domains (at least those of the generic top level domains, such as .com and
.net) are a public resource available for registration by anyone who
wants to pay the fee.
right to register names is not unlimited, as trademark rights should
not be infringed.
process of registering domain names should be straightforward,
transparent, and available to everyone with access to the Internet
on an equal basis.
I will assume that readers have already
familiarized themselves with the basic principles of the proposed
WLS, so I wonít rehash those here. Instead letís review the
current system for acquiring expiring domain names to see why a
change is needed.
At the time of this writing, valuable domain
names that transition from registered to unregistered
("expiring domains") status are registered within
fractions of a second, primarily by the registrars for various
expiring names services, including Snapnames, NameWinner, Pool, eNom
Drop Club, DropWizard, GoDaddy, and others.
In addition to these public services, there are
registrars active in acquiring expiring domains for private
individual accounts, especially for two major powers in the domain
names business, Buy Domains (BD) and Ultimate Search (Ult).
Buy Domains principally purchases domain names for resale.
Ultimate Search principally purchases domain names for the
traffic they produce.
At one time many individuals were competing for
expiring domains during the daily drop time. However it now has come
down to having close proximity to the registry and significant
"bandwidth". This pretty well limits the game for truly
valuable expiring domains to the registrars who have special
SnapNames and GoDaddy are fixed price services,
where a seeker of an expiring domain pays a fee for the privilege of
being the unique party to acquire a specific domain if the service
(through one of its registrars) successfully acquires the domain.
The WLS is modeled after the Snapnames service, and in fact
Snapnames will provide the technology used to implement WLS.
The principal difference between the current Snapback product
and WLS subscriptions is that a Snapback only provides the holder
with a chance at obtaining a name if it actually expires.
On the other hand, a WLS subscription will offer the holder a
100% guarantee of securing a specific domain, IF it is deleted.
All of the other mentioned services are
auction-based services. Namewinner,
for example, conducts an auction in which the high bidder gets the
sought after domain IF Namewinner is successful in acquiring the
domain. If the winning bid is say, $3,000 then that is the amount
the successful bidder must pay.
Pool.com has a slightly different auction model.
At Pool, customers pay $60 if Pool is successful in securing
the domain they want AND the seeker is the only party at Pool who
ordered the domain prior to the drop.
However, for names acquired by Pool that had multiple
interested parties placing orders, Pool conducts a 72-hour auction
involving only those who were willing to pay at least $60 before the
What has shifted significantly lately (long
after WLS was first proposed by Verisign and accepted in principle
by ICANN), is that more and more of the better names are being won
by the auction based services.
Where a typical domain seeker might have paid less than $70
in the past for a chance at snaring a good name, today the cost has
skyrocketed many times beyond that. Take mirror.net for example.
This domain was acquired by Pool.com and went to the high bidder for
$1,550. The bidding
system at Pool involves proxy bidding so the successful bidder had
actually bid a maximum bid of $5,001. If another party had really
wanted this domain, they would have had to pay at least $5,002!
We know that the wholesale cost for all .com
and .net domains is only $6, so who got the added $1,544 in profit
on the registration of mirror.net?
It was split between Pool and the affiliated registrar that
caught the domain on their behalf.
So, in a situation where just one year earlier a good (but
not great) domain like mirror.net might have been secured for $70
through SnapNames, this name went for $1,550 in the summer of 2003.
This leads to my #1 argument in favor of WLS:
Without WLS, most of
the value of the better expiring domain names will end up as profit
to the Expiring Domain services and their affiliated registrars. This
trend is already happening and most people in the expiring domain
business are well aware of that fact.
This is in direct conflict with Domain Basic
Principle #1 stated at the beginning of this article.
Since there are numerous services like Pool and
Namewinner, the average person would have no way of knowing an
optimal overall strategy for acquiring a specific expiring domain.
The existing system also is in conflict with Domain Basic Principle
#3. The current system
is not straightforward, nor is it transparent (who knows what really
goes on at Namewinner or Pool?), nor is it equally available to
everyone. One has to do a lot of research to even learn of the
existence of these different services. There is no central place for
an interested party to quickly learn what they need to do to have a
chance a securing a domain that may expire.
However, the fact that the current system violates the
Domain Basic Principles does not mean that WLS automatically would be consistent
with the Principles. So,
let's take a look at WLS in that light.
would be equally available to everyone.
