Expired Domain Skimming by Registrars

[YAYnames.com]

Every domainer that intends to bid in a dropped domain name auction needs to be aware of the fact that some Registrars by their own admission skim the very best names.

Does that sound outrageous to you? It certainly does to me, but it's true. The funny thing is, they make no bones about it, and are completely unapologetic about it as well.

Not only that, but just because you win an auction and pay for the names at some houses doesn't mean that they won't decide after the auction's closed that they won't hand over the names. I know this sounds crazy, so don't take my word for it. Take a look at these related threads on respected industry leader Michael Berkens' blog that are a MUST READ for anyone participating in any drop auctions.

check this:
http://www.thedomains.com/2008/06/25/tucows-response-to-our-post-not-good-enough-and-heres-why

and this:
http://www.thedomains.com/2008/06/2...alled-out-yesterday-today-we-call-out-tucows/

Tucows recently reached an agreement with Afternic to auction expired names that are registered with them. So, if you plan on bidding on any of these names, you should definitely see the responses in the thread by Bill Sweetman, General Manager of Tucows Domain Portfolio, and understand that what you're bidding on is the crap that Tucows decided they didn't want.

If that doesn't seem right to you, maybe you should let the folks at ICANN know that you're not happy participating in a rigged game where registrars can skim the cream of the crop of expiring domain names.

.

 

[YAYnames.com]

We're not talking about a few names here, either people. Tucows is grabbing 6,000 to 8,000 names each month off the top for themselves. Again, don't take my word for it. Here's a transcript of a February 7, 2008 Tucows earnings call with their President/CEO Elliot Noss. Here's the quote:

"We believe we are one of the leading portfolios in the world. Please remember we pick up 6000 to 8000 more names each month from expiring domains. We made the decision two years ago to acquire expiring names that we believe add value."

http://seekingalpha.com/article/636...earnings-call-transcript?source=yahoo&page=-1

So... by my calculation, in the last 28 months that's around 168,000 to 224,000 names Tucows has decided to gift to themselves (for reg fee, I presume), without ever having sent them to auction.

Remember that the next time you're bidding in a dropped names auction on Afternic.

I know this is old news to a lot of you. I posted this so that the newer players would understand that domaining is a very rigged game when it comes to registrars like Tucows.

 

[Just_Dave]

Thanks for the heads up. I think it's bad for the industry for things like that to happen, but I don't see how we'd stop them, as it's perfectly legal, and they've put a lot of hard work to be in that position.

Because of things like this, the domain industry has a shady, underhanded reputation, which may be limiting growth.

 

[Takwa]

Yep BIG BOYS gets all the good profits, maybe we should start a non-profit registrar where everything is fair.

 

[Aboutdomains]

I learn a lot from this. Thanks

 

[YAYnames.com]

Thanks for the heads up. I think it's bad for the industry for things like that to happen, but I don't see how we'd stop them, as it's perfectly legal...

I question your assertion that it's "perfectly legal" -- just because they've been getting away with it, doesn't necessarily mean it's legal.

Here's the ICANN Registrar Accreditation Agreement:
http://icann.org/registrars/ra-agreement-17may01.htm

Read section 3.7.5... here's a quote:

"3.7.5 Registrar shall register Registered Names to Registered Name Holders only for fixed periods. At the conclusion of the registration period, failure by or on behalf of the Registered Name Holder to pay a renewal fee within the time specified in a second notice or reminder shall, in the absence of extenuating circumstances, result in cancellation of the registration."

If the requirement is that the registration is CANCELLED, then the name must be DROPPED, right?

We need to hold ICANN's feet to the fire to make the Registrars follow the agreement.

Also, take a look at section 3.7.9, this is it in entirety...

"3.7.9 Registrar shall abide by any ICANN adopted specifications or policies prohibiting or restricting warehousing of or speculation in domain names by registrars."

What's the purpose of this section if it isn't to state that warehousing or speculation by registrars amounts to dirty dealing???

In fact, there IS something we can all do, and that's let ICANN know that this garbage has to stop now. Not only that, but any names that registrars have obtained this way MUST BE DROPPED to the auction pool immediately.

The Registrar Accreditation Agreement is currently up for comment with ICANN. Every single domainer needs to comment on this unethical practice and get it stopped now.

One more thing... the deadline for comment on the "Draft Proposed Changes to Registrar Accreditation Agreement" is August 4th, and as the draft stands right now there's nothing in it that demands that Registrars abide by the language in 3.7.9 above.

Tell ICANN that language MUST be added to the Registrar Agreement to ABSOLUTELY PROHIBIT registrars from WAREHOUSING OR SPECULATION IN DOMAIN NAMES BY REGISTRARS. Send comments to: [email protected].

This is a no-brainer for every domainer, do it TODAY!

 

[accent]

I agree with a lot that you are saying, but remember that the registrar and auction company split the profit from auctions - sometimes a large amount of money. So, as the present system lies, either way the registrar gains from expired domains, essentially unclaimed property.

