ICANN to Add Anti Front Running Charge?

shashib writes to tell us that ICANN is considering a new $0.20 per-transaction fee for large numbers of domain registrations in order to curtail domain tasting abuse. Network Solutions, previously accused of front-running, is offering their support of the new approach and promises to remove the security measures that caused such a commotion back in January. "Because of the prevalence of these practices, earlier this year Network Solutions enacted an opt-in domain protection measure for our customers that reserves available domains for four days. If ICANN adopts the anti-tasting provision, Network Solutions will feel safe in discontinuing its service since the non-refundable fee will deflate domain taster's profits and provide a substantial blow to front runners who use and sell search data for tasting purposes."

Comments

Re:What of bulk squatters?

[Anonymous Coward]

I guess it's kind of like pornography; you know it when you see it. I think going through all the customers of this service would be a good start.

Re:Why not every time?

[ehrichweiss]

That is quite a bit of insight into how it works. I knew about all the rest but hadn't yet put how the $0.20 would be useful.

Re:Still won't feel safe

[mabhatter654]

this is not a new fee! ICANN is just making ITS share used to fund DNS and such non-refundable. Regular users won't see a thing change. That means any registar that wants it's names on root DNS will have to pay the money. They already pay it, they just won't get it back in 3 days if you don't want the domain.

This keeps domain registars honest, because in hundreds of thousands of domains they'll have to collect this and not let it slide because technically THEY owe ICANN the money.

Second, in large volume this will add enough "treading water" that spammers and such will stop the practice. Either they will keep the names, or pay the money. Right now they are cycling thru names every 3 days so they don't have to pay. Paying 20 cents every time they switch will cost more than registering in just a few months.

Clarification about how ICANN charge may help

[solprovider]

Your post was good, but failed to mention how unending domain-tasting works. You also mention squatters; this charge will not affect "squatters" since squatters buy domains.

The current system allows a domain to be used (tasted) for up to 5 days without charge. The purpose of this policy was to allow free reversal of mistaken registrations. ICANN currently charges $0.20 per domain registration (changed in 2007 from $0.25.) The policy change is the charge will not be refunded if the domain is released within five days.

Current Problem #1: Somebody noticed the ability to check expired domains for traffic that could become profitable by advertising on previously used domains. If enough (maybe one visit?) traffic reaches a domain in the first five days, the domain is bought in the expectation that the advertising revenue from the domain will more than offset the cost of buying the domain. This is one variant of the "squatter". [Other variants are buying domains that may become valuable e.g. names of potential celebrities, and buying domains similar to popular domains e.g. slashdit.org.]

Current Problem #2: A few companies doing #1 can keep a domain from ever returning to the public. A company tastes all expiring domains. If the first company releases a domain at five days, another company tastes the repeatedly-expired domain. The domain would eventually be released to the public if the companies excluded recently tasted domains, but no reason existed to encourage this practice since no cost is incurred for tasting a domain once or multiple times. Currently, most expired ".com" domains enter this "constantly tasted, never bought" state.

[From memory of previously research on this issue] Three companies in Florida at least connected by sharing legal representation are "tasting" 20 million domains. A domain can pass amongst these companies indefinitely without incurring any costs.

The new policy is designed to stop this practice. Indefinitely tasting those 20 million domains would incur the $0.20 charge every 5 days: $4 million every 5 days = $292 million per year. The cost to a registrar for buying a domain is ~$7. With the new charge, buying a domain for one year has the same cost as tasting a domain for only half of a year.

One of two possible outcomes can be expected:
1. The cost of buying the domains is more than the domain-tasting companies are willing to pay so the domains are released to the public.
2. The domains generate more than $7 per year so the domain-tasting companies buy the domains and become domain-squatting companies. Tasting a domain will cost $14 per year. Buying a domain costs $7 per year and simplifies the system by removing the need to change DNS settings every 5 days (although that system must have been automated long ago.)

Every article about the policy change assumes the first outcome -- more than 20 million domains will become available during the week after this policy is effected. I do not know if the profitability of these companies depends on free domain-tasting. The companies may still be profitable with a new $140 million per year expense -- owning 20 million domains at $7 each per year. If so, nothing would change except ICANN "earns" more (and those three companies could merge since the benefit of being separate entities would be lost.)