DomainTools Blog

The ICANN board just passed the following motion to end Domain Tasting, “THEREFORE, the Board resolves to encourage ICANN’s budgetary process to include fees for all domains added, including domains added during the AGP, and encourages community discussion involved in developing the ICANN budget, subject to both Board approval and registrar approval of this fee.”

It did not directly deal a death blow to tasting, but it was a definitive motion that will kill it this year. This policy is expected to go into effect when the new budget is approved, and that process typically happens in the summer.

http://www.icann.org/minutes/prelim-report-23jan08.htm

It seems all the heat on Domain Tasting in the last few weeks is causing everyone to take action, from Google to the ICANN Board. I applaud the decision to kill the abusive process of millions of free domain names, but I would caution the original use of the Add Grace Period (AGP) is still needed. The AGP was originally designed for very legitimate reasons: erasing domains purchased with a spelling error or for testing the registry computer system.

When the ICANN staff implements the new policy, there are specific things they should allow. Each registrar should have a testing limit of drops in the AGP, possibly 10,000 per month or 3% of all adds, whichever is greater.

One way to keep domain registration prices low is to not increase the domain registration costs for registrars. Bad credit cards are one of the reasons the AGP is needed. Registrars are severely affected when they purchase a domain from Verisign for $6+ and that purchase turns out to be from a stolen credit card. If the average margin on a domain is $1.00, it will take six legitimate registrations to pay for that one fraudulent domain purchase. Keeping costs low for registrars is a good thing. Domain Tasting should end, but registrars still need some use of the free AGP. The board made the motion to include the following language:

Whereas, it is the Board’s view that abuses of the AGP should speedily be halted, while the positive benefits of the AGP to consumers should be retained; Whereas, the positive benefits of the AGP may include, among other things,avoiding fraud and monitoring, testing and development of registrars’ provisioning, production and/or merchant gateway systems;

I am extremely happy Domain Tasting will end. I do feel a bit sad, though, since I coined the term Domain Tasting and now the phrase will be only used historically.

A confidential informant says Google will stop monetizing all domains if they are less then five days old. This potential new policy change by Google could stop all Domain Tasting in its tracks. The Add Grace Period (AGP) is a time period when registrars can delete a domain at no cost, but in this time frame a registrant could register millions of these temporary domains and place Google Adsense for Domains on them. The result is the ability to produce millions of temporary websites that literally generate millions of dollars in income per week for Google. It was disclosed in court that one of Google’s partners was generating as much as 3 million dollars a month from the practice, and that was after Google’s revenue share. Oversee.net and other companies have been using this practice for years and it will have a direct impact on them. The gravy train of free money might be coming to a halt very fast. This policy change at Google should be announced to the channel partners soon and it will have a huge echoing impact on the Industry.

The good news is the quantity of advertising will now be spread among fewer domains. If bid prices start to rise as a result of this change, domain owners who actually own real, full domains should receive more money. However, some advocates of Domain Tasting say that perhaps no one will be able to serve the niche for some ads and no one will make money on the un-served ads.

I think this is a return of the “Be Good” motto Google had a few years ago. Google has been quietly enabling this practice for years. This is a smart policy move on Google’s part to ward off impending litigation that might have hit them in the coming months. Trademark lawyers have been getting craftier at taking down Kiting by suing under other laws. The new weapon of choice is to use forgery laws instead of trademark laws. The penalty for forgery is much worse and caries a much higher fine per forged article. Dell, Yahoo, and BMW have all filed lawsuits in the last two months asking for millions of dollars of damage from Google partners and I think Google sees the writing on the wall: they might be named next.

The question remains, “Will Yahoo follow suit and also block all advertising on domains less than 5 day old?” I have a feeling Yahoo will do precisely that because they are one of the groups suing Domain Tasters using the forgery law tactic. Most of the big Domain Tasters are now using Google ad syndication feeds to monetize the traffic - those dollars will come knocking on Yahoo’s door soon.

UPDATE BY JAY: The new Google policy will go into effect before the end of February.

Oversee.net announced today that it has executed a definitive agreement with Oak Hill Capital Partners, a private equity firm, for an investment of $150 million in Oversee.net’s holding company. Specific terms of the transaction were not disclosed.

The funds will be used to augment organic growth and acquire technologies that will enhance its suite of services in the online marketing and domain name industries. Oversee’s DomainSponsor will continue investing in technologies that monetize domain traffic. In 2007, Oversee moved assertively to build its domain name auction and related services capability, in part through the acquisitions of SnapNames and Moniker. The company will continue to evaluate acquisitions that extend its overall capabilities.