The idea has been floated that the proceeds from auctioning one letter .coms and etc. be used to improve internet access in developing countries. Despite the great inefficiencies and imbalances that would undoubtedly occur in such a program, it is a far better use for the money than to place it in the registrar and dropcatcher pockets.

 

[YAYnames.com]

I don't mind that they gain from the auctions, but to basically steal the cream of the crop of expired domains while the average domainer is busting their butts bidding on the leftover crap is WRONG!

And... we can do something about it! Make sure you give ICANN an earful about this underhanded, unethical practice!

Read the last paragraph on this page that clearly spells out the deletion timeline.

http://gnso.icann.org/issues/deletes/report-final-17jun03.shtml


"... at the end of the Redemption Grace Period is the domain name permanently removed from the registry database and made a part of the pool of available names."

Nowhere does it say that the registrar gets to keep the name if they feel like it, customers be damned.

Also check out this section:

"4. OTHER ISSUES


4.1 Domain name warehousing



In the task force's discussion of registrars' deletion practices, the subject of warehousing of domain names by registrars was raised. Three specific modes of warehousing were identified:



(1) The registrant allows the domain name to lapse, but registrar fails to delete the domain name during the grace period, resulting in a paid renewal to the registry. The registrar subsequently assumes registration of the domain name.

(2) The registrant purchases the domain name through fraud and the registrar assumes registration of the name to resell in order to minimize losses.

(3) The registrar registers the domain in its own name outright.


The task force believes that its current set of recommendations deals with the first scenario described above"


Pretty much sounds like ICANN understands that warehousing and speculation violates the agreement. I wonder why Tucows and some other registrars don't get it?

Make ICANN enforce the Registrar Accreditation Agreement!!!

Here's another 2006 doc which states that ICANN prohibits registrars from warehousing and speculation:

http://64.233.167.104/search?q=cach...using+site:icann.org&hl=en&ct=clnk&cd=5&gl=us

Specifically, here's a section on some of ICANN "Consensus Policies":

"(iv) Consensus Policies and the procedures by which they are developed shall bedesigned to produce, to the extent possible, a consensus of Internet stakeholders.Consensus Policies shall relate to one or more of the following: (1) issues for whichuniform or coordinated resolution is reasonably necessary to facilitateinteroperability, Security and/or Stability of the Internet or DNS; (2) functional andperformance specifications for the provision of Registry Services (as defined inSection 3.1(d)(iii) below); (3) Security and Stability of the registry database for theTLD; (4) registry policies reasonably necessary to implement Consensus Policies relating to registry operations or registrars; or (5) resolution of disputes regarding theregistration of domain names (as opposed to the use of such domain names). Suchcategories of issues referred to in the preceding sentence shall include, without limitation:

(A) principles for allocation of registered names in the TLD (e.g., first-come, first-served, timely renewal, holding period after expiration);

(B) prohibitions on warehousing of or speculation in domain names by registries or registrars.


.

 

[strong]

This problem is similar to the godaddy problem (employees bidding on tdnam domains) . How do you police it ?

Registrars will continue to "warehouse" by creating separate corps and feeding the domains to the corps or providing the corps with insider info on traffic etc. so that when auction bidding occurs the insiders know the true value of the domains.

Also, what do you do about a company like Name Administration who is a domainer and a registrar ? Are they going to be considered to be warehousing domains ? They likely have the corporation for registrar and domain owners separated in legal terms but where is the line going to be drawn ?

 

[YAYnames.com]

This problem is similar to the godaddy problem (employees bidding on tdnam domains) . How do you police it ?

In a way it's similar, but about a thousand orders of magnitude worse. You police it by sending an email to ICANN right now at this address:

[email protected]

...telling them that Registrar must not be allowed to warehouse domains or speculate in domains.

A registrar can buy all the names they like, they just have to do it in a competitive way, same as you and me. That means either drop it to the pool or bid in the auction with everybody else.

I don't think folks here understand the magnitude of what's going on here. One registrar, Tucows Inc., has admitted skimming 6000 to 8000 domains PER MONTH for almost two and a half years. That's almost a quarter of a million domains that they just appropriated (stole from the public for all intents and purposes).

Being a Registrar is not a license to steal. Registrars are charged with administering a PUBLIC RESOURCE. They don't own the names!

For maintaining a database they are paid through registration fees. Nobody would argue with that model. But Tucows is not following the rules, specifically 3.7.5 and 3.7.9 of the RAA as it is currently written. 3.7.5 says if the name expires it gets cancelled except in a few very precisely defined cases, none of which is "Registrar wants to add it to their 'portfolio'". Otherwise the registration is cancelled. That means DROPPED!

Public outcry will move ICANN, it's happened before with the 60 day information change, with NetSol front running names. They're slow, but they will respond with enough public pressure.

If Tucows and a few others continue to get away with this, how long do you think before GoDaddy, and every other registrar decide "hey, they're being allowed to print money, hell, we're going to as well!"

