Tuesday, February 05, 2008

The New Domain Name Industry: Opportunity or Abuse?

Though it's often overlooked, perhaps the biggest reason why the Internet has been so transformative to our culture in such a short amount of time is that it has virtually eliminated that age-old economic problem of scarcity. In cyberspace, resources are unlimited and there are no zero-sum games. If you want to build a new website, you don't have to worry about the Internet running out of available real estate. In fact, there is no such thing as "unavailable".

Except, that is, for domain names. Only one person or entity can own the rights to a domain name, and as a result, an entire industry has popped up looking to capitalize on owning one of the only scarce commodities on the Web. Read this fascinating article in the New York Times and you'll start understanding the gold rush that is already well-underway.

To give you a sense of scale, several months ago I was brought in to consult for a guy who owned the domain name "Mom.com". He had purchased the rights to the domain name years ago for the standard price (about $9/year), had never developed a website, but had received an offer of about $20,000 for it. (An interesting sidenote: it was from a porn site). In 1997, I personally bought the rights to "Hannukahgifts.com", wound up doing nothing with it, so just let those rights expire without renewing them. Thinking about it in retrospect, it's like a punch to the gut.

Now, I have a dream. It's relatively humble - I want to someday own the rights to "domanski.com". I've got big plans for it. Create personal websites for my family members like "Rob.Domanski.com" and "Lisa.Domanski.com", content-sharing pages like "Photos.Domanski.com", and email addresses like "Edie@Domanski.com". You get the point. As a computer programmer and web developer, I've got big eyes, big plans. Like a grandmother who just bought a fancy new oven.

The problem is that some company has already purchased the rights to the "Domanski.com" domain name. I recently contacted this company to sell the domain name to me, however, despite them not even creating a website or doing anything with it, they decided to hold the domain name hostage with a ransom of $5000!

To deal with scenarios like this, there is a non-profit organization charged with controlling the worldwide domain name system, and through this charge, ICANN is often considered one of the most powerful players in Internet Governance. They are supposed to resolve conflicts over domain name ownership taking into account legitimacy and intellectual property. These principles are why a similar organization, WIPO, ruled, for instance, that "TomCruise.com" should be transferred over to the celebrity actor, and taken away from a cybersquatter who just wanted to redirect visitors to his own website.

The fact that an entire industry has developed, buying and selling domain name ownership as if it were its own stock exchange, completely undermines the purpose of ICANN and WIPO, as well as any sense of fairness built into the system itself. Don't get me wrong: capitalism is great, and I can already picture many Nerfherder readers seeing dollar signs after reading the Times article above. But they'll be missing the point... because domain names are the only scarce commodity on the Web, and so central to its functioning, it is in desperate need of a strong mechanism for conflict resolution.

My dream might not be Martin Luther King's, but it's fairness that I seek nonetheless.


At 9:05 PM, Anonymous Anonymous said...

Don't forget about hosting/register companies that buy domain names after they expire. A friend of mine had their domain name expire with registerfly. After six months they wished to re-purchase the domain. Registeryfly wanted $250.00 citing administrative costs for holding the domain name. Also some hosting/register companies will purchase names if that name is searched repeatedly on their site.


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