“Oak Hill understands that the online marketing, traffic and domain name sectors are rapidly growing, and they share our vision for establishing Oversee as a leading, trusted partner for domain owners and advertisers,” said Oversee.net co-founder and CEO Lawrence Ng. “Their commitment and support will add fuel for organic growth and will help us capitalize on opportunities to broaden our capabilities.”

Robert Morse, a Partner at Oak Hill Capital Partners, added, “Oversee is an innovative company which we believe is well positioned for growth over the coming years. We’re looking forward to working with Lawrence and his talented team as they play a leadership role in this dynamic industry.”

The transaction is expected to close by the end of January 2008.

After a horrible launch last week of reserving all domain names on Network Solutions before a customer even ordered them, Network Solution started making improvements to the forward reservation service. I privately offered 4 unsolicited suggestions to a few Vice Presidents at Network Solutions.

1) Don’t register Name Servers with the domain (Avoid leaking the ideas).
2) Ask the consumer IF they intend on register a domain and IF they can guarantee payment.
3) Allow them to Opt in before searching.
4) Allow the consumer the ability to delete the domain being held in the AGP.

The first concept is the most important. When leaking customer intent or an idea of a potential registration, Network Solution was broadcasting information that was more hurtful then helpful to their own customers. In less then a week, commercial services specifically targeted the leaking data had popped up to mine Network Solutions customers. To steal the ideas of their customers and trade their ideas like fruit at the Sunday Market. I am glad to report all leaks have stopped, a domain is now registered with the status of Client-Hold meaning that Verisign doesn’t report the domain in the zone file and broadcast the idea to the world.

The second concept was straight forward, only register domains for people that want to buy the domains. If a person was performing a whois request and the domain was available that was not enough evidence to secure the domain and reserve it. Network Solution directly stopped registering all domains on their whois page. They only register domains of their customers in the shopping cart process now.

The third concept seems the most obvious, allow customers to choose ahead of time if Network Solutions would register and hold a domain as a reservation. Network Solution has not enabled this yet however a spokesperson for Network Solution said, “we are working on developing an option for the customer to choose whether to have the searched domain reserved”.

My final suggestion was to allow people to escape the process and go register the domain at a registrar of their choice. Two people can be on the phone call talking about domain names and if one person is checking ideas at Network Solutions that would lock the guy with the wallet from purchasing the domain at another registrar. The customer should have the right to delete the reservation. I was told this had changed since last week. Last week, Customer Support told me the domain would be available again in 4 days and there was nothing they could do to help me clear the domain off their system, I would just have to wait it out if I wanted to register it somewhere else. This week when I called in I was told the domain could be deleted in 6-8 hours but the issue had to escalated. Instant deletion is a big deal, there is nothing more overwhelming then the feeling of being held hostage. If Network Solutions can register the domain in 5 milliseconds, then why can’t the support team delete the domain in under 5 minutes.

Overall, Network Solutions accomplished 2 1/2 of the 4 suggestions I gave them. I am hopefully that all 4 will be accomplished in the next few weeks. This reservation service reminded me of how Site Finder was launched. A huge change with no advanced polling on how people would react to the service. I believe Site Finder could have been launched and stayed a service had Verisign launched it correctly. The Network Solutions forward reservation system is a good idea but not when it broadcasts customer ideas to the world, has no opt-out, and gobbles every idea on the whois page. Customers deserve to opt-in to such a service and be made aware of it before hand.

I applaud Network Solutions on acting quickly and making changes.

It’s a new year, and Domain Roundtable is gearing up for its fourth annual conference in San Francisco! Hosted from the luxurious Palace Hotel, this year’s Conference has all of the events which made it a success in the past, along with some new additions. Right now, we are lining up events for the April 18-21st Conference, as well as the April 21st Live Auction. This year, we are also thrilled to announce that Gary Kremen will headline the guest speakers.

Back in the 1990s, Kremen fronted the lawsuit which changed the face of industry on the internet as we know it. The Sex.com suit, and Kremen’s ensuing victory, proved that the internet is not as nebulous a place as was previously believed, even by government officials. Kremen’s realistic bent and flights of clairvoyance concerning domain name relevancy and acquisition, ideas such as Match.com, and molding companies based on internet interaction have allowed him to view this industry from every peak and valley of success since the formative days of internet industry. But Kremen’s experience is more than just a perennial presence gracing editorials such as Wired, Forbes, and The New York Times. His career path is also the story of how the internet came to be, which lends him a rare and sought-after credibility.

