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The Lowdown

June 2006 Archive

Here's the The Lowdown from DNJournal.com! Updated daily to fill you in on the latest buzz going around the domain name industry!

Compiled by Ron Jackson (Editor/Publisher)
& Ray Hackney (DN Journal Special Correspondent)


Domain owners are invited to gather in Barcelona, Spain July 25-27 for a European Domain Fest being sponsored by DomainSponsor.com and EuroDNS.com. The event will be held at the spectacular Hotel Arts - Ritz Carlton and there will be NO registration fee! The sponsors are covering the cost for most of the meals, cocktail receptions and entertainment so attendees will only need to handle their own hotel and travel expenses. Organizers say the primary focus of the conference will be on creating new business opportunities and sharing industry-related ideas. You are invited to RSVP at www.domainermeeting.eu. For more information you can send an email to [email protected].
Posted June 30, 2006

The online edition of the Melbourne, Australia newspaper The Age joined the parade of mainstream media outlets writing about the domain business this week with an article titled "Property Boom Shifts Online" by Louisa Hearn. The article was aimed at readers who are unfamiliar with this business, so there is nothing in the article that veteran domain investors won't already be familiar with. However, it was nice to see a straight forward factual account of the business, rather than the kind of articles we've seen this month that have been tainted by biased or ill-informed writers who recklessly tried to tar all domain owners with the cybersquatter brush. 
Posted June 29, 2006   

The ICANN Meeting in Marrakech, Morocco got underway yesterday (June 27) with a much anticipated Domain Name Marketplace Workshop. Jothan Frakes, who produces the Domain Roundtable Conference, served as moderator for the session and sent us a link to a complete transcript of what was said during the workshop that featured a number of industry leaders.
Posted June 28, 2006

According to Advertising Age magazine, a seismic shift in where advertisers spend their money may be occurring this year. The network TV "upfront" season is currently underway (the period in which advertisers book time for the upcoming fall TV season) and it looks like TV's take could plunge by up to $600 million this year. The magazine reports the money is going to new digital options like the web that have given marketers far more bargaining power in their dealings with the TV networks. For domainers PPC income usually slumps in the summer, but many are reporting higher revenue than ever this year. It appears that boom is being fueled by ad dollars continuing to migrate into our space from old media outlets.
Posted June 27, 2006

Germany's .de extension hit 10 million registrations Monday (June 26), joining .com as the only extensions to pass that landmark. A press release from Denic.de (operators of the .de extension) said domain #10,000,000 was huettenberger-case-fabrik.de, registered by a manufacturer of transport cases from Linden, a small town in the vicinity of Frankfurt
Posted June 27, 2006

Domain developers who currently rely on Google Adsense for revenue may soon be able to tap another income source that the search leader is currently testing. According to a Google email posted in a blog entry by David Jackson at SeekingAlpha.com, Google is looking at a CPA (cost per action) ad program in which the advertiser would pay only when surfers click a link and go on to perform a specific action, such as making a purchase or providing an email address. Typically generation of a lead or sale will pay considerably more than a simple click that does not require a follow-up action. If the new program is implemented it would be separate from AdSense so publishers could run ads from both programs at the same time.
Posted June 26, 2006

EURid, the operator of the .eu registry, says that those who acquired domains during the rollout of the European Union's new extension through use of false or misleading information could have their registrations revoked at any time. However, according to Out-Law.com, EURid spokesman Patrik Linden said those who broke the rules to get prime .eu domains could keep the money if they are able to sell them before getting caught. The .eu rollout has been plagued with controversy with some registrars,  including GoDaddy,com, claiming that U.S. profiteers took advantage of a lax EURid system to stockpile valuable domain names against its rules.
Posted June 23, 2006

Verisign (Nasdaq: VRSN) shares got a boost Wednesday when stock analyst Gregg Moskowitz of Susquehanna predicted the company would get a big increase in revenue if the controversial ICANN-Verisign .com agreement is approved by the U.S. Department of Commerce. The agreement would allow Verisign to raise .com registration fees four times over the next six years. John Berard, the spokesman for the Coalition for ICANN Transparency, a trade group that opposes ratification of the agreement, said today's financial news undermines persistently repeated statements supporting the deal (which is the subject of antitrust litigation in federal court and is currently being looked at by a Congressional committee). Berard said, “When ICANN general counsel John Jeffrey and VeriSign Internet Advisory Board member Rick White told Congress two weeks ago that there were ‘no major differences’ between the current contract and the proposed deal and that just because VeriSign can increase prices without review didn’t mean they would, they drew laughs.  Press reports today quoting financial analysts who say the 2008 impact should be large puts the lie to those statements." Berard added, "ICANN has let VeriSign browbeat it into a bad deal. No one objects to VeriSign running the .COM database as they now do.  ICANN should use the time between now and the end of that contract in September to rebid it for the benefit of all.” 
Posted June 22, 2006

