ICANN Kills Domain Tasting

January 30, 2008
Lexero LLC

 

The Internet Corporation for Assigned Names and Numbers has
announced a proposal to start charging a non-refundable annual ICANN fee on
registrar domain registrations immediately upon registration. The ICANN Board
resolved to:

. . . encourage ICANN's budgetary process to include fees
for all domains added, including domains added during the AGP, and encourages
community discussion involved in developing the ICANN budget, subject to both
Board approval and registrar approval of this fee.

 

The resolution passed 13-0, with one abstention.

 

While the ICANN fee is nominal, about $0.25 per name, it
will likely be more than enough to terminate the “tasting” practices because it
eliminates the economies of scale. Currently a taster can register hundreds or
thousands of names for a short time with no investment, even when the names
provide absolutely no monetization to the registrant.

 

For example, if a registrant chose to register 1,000 names,
and only made $200 during the five day period, it was still a profitable
practice. The registrant could cancel the registrations, register them again
shortly thereafter, and make another $200 over the next five days.

 

If the ICANN resolution is fully implemented that same registrant
would now have to invest $250 ($.025 ICANN fee x 1,000 domains) to register the
names for a potential gain of only $200. This would lead to a loss of $50 under
our scenario, which would effectively eliminate the practice. The numbers will
vary, of course, but under any numerical scenario the profitability of the
practice will certainly take a hit.

 

The original goal of the AGP was to protect those
“legitimate” registrants who had mistyped or otherwise made an error in the
domain they intended to register. This goal, while of less importance than
ICANN continues to believe, is still achieved. The difference is that a “legitimate”
registrant will now pay the nominal ICANN fee to cancel the registration as
opposed to getting off the hook totally free of charge.

 

Overall, the plan is well designed, although one could
imagine a situation where ICANN makes a greater effort to reduce the practice
immediately. If the economics somehow continue to be attractive to tasters,
however, ICANN may be forced to revisit the issue.


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Lexero LLC

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