Kremen has seen the best. He has seen the worst. Now, you can see him at Domain Roundtable 2008. Only here can you converse with Gary and listen in as he shares tips on building and maintaining a viable virtual company, as well as divulges quips and concerns on the latest in domain name security. So don’t miss your chance to meet Gary Kremen in person!

What’s more, there’s still time to get your Early Bird conference tickets until February 1. Tickets normally run $1050 for guests, $1250 for full access passes. For a limited time, enjoy a $200 discount on all Domain Roundtable tickets. Visit www.domainroundtable.com for more information on reduced hotel rates and ways to receive promotion codes for discounts and coupons.

The Domain Roundtable team would also like to thank WhyPark.com for being the first to volunteer sponsorship for this year’s Roundtable Conference. Domain Roundtable would not be possible without sponsorship, and we would like to extend our gratitude for their generosity and support of Domain Roundtable.

We sold 16 domains in the auction today. The biggest bidding war was on Builder Loans.com. I expected more domains to sell. We had 150 viewers online during the auction. There was one technical glitch in the first 3 minutes, it seemed server lag. We started the process over again from the first lot and everything else ran good in the auction from that point. The software is still beta at this point but we are learning lessons every time we hold an auction.

There are a few domains that got bids after the auctioneer past on the lot with no bids, we are going to keep those lots open until the February auction.

Lessons learned from this auction:

• Pick better domains
• Pre-qualify metrics on domains using parking stats from parking companies.
• Make the user notes easier to write.
• Put a Chat Channel in the bidding room
• User count was 167 People watching, we should display user count.
• Pick better domains
• Good domains will always sell (BuilderLoans.com)

The bidding war on BuilderLoans.com took the domain from the $1,000 reserve to $8,000.

We have a 60 day contract right now to sell the remaining domains. If you have any interest in buying one of them please contact us at auctions@domaintools.com, we will be happy to work with you in trying to get you the domain.

Today is Auction Day. A few last minute changes that I wish to let everyone know about, they are mostly intuitive changes to the interface but I just wanted to cover them so that everyone is aware the legend has changes and we have made things easier to understand. Take a deep breath and relax, If you have already learned the older harder interface you should pick it up new interface rather quickly. The color coding chart has changed a bit and their are count down timers on most of the individual lots. These show people the estimated closing time and help with people multitasking. We encourage people to get their bids in early and not to wait until the last moment. We have a 30 second timer on every Lot that is closing, if any bid is received in the final 30 seconds the timer will be reset. There will be no sniping domains, you will have to wait that 30 seconds and hope no one else bids in that time period. If you bid in the last 2 seconds and your computer lags, don’t blame us, the timer always resets to 30 seconds, get your bids in as early as you can in that 30 second final period.

Live Auction Page:
http://www.domaintools.com/live-auction/bid.html

Auctioneer Follow Status:
The most important thing to be aware of is your Follow Status. You will being with this status Enabled. Which means if the auctioneer is looking at a lot, you will also be magically shown that lot as well. The auctioneer is the only one that can lower the gavel, so if you want to watch what the auctioneer is closing keep this status enabled. If you want to duke it out ahead of the auctioneer on a particular domain then you may want to disable this status by unclicking the checkbox. You will not be pulled to where the auctioneer is if you do uncheck it. We have color coded everything as well, the auctioneer’s movements can be tracked with the Yellow message boxes all over the screen. Anything the auctioneer does or instructs will be Yellow.

Getting eligible to Bid:
We have a BIG yellow auctioneer message at the top of the screen, it tells people if they are not eligible to bid. If you want to be eligible, get this taken care of well in advance of the auction beginning. Having a free DomainTools account and a Credit Card on file with a $1 verification purchased with it will ensure you are eligible to bid. PLEASE NOTE: We do not accept Paypal for this purpose. If you have any problems with this process, please call us at 206.838.9035.

Screen Shot:

Lots with Bids
In this picture we see that Grampa.com has some bids on it because it has a darker blue color. All domains in the auction with are still open will be blue. Dark Blue for lots with bids and Light Blue for lots with no bids yet. When the auctioneer is looking at the lot it will turn Yellow and when the auctioneer closes the Lot, it will turn Red. No more bids are allowed once the auctioneer has closed a Lot.