According to a new Harris Poll, the number of American adults using the Internet continues to show steady growth, with 77% now online at home, work, school or other location. That is 172 million surfers, a 5% increase in the total number online over the past year. When Harris Interactive first started tracking Internet use in 1995, only 9% of American adults were using the web. By 2000, the number had shot up to 57%. The new report also provides a breakdown in demographic use of the web. Not surprisingly, Internet users tend to be younger and more affluent than non-users. Those demos are especially attractive to advertisers and are helping to drive the continuing flight of ad dollars from old media to the web.
Posted June 21, 2006

Oversee.net, the operators of leading domain monetization service DomainSponsor.com, today announced their acquisition of a privately-held portfolio of 35,000 domain names. Commenting on the transaction, Oversee.net CEO Lawrence Ng said, "The domain industry is undergoing significant change. While it is consolidating on some fronts, there is escalating interest in the acquisition of domain names and direct navigation traffic." Ng added, "this deal was executed in record time. Unlike financial players, our technology gives us a distinct advantage in evaluating portfolios. We have the knowledge and resources to close an acquisition in a matter of days." The company says it monetizes more than one million domain names and has more than 100 million unique visitors per month.
Posted June 20, 2006

.FR, the country code for France is opening to individual registrations starting tomorrow - Tuesday, June 20th. The French ccTLD was previously limited to companies, organizations and holders of trademarks valid in France. Starting June 20 there will be only two conditions for eligibility: the registrant must be over 18 years old and able to provide an address in France. AFNIC, the operator of the .fr registry, has accredited several registrars to offer .fr domains. One of those, EuroDNS.com, said they will provide a 50% discount on .fr registrations with the promotional code: FR50PR.
Posted June 19, 2006

Jeff Baron of Compana.com, whose company had a representative at the Congressional hearing into the proposed ICANN-Verisign .com agreement June 7 (see items further down in this column), tells us he believes momentum opposing the agreement is getting stronger. The House committee invited domainers to submit their views on the controversial agreement by Wednesday, June 21 but there has been little publicity about where your letters should be sent. They can be FAXed to either (202) 225-3587 or (202) 225 7209 or emailed to [email protected]. Address your comments to:
The Hon. Donald Manzullo
Committee on Small Business
U.S. House of Representatives
Washington, DC 20515

Posted June 18, 2006

In view of the item we posted yesterday, this would be a good time to address the misuse of the word "cybersquatter" that we unfortunately still see from time to time in the mainstream press. Erick Schonfeld's justification for mistakenly labeling domainers as "cybersquatters" (see June 14 item below this entry) was that he found a definition in one dictionary that did not refer to trademarks, defining a cybersquatter as "a person who buys one or more commercially viable domain names for the purpose of reselling for a profit". That is obviously a dictionary that needs updating since, as one domainer pointed out in a reply to Schonfeld's blog (with many sources cited) the term is universally understood to refer to trademark domains only. The original word "squatter" is defined as “someone who settles on land without right or title". The cyber prefix was added only to produce an internet equivalent of the word squatter. Domain owners have purchased the rights to their domains so they are obviously not squatters.  

Even if someone accepted the virtually unrecognized definition of the term Schonfeld cites, it is still inaccurate in referring to people who park domains. Many, like giant portfolio holder Name Administration, do not offer to resell domains, so clearly do not meet the definition of the word even as Schonfeld so carelessly uses it. Regardless of the semantics, the important thing is that "cybersquatter" is viewed by generic domain investors as a derogatory and insulting term and for that reason alone should never be used in referring to them. It is a situation similar to what you have with the word "coon". The primary dictionary definition is harmless enough - a "North American raccoon", yet directed at the wrong person it becomes a racial slur (as a St. Louis DJ found out when he used the word in referring to Secretary of State Condoleeza Rice and was immediately fired). 