Registrars will continue to "warehouse" by creating separate corps and feeding the domains to the corps or providing the corps with insider info on traffic etc. so that when auction bidding occurs the insiders know the true value of the domains.

This is an excellent point. You're right that this will probably happen.

But, at least with stronger language in the RAA, if they get caught doing this they're done. And reality is eventually some disgruntled insider will rat them out.


.

 

[Compassion]

Yep BIG BOYS gets all the good profits, maybe we should start a non-profit registrar where everything is fair.

Now there is a great idea. The registrar could give at least partial proceeds to the dropper.

 

[Dave_Z]

Registrars are charged with administering a PUBLIC RESOURCE.

Registrars aren't required to offer domain registrations to end users the last I
checked, though many do so anyway.

Tucows is rather an interesting registrar. They don't necessarily cater to end
users, yet they allow only certain people to bid in their auction system while
essentially cherry-picking certain names that haven't been deleted yet.

I agree they should be able to compete with others when trying to buy them,
though.

The registrar could give at least partial proceeds to the dropper.

Network Solutions does something like that where the last registrant receives
some proceeds from the sale of the expired domain name.

 

[flamewalker]

Ick... the more and more I hear this kind of stuff the worse I like the whole domain system.

 

[Keral_Patel]

WTF and they say domainers are cyber squatting and are doing illegal stuff.

This is no good and Aftermarkets are then just a junkyard where you find the useless domain names that were left out from registrars.

 

[leftfielder]

Registrars don't care about cybersquatting because the domain has already been sold. It would be up to the victim to recover. I haven't seen many squatted domains repossessed here lately and Domain skimming doesn't surprise me. You can't tell me if you scored your own domain registry you wouldn't do the same?

 

[flamewalker]

Registrars don't care about cybersquatting because the domain has already been sold. It would be up to the victim to recover. I haven't seen many squatted domains repossessed here lately and Domain skimming doesn't surprise me. You can't tell me if you scored your own domain registry you wouldn't do the same?

Absolutely NOT... while not necessarily illegal, it is definitely UNETHICAL and provides an unfair advantage to themselves over the open market.

 

[leftfielder]

Absolutely NOT... while not necessarily illegal, it is definitely UNETHICAL and provides an unfair advantage to themselves over the open market.

They are doing the exact same thing domainers are doing but on a grander scale. They are tasting it, they are dropping it and getting refunds or they are selling it for more than it's original value (reg fee.)

The whole domain business is unethical then? Ethics is about proper conduct, not getting emotional over business.

 

[flamewalker]

No they aren't doing the same thing because domainers don't have direct access to the registry to snap up names before anyone else does. In many cases not even letting it go through its proper drop cycle.

Domainers that catch names appropriately are not unethical... registrars that have access that the general public doesn't have, is using their power in an unethical manner imho.

 

[leftfielder]

Understood. If you can't beat them join them. Registrars were entrepreneurs before they were registrars. And they are enticing you to backorder without disclosing how many people are ahead of you in line for the good stuff, just like a grab bag party.

 

[flamewalker]

Join em? no thanks... I prefer the big stick method :p (beating them with it that is)

 

[Kate]

No they aren't doing the same thing because domainers don't have direct access to the registry to snap up names before anyone else does. In many cases not even letting it go through its proper drop cycle.

Well domainers use dropcatchers that in turn set up or "hire" registrars just for the purpose of catching domains. So basically domainers are using the same resources.
Now if you are in entrepreneurial mood you can start your own registrar to get your feet wet

 

[flamewalker]

No... I don't have the capital or time to do that... or I would :p

 

[MeanerDomainer]

GREED is a very powerful force, stronger than even LUST in almost all cases.
Greed can win over the best of men, and it has NO trouble with the rest of them.
Regulations need to be put in place, and enforced, or greed will win.

 

[tricolorro]

Also, what do you do about a company like Name Administration who is a domainer and a registrar ? Are they going to be considered to be warehousing domains ? They likely have the corporation for registrar and domain owners separated in legal terms but where is the line going to be drawn ?

Just for the record:

Name Administration,Inc is the Domainer.

Domain Name Sales Corp. is the Registrar for Name Administration domains.

See:
http://www.icann.org/registrars/accredited-list.html

Anyway...

There is a big difference between Tucows and other Registrars that skim expired domains registered by others for their own account and Name Administration domains regged at Domain Name Sales Corp.

All domains registered by Name Administration are regged by one entity.

Although Registrant and Registrar may be legally separate entities for all practical purposes they are one and the same.

There are no third party domains being skimmed.

Tucows and their ilk are surely in violation of the spirit of their Registrar Agreement with ICANN and they are sporting an unfair advantage skimming domains and preventing their re-entry into the domain marketplace.

It is surely a type of Unjust Enrichment.


:imho:

Patrick

 

[PowerUp]

This is why the rich gets richer (by buying the best income generating names for reg fee) and the poor gets poorer (by sometimes paying too much in an auction for crappy names). This happens everywhere (eg ebay deal with buy.com), not just in domain industry.