to the public
list I assume it's OK)

-----Original Message-----
From: owner-alac@icann.org [mailto:owner-alac@icann.org] On Behalf Of John L
Sent: 21 August 2006 05:50
To: ALAC
Subject: [alac] Re: Domain Monetization Background

Thanks for that useful summary. There are a few other points that are worth
bringing out:

One is that there is a meaningful difference between domain monetization and
domain tasting.

Monetization is a straightforward arbitrage between the cost of domain
registrations and the revenue from as much pay-per-click traffic as the
domain owner can get from people who visit web sites in the domain.  It's a
fundamentally sleazy business, since the web sites have no useful content
and the way they get the traffic is basically by tricking people, either via
typos or recently expired domains.  But it's not the only sleazy thing that
people do with domains, and it is not at all obvious to me why ICANN should
do something special about this particular flavor of sleaze.  If registrars
are warehousing domains in violation of sections
3.7.4 and 3.7.9 of the registar agreement, I suppose that ICANN should slap
their wrists, but that's trivial to circumvent by creating a nominally
separate customer to hold the domains.

If we agree that this is a bad idea, it would be much more effective to
persuade Google and Overture to stop paying for clicks on pages with no
content, thereby dealing with a problem that is not limited to typo and
expired domains.  We've seen click arbitrage, people buying Google ads to
drive traffic to pages that are simply other Google ads.

Domain tasting, on the other hand, uses the five day add grace period to
register domains without paying for them.  It stops being arbitrage and
instead is somewhere between larceny and extortion, because the registration
cost is zero. As many people, most eloquently Bob Parsons, have noted, it's
exploiting a loophole that shouldn't be there in the first place.  There was
a great deal of debate both in the ICANN community and on the ICANN board
about the deletion grace period, but none at all about add grace which was
apparently tossed into the package by an ICANN staffer without asking
anyone.  So says Karl Auerbach, who was on the board at the time, and I
haven't seen anything to the contrary from any other board member.

The usual explanation of domain tasting says that the registrars register
millions of domains, watch the traffic, and then after 4.9 days they delete
the ones that don't seem likely to make back the six bucks.  I wouldn't be
surprised if they just delete them all and then reregister what they can a
few minutes later.  The domains are all nearly worthless, so why take the
risk of paying anything for them?

The add grace period is just a mistake.  The problem it purports to solve is
not and never was an important one.  If you let an important domain expire,
you risk losing the entire investment made in that domain over many years.
But if you register a domain by mistake, the most you risk is the ten or
twenty bucks you paid to register it.

Finally, it was completely predictable that people would abuse the ability
to register domains for free.  Back in the pre-ICANN days you registered a
domain by sending mail to NSI, they sent back the confirmation, then you had
several weeks to send them a check before they deleted the domain for
non-payment.  Pay per click hadn't been invented yet, so the abuse at that
point was to squat on domains with interesting looking names and try to sell
them before they were deleted.

R's,
John

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