If you call a generic domain owner a cybersquatter it is a blatant insult (and if you say it to a generic domain owner face-to-face you may find that your nose has suddenly been realigned, just as it might be if you went around spouting racial slurs). As they did with Schonfeld, domain owners are right to call out people who cavalierly apply this ugly term to honest investors in a legitimate business that is attracting some of America’s best known capital investors.
Posted June 15, 2006

In one of the most ignorant comments we've seen from a mainstream business reporter to date,  Business 2.0 Magazine's Erick Schonfeld labeled domain investors as "The New Cybersquatters" in a stunningly misinformed blog entry yesterday. Never mind that cybersquatting involves unauthorized use of trademarked names and has nothing to do with the generic domains most investors specialize in. We feel such irresponsible use of this insulting term is no different than using the "N" word to refer to black people. That may sound like hyperbole, but I believe there is no difference between slurs because the original intent of all slurs is to dehumanize and belittle the person being smeared. Left unchallenged, the notion that generic domain investors are all cybersquatters will make it OK to take away their rights and property (domains) because, hey, after all, they are just cybersquatters. Obviously that kind of damage cannot be compared to the great horrors of history like the Holocaust and slavery that resulted when people were allowed to be treated as less than human and undeserving of the rights everyone else has. However at the root level (the initial use of any slur) the aim is the same. In this case, I believe it has to be nipped in the bud and the word "cybersquatter" when misapplied, as it is so often, needs to be as regarded with as much contempt as any other slur. It's an insult to you and an insult to such mainstream businessmen as Starbucks Chairman Howard Schultz, MySpace co-founder Richard Rosenblatt and Ross Perot who are among those  investing big money in the domain space. 

Domains simply represent another valid and very effective advertising channel, one that is growing rapidly because it helps guide consumers to products they want. Would Schonfeld insult advertisers who use his magazine to reach consumers? Maybe he he would like to call them "snake oil salesman" or some other grossly inappropriate term. It was heartening to see Schonfeld blasted for his comments by many from the domain community, quickly forcing him to prevent others from commenting in his blog when it became too hot in the kitchen for him. While he is certainly free to express his opinion, we have to think a reputable magazine like Business 2.0 (which ran the first major magazine article on the domain industry last December) must be embarrassed to have such an offensive and inaccurate characterization made in their name.
Posted June 14, 2006

40% of online retailers expect to see their businesses grow 30% over 2005 according to a survey commissioned by InternetRetailer.com. 47.5% of the businesses that participated in the survey expect growth rates ranging from 10%-30% while just 12.5% anticipate a yearly gain of less than 10%. While web-based business continue to boom, their brick & mortar counterparts aren't doing so well. The same report says that 39.5% of chain retailers, catalogers and consumer brand manufacturers are ready to reduce expenses, including their marketing, fulfillment and general overhead, to sustain profitability. 
Posted June 13, 2006

The move by large portfolio owners to try to increase revenues by adding content to their domains continues to gain momentum. Internet REIT announced a partnership with Associated Content today to provide relevant user-generated content across multiple iREIT sites including Netster.com, Consulting.com, HispanoMundo.com, MovieClips.com and MutualFunds.com. iREIT CEO Bob Martin said, "Associated Content allows us to quickly enhance the information available on many of our sites without having to generate this unique content in-house, which gives us significant leverage as we continue our rapid growth."  Associated Content pays its online community of Content Producers for original audio, video and text and then publishes this content across its partner sites, as well as on their own site.  
Posted June 13, 2006

YesDirect (operators of BuyDomains.com) has a new name. The company was rechristened as NameMedia today. The company also announced its new Direct Search platform designed to give online advertisers access to its rapidly growing network of search destinations that currently attracts more than 25 million visitors each month. NameMedia is backed by Highland Capital Partners and Summit Partners. Over the last year, it has acquired a leading domain reseller, BuyDomains, a well-known PPC (pay per click) parking service, GoldKey.com, and dozens of smaller domain collections to create the world's largest domain portfolio, one that now contains more than 1 million names. Also today the company named Kelly Conlin as its CEO. Conlin has been CEO of technology media company IDG and targeted media company Primedia. His experience also includes CNN and the New York Times. “Domain names are the real estate of the Internet,” Conlin said. “They provide opportunities to buy, sell and develop property. With such a large collection of undeveloped real estate, we have a compelling platform for creating a media company that leverages Direct Search while continuing to be the leading buyer and seller of premium domain properties.”
Posted June 12, 2006

