The Man Who Owns the Internet

Tefen writes "CNN Money posted this story about Kevin Ham, who has made a fortune gobbling up lapsed domain names and has recently launched a lucrative business partnership with Cameroon, the country which controls the .cm TLD. Since 2000 he has quietly cobbled together a portfolio of some 300,000 domains that, combined with several other ventures, generate an estimated $70 million a year in revenue."

Comments

So the market sure is promoting innovation

[andy314159pi]

Kevin Ham, who has made a fortune gobbling up lapsed domain names

The market sure is promoting innovation. He should feel proud of his great contributions and he has justly been rewarded.

Re:So the market sure is promoting innovation

[timeOday]

IF I made a fortune gobbling up prime real estate, nobody would care.

I would. Real estate flippers are leeches on society. Let's say you buy a plot of land for $1M and sell it for $2M two years later. Where does that money come from? Ultimately, it has to come from somebody who worked to produce something useful. People cry and scream about a welfare recipient who might receive $100K over their lifetime - what about the trust fund babies and market squatters who never produce anything yet consume millions during their lifetime? They are the biggest leeches of all.

Re:So the market sure is promoting innovation

[Anonymous Coward]

You're an idiot. Obviously if someone can sell the land for $2M two years later, there's some buyer who thinks it's worth it. No one *makes* them buy it at that price. However, when the government takes my money at gunpoint and gives it to the welfare recipient, I never get the option to say, "No thanks, too rich for me". That's a very big difference.

The guy who bought it for $1M may have just found an ignorant seller who under-priced it. Perhaps it really did appreciate 100% in two years because of other influences in the local economy. Remember, it's an investment and it's certainly possible the guy who bought it for $1M would have trouble selling it for $500K two years later. It's all about risk and reward.

Re:So the market sure is promoting innovation

[Chineseyes]

Let's say you buy a plot of land for $1M and sell it for $2M two years later. Where does that money come from?

Its funny how when people look at someone making $$ they always focus on the REWARD and never on the RISK

Let's say you buy a plot of land for $1M and sell it for $500K two years later. Where does that money come from? Yeah thats right the investors pocket. And thats not even including the taxes, insurance, $$ spent on improvements, interest paid on the loan the investor took out (flippers almost always use OPM in order to stay liquid), the points you get raped for by mortgage bankers on a residential deal and commercial lending is 100 times worse because there are no limits on the amount of points that can be charged.
Your comment wreaks of someone who never looks at the entire picture and probably watched some stupid "reality tv" show about flippers. Real estate investments are risky (ask the all the people in Fla. who are losing millions at this very moment) thus the high reward instead of complaining about flippers pick up a few books, grow a set of balls and invest yourself.

Full disclosure: In addition to being an S.E. I have been a Real Estate Agent for 8 years and a Real Estate Broker for 4 years.

Re:So the market sure is promoting innovation

[cgenman]

Real-estate is generally bought, developed, and sold at a profit. Net good happens there. Some real estate developers buy land they think will be profitable, and sell it months later once it is in demand. No net good, but the land usually flips within a reasonable amount of time and, hey, other landowners nearby are usually willing to sell.

Web squatters buy up huge swathes of land, then sit on them. They earn ad revenue from other people's mistypes, then a huge chunk of change when they finally decide to flip it. And during this time they've done NOTHING of net good for anyone. They've simply prevented anyone else from using the site name, usually for a long period of time, which causes an overall net loss.

The profit margins are atrocious. The site name that sold for 400,000 dollars? Yeah, they registered that for 20 bucks. The behaviors of squatters is equally atrocious. They frequently register typo domain names (slshdot.com, for example) to try to drive clicks. They automatically swoop in to register domain names that people forget to renew, then sell it back to them at extortive prices.

The domain name resolution service is a series of agreements amongst a group of dedicated nerds in an attempt to facilitate easy information distribution on the internet. By gaming the system, squatters are profiting while creating nothing, at the expense of people with real jobs and real work to do. It's taking a good-faith agreement and exploiting every loophole it can find. It's like spamming... it's legal, and it works, but it is a PITA for basically everyone. Unlike spamming, domain squatting and parking could be stopped, but nobody has moved to outlaw the practice yet.

Re:So the market sure is promoting innovation

[billcopc]

Domain names are not real estate. God I'm sick of that flawed analogy.

Domain names online are more like registered trademarks in real life. The difference being that you can't defend a trademark against a newcomer if all you've done with it is sit on it like an egg, which is what these "domainers" do.

I'm in the business of web business, and there is nothing that irritates me more than having an "AHA" moment, and finding out my great fun domain name is already taken by a squatter. They bring NOTHING to the table, and they're stopping me from doing something actually useful with the name rather than throw up a sleazy parking page with its own ad search engine.