The Biggest Change:
The first and big change is the new estimated closing count down timer next to each lot in the auction. This will give people the ability to multi-task and check in on the auction as it progresses deeper into the auction. We have an estimated closing time next to each Lot. Checking back on this web page will let people know how close they are to the auctioneer closing the particular Lot.

Legend has been updated
The Legend is very straight forward now, if you remember the last one, forget it! All blue things are open lots that have not closed yet, if the lot is Yellow the auctioneer is on it and it will be closing soon. If the Lot is red, it is already closed and someone has won the domain(s) in that lot. The Orange color is reserved for the bidder. This is the area of the screen where the bidders should be bidding and watching the price going up. We hope all the changes make everything easier to follow. I want to hear feedback on the layout in the comments below, we are always working on this interface to make this the most intuitive live online auction interface.

Video Feed:
We have opted not to show a video feed for this auction because we have no floor bidders present for this live auction. We will have our video feed put back on the page for the DomainTools’ auction at the April Domain Roundtable conference hosted in San Francisco (If you have no signed up yet, Early Bird discount is now open).

Next Auction:
The next auction will be in February, it will also be an entirely online Live auction format. We will begin accepting domains for this auction at the conclusion of this auction.

I am confirming that Network Solutions steals domain ideas when people check domain availability on the Network Solutions website. They seem to have started the practice of stealing domain ideas on December 16th 2007 according to our Domain History database but I was just made aware of this practice today. I am appalled at the concept of taking people’s domain ideas and registering it before the consumer has the ability to manually register the domain.

It is a deplorable action that Network Solution would announce potential domain names to the entire world. If a customer chooses not to register the domain name with Network Solution they are forced to wait 4 days for Network Solutions to delete the domain name in the Free Add Grace period. After the four day hostage period the consumer is free from the hostage situation and can register the domain somewhere else. However Network Solutions has now exposed those domains to Domain Tasters that will snipe those domain up milliseconds after Network Solutions deletes them. By registering the domain Network Solutions is exposing the domain in the DNS and every computer in the world now knows about the domain. These domains are now easy fodder for scammers and it is mind blowing that Network Solutions would expose their customers queries to the world in this manner.

Domain has never been registered before:

Network Solutions is now the best friend of Domain Snipers and Spys. I tested the system by going to Network Solutions and looking up the availability of Neiman Marcus Verizon.com. Sure enough the domain was available to be registered, however when I check the whois it now said it was taken by Network Solutions. I was not able to register the domain at GoDaddy.

Network Solutions says it is available:

Network Solutions sets up a website on the domain:

The domain is now registered to Network Solutions, LLC

Network Solutions really screwed up on this one. The exposer of their customers was put before corporate profit on this one. If you use Network Solutions to check if a domain is available they will literally register the domain without your knowledge and hold it hostage for 4 days with a price tag of $34.99.

This easily makes Network Solutions the worst Registrar in the world. I hope that they cease this activity immediately as this has given them the worst black eye and makes the entire industry look bad. They actually think they are doing customers favors with this little dirty trick. These guys are clueless!

UPDATE: Network Solution has made some improvements.

Imagine if when people purchased houses they were not allowed to have mortgages. Sit back and just ponder that for a minute before reading the rest of the article…. Now that you have thought about it, I will walk you through what would happen in a world that did not have mortgages. The result would be that 95% of the people that currently own a house would not able to purchase that house in our current world. Those people that need houses, truly need them would not be able to own them. Who would own them then in this alternate reality? The answer is the same people. Are you confused yet? The market would adapt, the cost of a home would be less. Perhaps houses would be made cheaper as well. The law of supply and demand is the equilibrium of this world that sets prices. If multiple people demand something then it is sold to the person that can pay the most. The mortgage is a tool that allows people to stretch their purchasing power and afford the expensive house. We see a lot of domain sales for mid caliber names right now that range from $50K to $2M. Where are all the $5M to $50M dollar sales? The answer is simple, there are no mortgages for domain names right now. Once this happens the price of domains will skyrocket upwards. Owning a generic domain right now is like owning property at the turn of last century. The tools are just not available for people right now to own the truly signature generics. Leveraging third party capital is the smartest way to own any asset, it does not matter what the asset is. If the appreciation rate on an asset is cheaper then the interest rate of the asset then those assets will increase in value and it is an easy decision.