The percentage of American homes with high-speed internet access soared from 30% to 42% in the year ending March 2006 according to the 2006 Home Broadband Adoption Report from the Pew Internet & American Life Project. The report showed that wider access to high speed connections has accelerated consumer-generated media (CGM) on the Internet (and the purchase of domain names that usually accompanies new blogs and personal websites). Based on two U.S. telephone tracking surveys, the report estimated that 35% of all Internet users (48 million people) have posted content to the web, including blogs, web pages and self-created content like videos, artwork or articles. An even higher percentage of home broadband users (42%) have posted content to the Internet. This group accounts for 73% of all home Internet users who were the source of online content.
Posted June 9, 2006

Muinish Krishan of Netsphere was among those who submitted a letter of testimony to the U.S. Congressional Committee looking into the proposed ICANN-Verisign .com agreement (see items below). Krishan said that the small business community is “asking for a market where small business can invest and grow in a market without fear that a corporation in a monopoly position, protected by ICANN, will attempt to hijack successful business models to the exclusion of competitors. The proposed agreement provides for VeriSign to have exclusive access to [traffic] data for its own commercial benefit," Krishan said. "Currently, we obtain this data through other sources, and it is essential to our business; without it, we would no longer order new domain name registrations. This poses a threat to our existence without providing any benefit to marketers or consumers.”  You can read his full testimony here. Silicon.com also posted a good synopsis of yesterday's hearings on their site today.
Posted June 8, 2006

Here's an update on the congressional hearing into the controversial ICANN-Verisign .com agreement held June 7 in Washington, D.C. One of the more interesting comments came from Network Solutions CEO Champ Mitchell whose company was once owned by Verisign. Mitchell said  the .Com deal "shocks the conscience." He added that there was no need to rush to a bad judgment as discussions on the future of the Memorandum of Understanding between ICANN and the Department of Commerce is underway and the current .com contract is not scheduled to end until next fall. Committee members apparently agreed with the go slow approach, deciding to accept written public comments on the proposed agreement for the next two weeks.
Posted June 7, 2006

The U.S. House of Representatives hearing on the proposed ICANN-Verisign .COM agreement (see 2nd item below this post) opened today in Washington D.C. with Internet REIT President Marc Ostrofsky among those who submitted testimony against ratification of the agreement. Ostrofsky said "it will raise significantly the cost of doing business without sufficient justification, it ignores and shuts the door to alternatives which could decrease these costs by a significant amount, and it opens the door to unfair competition by VeriSign. Ostrofsky said the contract would cost his company over $1 million a year in additional domain registration costs. Ostrofsky added, "The contract gives VeriSign almost unfettered discretion to unilaterally raise rates with little to no accountability. Not only does the VeriSign contract assure increased costs, by entering into it ICANN will have turned its back on other potential bidders who could greatly decrease current costs." The full text of Ostrofsky's statement to the Committee can be read here. Yesterday the Coalition for ICANN Transparency (CFIT) issued a formal statement to the Committee as well as a press release asking the Congressmen to act on behalf of the Internet community whose wishes CFIT says have been ignored by the ICANN-Verisign deal.
Posted June 7, 2006

We have posted a number of items about the migration of advertising dollars from old media outlets, especially newspapers, to the web. However, there has been one silver lining for print media. ClickZ News reports that online newspaper ad spending soared 35% to more than $613 million in the first quarter of 2006 compared to the same quarter a year earlier. Until recently, many newspaper publishers provided web advertising as free add-ons to print ad orders but now Peter Krasilovsky of local media consulting firm Krasilovsky Consulting says "Newspapers are beginning to establish separate value for their online ads. That accounts for some new dollars coming into the stream." 
Posted June 6, 2006

The U.S. House of Representatives Committee on Small Business will hold a hearing on the controversial proposed .COM agreement between ICANN and Verisign on Wednesday, June 7 at 2:00 p.m. The congressional session has been labeled "Contracting the Internet: Does ICANN create a Barrier to Small Business?" John Berard of the Coalition for ICANN Transparency (CFIT.info), a trade organization that has been lobbying against ratification of the agreement, said "Ever since the ICANN board cast its contentious 9-6 vote on the proposed .COM agreement the Internet community has voiced continued opposition on the matter. This hearing is yet more evidence that the .COM deal is wrong for the community and is wrong for small business. By granting VeriSign a perpetual monopoly to the .COM registry, the Internet community will be faced with unjust price increases and a continued erosion of the check-and balances."
Posted June 2, 2006

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