Domain kiting article by Bob Parsons.

[Reppy]

Source: BobParsons.com, written by GoDaddy CEO Bob Parsons.


Out of 35 million names — 32 million were part of a kiting scheme.
During the month of April 2006, a little more than 35 million domain names were registered. Of these names, 32.7 million were used – most again and again – but never permanently registered. These 32.7 million names were part of a scheme – a growing abuse of the domain system — one I wrote about in my last blog article. It’s an outrageous practice. I used to call it the add/drop scheme. After thinking about it, I think the name “add/drop” sanitizes the practice too much, so I’ve decided to call it something closer to what is actually taking place. The name I’ve decided upon is “domain kiting.”

Why I call it domain kiting.
Here's why I chose to call it domain kiting. All of us are familiar with the illegal practice of check kiting. Quite simply check kiting involves taking advantage of timing and the banking system to generate cash that simply isn't there. In many ways that is what domain kiting does. Domain kiting takes advantage of timing and the domain name system in an abusive and improper way to generate cash.

In a nutshell, here's how domain kiting works.
Domain kiting registrars put up mini-Web sites — loaded with search engine links — for domains names for which they never pay. When people land on these Web sites and click on the links, money is made. It's easy to spot one of these registrars as the number of total registrations they make often far exceed the number of permanent registrations — or names for which they actually pay. This is why during the month of April 2006, out of 35 million registrations, only a little more than 2 million were permanent or actually purchased. The vast majority of the rest were part of the domain kiting scheme.

Now let's drill down a little further into domain kiting 101.
A registrar who participates in this scheme – Go Daddy and its affiliates do not participate in this scheme – makes a large deposit – sometimes a huge deposit – at a registry. Then the registrar registers as many domain names as the deposit will allow. For example, if the registrar makes a $600,000 deposit at VeriSign Registry, they could register 100,000 .COM domain names as .COM names cost $6.00 per year.

It's all about catching Internet traffic.
For each domain name registered, the domain kiting registrar puts up a simple Web site filled with search engine links and hopes users land on that page and click on the links. Anytime an Internet user lands on one of their mini-Web sites and clicks on one of the links, money is made.

Domain kiting registrars abuse the 5 day refund period to work their scheme.
After a domain name is registered, a registrar has five days to cancel a domain name registration – i.e. drop the name – and get their money back. Domain kiting registrars abuse this rule and cancel the lion’s share of the names they register just before the five day period expires – so they get their money back. But then something unexpected happens. After names are cancelled or dropped, the domain kiting registrar goes out and immediately registers the same names again. The domain kiting registrar will then put the same simple Web site back up for each domain name, wait another five days and then cancel all the names again — just in time to get a full refund. And for most names caught up in the domain kiting scheme, this process will repeat itself over and over and over.

Domain kiting registrars rarely pay for the names they use.
By not actually paying for the names they are using, domain kiting registrars are able to generate profits, even if their mini-Web sites only generate 50 cents or more per year. And if they find, over time, that certain names never generate any revenue they stop registering them altogether. It’s only the names that have value – to you as an Internet user – they register over and over and keep off the market – names for which they of course never pay.

Domain kiting registrars only purchase the names that prove to be real money makers.
There are those cases when, if a domain name proves to be especially profitable, domain kiting registrars will actually step up and register the name. They’re not stupid. They won’t take a chance on losing a name that generates much more than the annual cost of a registration. However, this is clearly the exception.

Read more...

 

[Kate]

Interesting article. Thanks.
And yes we know that registrars are abusing the scheme but unless ICANN does something about it I do not see an end in sight.
Verisign profits from the scheme too because in the end this will increase the number of firm registrations. Registrants have the opportunity to test-drive a name or get their money back. Otherwise they would be reluctant to put up the reg. fee for some names.

 

[dhscott]

I'd be interested to know if this practice only happens in America, because as far as I know, I cannot make any refunds on domains I buy here in the UK.

If the case is no, it does not happen in the UK, then why don't Verisign employ a system of no refunds? I reckon they should. If these "Domain Kiters" sign-up for the domains when a system like this is employed, they'd be making huge profits! And eventually the problem should go away surely?

 

[dnb8]

this is disgusting

 

[equity78]

WHEN YOUR TAKING content from someone elses site you should at least state it with the proper credit.

 

[-db-]

WHEN YOUR TAKING content from someone elses site you should at least state it with the proper credit.

Most definitely.

I thought the OP wrote it, until clicking on the link at the end.

I've edited the thread (and title) to reflect the author.

 

[Carlton]

If what Parsons wrote about is factually correct, any registrar proven to be doing this should lose their credentials permanently. I wish he had mentioned the names of the companies who are doing this.

Do ICANN publish (for public knowledge) general warnings sent to registrars? ICANN needs to engage in press releases along the lines of what Parsons posted in his blog. To demonstrate their monitoring and policing of ICANN accredited registrars. Only in my dreams.

 

[labrocca]

Gosh Parsons has a big EGO.

The name I’ve decided upon is “domain kiting.”

He seemingly likes to name things as if he is the first guy to do everything. Other than his ego though it's a good article. It's stuff like this that will put a dent in the shiny armor of domain parking and PPC.

 

[Reppy]

WHEN YOUR TAKING content from someone elses site you should at least state it with the proper credit.

My apologies. I though the link back to the site was sufficient.

Gosh Parsons has a big EGO.



He seemingly likes to name things as if he is the first guy to do everything.

Perhaps. But it's easier to put an appropriate name on something and use it throughout the article then some long winded explanation every time he needs to refer back to the practice.

 

[Shorty]

If what Parsons wrote about is factually correct, any registrar proven to be doing this should lose their credentials permanently.

The point is, they're doing this by the book. ICANN is facilitising this with their 5 day return thing. Technically it's not against the law or the rules, and Bob Parsons is calling for a change to make it so.

 

[ExpireGuy]

Yeah Bob should know about kiting since GD does it in a different way...note the GD parking pages with PPC links, when they expire they head over to the Hot domains category at TDNAM.

 

[Carlton]

Yeah Bob should know about kiting since GD does it in a different way...note the GD parking pages with PPC links, when they expire they head over to the Hot domains category at TDNAM.

Not happy with this either. I wonder if GoDaddy (any registrar) are obligated to release a name that is not sold at tdnam or through backorder. It was my understanding that registrars are not allowed to warehouse names. Although some try to do this under the radar.

 

[greggish]

Bob sure likes to criticize evry other registrar and the registration system. I'm not saying he's wrong, but it sure takes some balls to keep doing that after the mess Godaddy made of the whole .eu thing.