Domain Goldrush Part 3 - Wild Wild West

The expiring domains goldrush, previously described in Part 1 of this series, is over - at least as far as the average domain speculator is concerned. As recently as six months ago anyone with a PC, a browser, and a good idea of when a hot domain name was going to expire, had a good chance of grabbing it, and often they'd make a small fortune in the process. But these sorts of grabs are fast becoming a distant Internet memory.

Big Business Strikes Back!

So what's happened to change the situation in such a short time? Big business, that's what. ICANN registrars and assorted "partners" have woken up to the booming expiring domains industry, and are doing everything possible to get in on the act, especially since many now struggle to cope with the low margins in their normal registration business. But this transformation from a small cottage industry into something every ICANN registrar wants to get involved in has produced what can only be described as a "wild west" atmosphere.

The Dawn of a New Era

Consider what transpired on June 11th, 2001. There was a massive "drop" of expiring domains. Somewhere in the region of 40,000 names became available for registration, including many valuable 3-letter dot coms and generic one-word names. Six months ago most of these names, which could be worth millions of dollars on the secondary market, would have quietly been picked up by savvy domain pros. But what happened on the 11th shows just how much the atmosphere has changed, and how enormous tensions are developing between ICANN registrars.

The dot com registry, run by Verisign Inc., has rules that stipulate that each ICANN registrar can only open a certain number of server connections to the registry. In theory these rules should prevent any one registrar from monopolizing the resources of the shared registry system.

But at 6.30 AM on the 11th June, all hell broke loose.

At least one ICANN registrar (possibly more) allowed its customers to open far more than the permitted number of server connections. The result was chaos. Other ICANN registrars were almost entirely "shut out" of the registry. One company that registers names on behalf of clients said it could only open 2.5% of its normal server connections. It was the domain name equivalent of a DOS (Denial of Service) attack. But in this case, the perpetrator of the DOS attack profited by grabbing thousands of valuable names, while all the other registrars and their customers were left starting at error messages.

So what can be done to prevent this kind of thing happening again? Dan Halloran, the Chief Registrar Liaison at ICANN said he was "confident that the registry operator has in place the policies and technology that it needs to ensure fair access. Any repeated or intentional abuse will undoubtedly be dealt with very strongly by the registry operator."

Others don't share his faith in Verisign's desire or ability to stamp down on this kind of abuse. One industry source put it like this: "The Registry only reprimanded them. There are no teeth to the Registry's reaction, and thus no disincentive against another occurrence." And he's right. All that happened was that the offending registrars received e-mails from Verisign asking them to close down some connections. But by the time they did, the damage had already been done. The names had been grabbed and other registrars were left counting the cost.

Against this backdrop of lax enforcement of the registry rules coupled with what seems to be a complete absence of real penalties, the market is doing what the market does most effectively: taking over. Don't be surprised if other registrars begin "accidentally" over-stepping their allotted connections in the hope of grabbing names. If they don't, they'll have to answer to their "partners". Who are these partners? High-volume speculators who pay registrars in order to get preferential treatment over all other customers of the registrar.

The End of Equal Access

This in-fighting between ICANN registrars is all very interesting, but what of it? How does it affect end users? Well here's the killer: ICANN registrars are starting to make announcements about giving special privileges to their partners during drops. Registrars are now formally handing over their most precious asset, their connection to the registry, in exchange for hard cash. They claim it won't affect 'normal' customers but this claim seems hard to justify, even ludicrous. Here's how one registrar advertised their service:

"After the club member lists have been run we will open up again to the rest of the community."

Does that seem like fair and equal access to you? If you are a "normal" customer of one of the registrars who offer these services, and you attempt to register a name during the drop, it's very simple: you won't be able to. All the bandwidth will have been allocated to VIP customers.

Bear in mind that registrars were accredited by ICANN precisely for the purpose of democratically serving all customers. Also note that this service is going to cost around $1000 per month. Who can afford that kind of money except domain speculators? Currently the only affordable service for people who want in on some deleted name action is SnapNames and their Snap-Back service. They charge $49 per domain name, and offer refunds for names they fail to grab. That is reasonable. Charging $1000 per month to rent out bandwidth is a whole different ball-game.

What Next?

The way things are going, the next logical step is for registrars to abandon their "normal" customers completely, and just catering to speculators. VIPRegistrar.com anyone?

So the next time you want to register a domain name and the registration system takes forever to respond, you might want to glance at the clock. It could well be 6.30 AM in New York, and this time's been "booked in advance" by someone with more money than you. Welcome to the new frontier - the domain name wild wild west.

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