I've often negotiated domain names away from their owners, mostly because they were normal people who simply bought a cool domain and lost interest. I've never paid the astronomical prices these squatters try to extort, the most I've paid for a name was $100 and that way mostly because the guy had registered it for 7 years, 2 years in he still just had the registrar's parking page on there. He was happy to recover his investment plus enough for a case of beer, and I was happy to get the name I wanted for a friend's blog.

Hey here's an idea: domain hoarding is like a patent holding company. They cheaply appropriate low-value virtual properties, sit on them forever until some enterprising young fellow with a bright idea comes along, and then pounce on him when the money's good. Now there's a fitting analogy, and we all hate IP warehouses now don't we ?

Re:So the market sure is promoting innovation

[timeOday]

Its funny how when people look at someone making $$ they always focus on the REWARD and never on the RISK

What about it? A poker game among friends in somebody's basement isn't economically productive, even though they're all risking their money.

A real investor puts their money into something productive, which could be anything from a movie studio to a car company, that produces wealth. It's not a zero sum game, since the process results in wealth creation.

Squatting on limited natural resources, like beach-front property, produces nothing, so it is a zero-sum game. That's OK for gamblers, but it's annoying when speculators are driving up prices for those of us who actually need housing to, you know, live in. Now if you are talking about somebody who buys a plot of land and builds a hotel on it (or other valuable improvements), that's different - they've actually put some work into creating value.

Re:So the market sure is promoting innovation

[bogjobber]

Speculators (real estate, stocks, commodities, etc.) may not necessarily *produce* anything, but they are a necessary part of any free market. If prices fluctuate, there will be people trying to buy low and sell high. That's just the way things work. The reward is directly related to the risk, however, so a very small amount of people have the money, intelligence, and desire to engage in pure speculation. You're more likely to lose your shirt than make a good profit if all you're doing is day trading or flipping real estate..

I guess you could say that speculators ensure an efficient market. I'm not much of an economist, I'm sure there are much more eloquent ways to describe it than that.

Re:So the market sure is promoting innovation

[Squalish]

How is Jeff Bezos a scumbag? AFAIK, he's earning honest money. You can't even say it's unethical just because people were careless enough to allow 1-Click to go unpatented. It's their responsibility. He's just making a profit off of other people's carelessness, which basically happens right across the board in the corporate culture.

How are squatters scumbags? AFAIK, they're earning honest money. You can't even say they're unethical just because people were careless enough to leave their building windows unbarred. It's their responsibility. He's just making a profit off of other people's carelessness, which basically happens right across the board in the street culture.

How were the pioneers of the American West scumbags? AFAIK, they were earning honest money. You can't even say they're unethical just because Native Americans were careless enough to leave their property un-deeded. It's their responsibility. They were just making a profit off of other people's carelessness, which basically happens right across the board in the frontier culture.

How are Nigerian 419 scammers scumbags? AFAIK, they're earning honest money. You can't even say it's unethical just because people were careless enough to allow their due diligence in researching moneymaking opportunities to fail. They're just making a profit off of other people's carelessness, which basically happens right across the board in internet culture.

If you put it that way, you can explain away anything. The only reason I'm not continuing to more heinous things is that doing so would break certain laws. Though it would not be unethical, and I would only profit from the carelessness you showed in crafting your argument (which is your responsibility), I choose not to break Godwin's Law because it's the right thing to do. And natural hair wigs were too expensive right across the board in 1940, even for curly hair.

Re:So the market sure is promoting innovation

[localman]

That's about the best analogy I've heard. They (domain names) should be handled more like trademarks: use them or lose them. Come to think of it, patents might benefit by being handled that way too.

Cheers.

Re:So the market sure is promoting innovation

[joto]

What this sort of squatting has done, in the end, is to utterly undermine and render worthless the notion of the domain name itself.

It's funny then, that every time I type google.com, or slashdot.org into my browser window I end up at the same page. I would say that domain names are not worthless.

trying to get meaningful domain names is pointless

It always was. Search.com is not Google. Chopper.com is not Harley Davidson. Yahoo.com is not about happy people. Amazon.com is not about tall and powerful women.

most people don't give the old notion of "you're only a professional if your email address has a legitimate domain" much thought any more.

Why should they? It's not like a con-man couldn't afford to buy a domain name, and rent some space on a server. This rule is as silly as insisting that "you're only a professional if you wear a tie".

Search engines have pretty much rendered moot the idea that the domain name itself need to have anything to do with the business or organization that runs it.