It is true that in the rollout of WLS there is the
possibility that someone with a lot of funds could purchase WLS
subscriptions on most of the valuable domains.
However, of the millions of .com and .net domains registered,
there are approximately 1 million that are sufficiently valuable
that someone would be likely to purchase a WLS subscription on them.
Is there really a single party out there willing to suddenly spend
$40 million in one moment of time on the rollout of WLS?
Just as not all domains are registered at one
instant of time when a new Top Level Domain (TLD) is offered, it is
likely that intelligent parties will try to place WLS subscriptions
primarily on domains with a reasonable chance of actually expiring
during the term of the subscription.
Clearly, domains like sex.com and cars.com
(highly valuable generic commercial .coms) will have a WLS placed on
them without regard to the expiration date.
Someone will want the WLS even if the name is 5 years from
expiration, and highly unlikely to ever expire.
Those names are unlikely to drop ever, so they really do not
However, names like mirror.net or even
mirror.com might drop in the future.
It is likely that someone who has a strong desire to own
mirror.net would be willing to pay for a WLS subscription even if
the name is 2 or 3 years from expiration.
However, it is unlikely that a domain name speculator with
any success in the business would spend their WLS funds on a good,
but not great, domain that is 2 or 3 years from expiration.
This is one of the best aspects of WLS:
It really gives an opportunity to ordinary people, those not
associated with the domain business, to acquire a name that they
really want at a reasonable cost.
For example, the owner of DavesDeli.net would really
like to own DavesDeli.com.
Even though the name is 15 months from expiration, Dave
decides it is worth $40 to him to make sure that if the name ever
becomes available, that he will be the one person to get it.
Dave renews the WLS subscription after the
first year. Then, if
the name expires, Dave gets the name.
If a name like DavesDeli.com expires without WLS, a
speculator might pick it up. From a speculator, Dave might have to spend a thousand
dollars or more to acquire the domain.
With WLS, Dave, who is patient, has the opportunity to get
the name if the owner of DavesDeli.com goes out of business, changes
his business name, or decides that having a website is not important
to his business.
Another reason that some domain speculators
favor WLS is the belief that "WLS will level the playing
field". They say
this with particular reference to Buy Domains, Ultimate Search, and
some of the other big players in the expiring domain business with
private registry connections. Will WLS level the playing field?
The answer is both "no" and
or almost any reasonable system for distributing prized expiring
domains, is not going to enable a novice speculator with limited
time and resources to compete with the major players for most names.
The major players can invest in custom software and more WLS
subscriptions. In that respect, WLS will not level the playing field.
However, when an individual does their research and
determines that a particular domain is likely to drop, they will now
be able to buy a WLS subscription just as easily as anyone else.
They can buy the WLS subscription as early as they feel it
makes sense to do so. In
that respect, WLS does level the playing field.
As it is now, BuyDomains.com can beat just
about anyone to a domain that they want because, in addition to
subscribing to the major drop services like Snapnames, Namewinner
and Pool, BuyDomains has registrars that work specifically for them
in acquiring the best names. Furthermore,
BuyDomains will outbid most other players for names on Namewinner or
Some people oppose WLS because they do not like
Verisign (owner of Network Solutions, Inc, the original monopoly
registrar of .com, .net and .org domains).
On the other hand, almost everyone serious about domains is
willing to register .com and .net domains.
Of course, each .com or .net registration results in income
to Verisign, who has a logical monopoly on the .com and .net
This is a logical monopoly because only one
party can take responsibility for managing the registry itself. The same situation will prevail with WLS. You will be able to
purchase a subscription from whichever registrar you want (not all
registrars will participate in WLS initially, but all will
eventually if WLS succeeds). However,
under the registrar layer, there will be Verisign. They will earn
income on every WLS subscription, just as they now earn income on
every .com or .net registration.
This article is meant as a counter-argument to
many who are opposed to WLS rather than a pro-WLS argument. I
suggest that you forget about antipathy towards Verisign and ask
yourself the following basic question:
Will WLS distribute expiring domains in a more equitable, more
transparent, manner than the current system? I believe that
the answer is yes and that is why I support WLS.
If you would like to comment on Howard Hoffmanís article, write firstname.lastname@example.org.
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