When people can purchase $10M dollar domains for $500K down with a 5 percent interest rate that is when we will see the most valuable of domain names start trading hands with the smaller investors. The small investor right now doesn’t have the full $10M in cash and it would be stupid to put that much on one investment. Before the big banks step in with their 5% interest rates we will not see much movement in these marque domains. Until real banks give loans I expect double or triple that interest rate from early investors that act as bankers.

Travel.com is easily worth $50 Million. However not one domain investor has a wallet big enough to afford swallowing it in one bite. No one buys assets that big with all cash. Domains like these will never trade hands until institutional money starts backing our industry.

In 2008, I predict we will see more financing options appear, but still no major institutional money with mortgage rates as low as houses will appear. It will get easier for domainers to afford great generic domains this year, however until institutional money emerges the giant names like Travel.com will be off the table. The good news is that some giant domains will trade hands this next year. Everyone wants liquitity and some can’t wait for the golden day to arrive. So those that sell these premium domains will do it at a deep discount of what the real value should be in the future. There is a lot of room to invest in domains right now. The price of domains is not going down anytime soon and when institutional loans arrive the price is only going to go shoot up.

Now for my disclaimer for all the people that have low value domains, Let me state this clearly so people are not confused, some domains have no value or little value. A great domain is not a great domain just because it has 95% of the letters of a great domain. Truly generic signature domains are the ones I am talking about. Money.com, Travel.com, Sex.com, France.com, and others of this caliber. The less desirable domains will still trade with 100% cash and have no financing available even when institutional money arrives in a few years.

If you can afford a domain like Travel.com for $10M right now, you will be laughing all the way to the bank in a few years when financing catches up with our industry. $10 Million would be a steal for anyone that purchased Travel.com at this price. Not many people can purchase with all cash right now, but those that do get a good discount because there is a small supply of super rich guys with all cash offers. It all comes back to supply and demand. How many people purchase a house with all cash? If I was the owner of Travel.com I would never sell for $10 Million right now. I would hold out until the institutional money shows up and allows purchase prices to climb into the 10 digit range. Hotels.com was purchased for a song a few years ago, the new owners of this property now know the true power of generic signature domains.

For investors this year, I give the advise to buy cheap. Look for the hundred million dollar domains and go purchase them for 1 or 2 million. You will not find them at auction, you will find them buried under a rock or behind a dysfunctional company.

Oversee.net announced today that they have acquired Moniker but the terms of the transaction were not disclosed, however it was believed to be around $26 Million dollar transaction. Monte Cahn has agreed to a multi-year commitment with Oversee by continuing to run Moniker.

Oversee also acquired SnapNames in May of 2007 for around $35 Million. Oversee will leverage the two divisions’ capabilities by adding Moniker’s live auction and back-office services to SnapNames Live.

The first demonstration of the integration will be at DOMAINfest Global later this month, where SnapNames Live will lead and conduct the auction, with Moniker providing valuation and escrow services. More integrated services are planned, including:

• Deepening Moniker’s continuing commitment to its auction partners through the use of the SnapNames Live technology in Moniker-managed auctions
• The addition of DomainSponsor as an available option in Moniker’s TrafficClub monetization service
• Availability of Moniker’s registrar services for SnapNames and DomainSponsor customers
• Inclusion of traffic and monetization history as data for domain name auctions
• A complete set of Domain Asset Management services that offer domain owners all the tools necessary to profitably manage their domains

Commenting on the transaction, Moniker CEO Cahn said, “Oversee’s advanced technology platform and strong financial resources give us the capability to focus on further expanding our market opportunity. This is a dynamic industry, and our collaboration with SnapNames puts Oversee well ahead of any competitor. This is a tremendous opportunity for Oversee and Moniker.”

“We are delighted that Monte Cahn and his team of experienced professionals are becoming part of the Oversee family, Our primary objective, as a company, is to continue adding and developing capabilities that offer customers a greater breadth of products and services. Moniker is widely respected by industry players and has a reputation for knowledge, security, and professionalism.” said Lawrence Ng, Chief Executive Officer and Co-Founder of Oversee.

Personally I am glad to hear that SnapNames will be including traffic and monetization history into their auction service. This is a move in the right direction and DomainTools is also seeking expand on what we already do in the Auction space by providing this data. We will work with all leading parking companies to make the history and stats available when domains are being purchased at auction. I am working on an open standard for sharing this information along with secure authorization procedures for access to that data. I believe the next evolution for our industry will be more visibility into the domain history and monetization performance.