Yet for some unexplained reason, the Coca Cola Company decided that they wouldn't represent their company through the jfkojiovjojw2.com domain name, but decided to go for a meaningful one instead.

Re:So the market sure is promoting innovation

[yada21]

Speculators can only sell high because people are willing to buy high. If people are willing to buy high that's what the market will hold anyways - 'ordinary' buyers would have charged higher prices eventually. Speculators are just ahead of the wave.

Now if peiople aren't willing to pay high prices, then the market dives and the speculators get their fingers burned.

Having a bunch of domains == "owns the Internet"?

[dn15]

Sensational much?

I have no hesitation

[jeevesbond]

Having been on the wrong side of 'cybersquatters' this is an issue close to my heart. I wouldn't mind if these people took a domain and did something useful with it, but instead they just plaster it with advertising and watch the cash roll in.

Am not even that bitter (it wasn't even me that lost the domain but the previous owner of my site), what makes me angry is the way these people just leech ad views without giving anything back. Scummy blighters, the lot of them!

Problem is what should be done about these people? It's not as if the government(s) of the world are competent enough to deal with problems like these (tubes anyone). ICANN is the organisation we should turn to: perhaps make a rule that the owner of a domain has to actually do something with it within a set period of time (say 6 months to a year). If all they've done in that time is plaster it in advertising (or have done nothing) it should return to the pool, perhaps with a bar disallowing the ghastly spammer from buying it again for a year.

This is pretty controversial and I suppose if someone pays for something they have a right to do what they like with it. That doesn't detract from the fact that these people are like parasites, filling the Internet with rubbish and getting in the way of those of us who just want to provide a service.

Re:Really?

[Solandri]

Why do I suspect that his business colleagues are using botnets to artificially inflate those pageviews? If one follows the money paid in the advertising--whose pockets are he picking?

The most lucrative sites are general names, not typosquats. You're probably correct that most people who make a typo just ignore the ads and type in the URL again. But a surprising number of people who are, say, visiting Palm Springs will just type www.palmsprings.com into their browser, bypassing search engines like Google (dunno if that's a real site, but my guess would be it almost certainly is). These people will click on the ads on that site because it's exactly what they're searching for. I suspect most of the revenue comes from these types of domains. The article does focus on typos (mainly typos in .com), but that's probably because that's where all the new domain acquisition business is. Nearly all the "good" domain names under .com were sold long ago.

I wish they would raise annual fees

[Schlemphfer]

As a website publisher, I think it would be very much in the public interest to raise annual registration fees to, say, $70 a year. At that price, domain parking for "junk" domains would be prohibitively expensive.

Mixed amongst these junk domains are some great names that deserve to be developed, and will be if they are available. Unfortunately, the bottom-feeders of the online world have control of this vast assortment of names, which they are essentially holding largely for ransom purposes. I think that's a scummy way to make a living. But it's possible so long as annual registration fees are less than the small amounts of revenue that can be generated through generic google adsense programs and their ilk.

I would love to see the price of annual registration hit the point where, say, the guy who owns "waterfalls.com" would have to develop it in a meaningful way or surrender it. Sitting on a domain and putting up generic ads should be a losing proposition financially, and an increased annual fee would correct this situation and work to the public good.

Re:I wish they would raise annual fees

[rs79]

"I think it would be very much in the public interest to raise annual registration fees to, say, $70 a year"

The 20th century called. They want their pricing back.

When the NSF directed netsol to begin charging it was $100 for 2 years and $50/yr for renewal. There was widesperead consensus this was WAY too much.

Re:SO FULL OF HATE FOR CYBERSQUATTERS

[Anonymous Coward]

It's a reality of the internet.. the same ease of registration and freedom of use that enables EVERYONE to have domains also enables a secondary market in domain squatting. That's life.. the business world is no different.

The kind of controls necessary to prevent this are exactly the kind of controls we should be scared of, and not want.

Re:Does ANYONE click on those ads?

[QuickFox]

To make to people and/or businesses paying to advertise on those "sites" have to pay more for the clicks. You're just enriching the scumbags who make the sites. The advertisers don't chose to appear on such sites, they're just regular customers buying ads from Yahoo, Google etc. Most advertisers are probably completely unaware that companies like Google enable and encourage this sort of thing.

Read it. He doesn't make 70 mil a year.

[Jack9]

"generate an estimated $70 million a year in revenue" although the actual numbers are more like a couple hundred grand AT MOST. This is a market fluff piece blathering on about how it could be a goldmine but nobody can prove it other than he has a nice flat. Next article was about how someone invented cold fusion but couldnt show it to the public for fear of the power companies killing them. Yawn.