GoDaddy: Exposed

[BocaVision]

http://domainnamewire.com/2008/12/03/standard-tactics-llc-how-godaddy-profits-from-expired-domains/

Standard Tactics, LLC: How GoDaddy Profits from Expired Domains
Wednesday, December 3rd, 2008

GoDaddy goes to great lengths to hide its expired domain warehousing operations.

Scottsdale, Arizona based The Go Daddy Group, which runs the world’s largest domain name registrar GoDaddy.com, is warehousing its customers’ expired domain names and profiting from them. The company has taken a number of steps to hide this practice from public view. This article covers the results of a Domain Name Wire investigation into GoDaddy’s domain warehousing activities.

Profiting from Expired Domain Names
When domain names expire, most large domain name registrars try to make money from them. Network Solutions and eNom auction expired domains at NameJet. Register.com auctions domains through Snapnames .

GoDaddy.com and other registrars that are part of The Go Daddy Group don’t use a partner to sell customers’ expired domain names. Instead it auctions them on the company’s own platform originally called The Domain Name Aftermarket (TDNAM). It’s a fairly transparent system. But when a valuable domain doesn’t sell, something not-so-transparent goes on in the background, as described in detail below.

It’s not unique that GoDaddy profits from expired domains. What’s unique are the steps GoDaddy takes to cover up its tracks, that it holds on to some domains that aren’t sold at auction, and its apparent hypocrisy between domains it owns and some of its activities such as combating online pharmacy fraud.

Go Daddy’s Domain Name Warehouse
I first discovered GoDaddy’s domain warehousing efforts in 2005. I noticed a typo domain name that didn’t sell at TDNAM and wasn’t released. It was subsequently monetized by GoDaddy using a domain parking page. At the same time I purchased several domains on TDNAM that had expired but hadn’t sold in the initial auction, much like the typo. Interestingly, I received notification from an email address at StandardTactics.com offering to transfer all of the domains I purchased into my account.

Standard Tactics, LLC, is a The Go Daddy Group subsidiary that takes ownership of valuable expired domains that don’t sell at TDNAM. It then monetizes the domain names using parked domain pages and lists the domains for resale on TDNAM.

The Formation and Structure
When GoDaddy launched TDNAM back in 2005, it finally started cashing in on its customers’ expiring domain names. By auctioning off the domains it was able to generate revenue even when its customers didn’t pay to renew their domains. But GoDaddy understood it could also make money by keeping some of the domain names that didn’t sell at auction for itself.

On August 16, 2005, GoDaddy formed a subsidiary called Standard Tactics, LLC in New Mexico. Before founding Standard Tactics, all of GoDaddy’s subsidiaries were incorporated in Arizona where the company is headquartered. There are a couple reasons GoDaddy may have chosen to form the company as a New Mexico limited liability company rather than an Arizona corporation. First, by creating the company in New Mexico it could distance itself from it. Second, by filing as a limited liability company instead of a corporation, it didn’t have to list directors of the corporation. It only had to list an organizer — Scottsdale, Arizona lawyer Robert J. Rosepink. Rosepink filed the papers in New Mexico and listed the company’s principal address outside the state at 7373 North Scottsdale Rd, Suite E-200 in Scottsdale. That’s the address for Rosepink’s law firm.

GoDaddy says Rosepink is outside counsel for the company.

He may have run in the same circles as GoDaddy CEO Bob Parsons in Scottsdale. Both Rosepink and Parsons donated to Jon Kyl’s campaign for U.S. senate.

Earlier this year, Rosepink was indicted on 102 counts by the Arizona Attorney General office for his part in a concert promotion investment scheme. Rosepink allegedly earned nearly $1 million in fees for recruiting investors in what The Arizona Republic labeled a Ponzi scheme.

Although GoDaddy did a good job distancing itself from Standard Tactics as a separate company (one source said Standard Tactics was commonly called “a client” of GoDaddy’s even inside the company), GoDaddy’s filing to go public in 2006 provides a definitive link between the two companies. It showed that Standard Tactics, LLC is indeed a subsidiary of GoDaddy. It’s distanced even further from the parent company as a subsidiary of a subsidiary. Special Domain Services, Inc., is a subsidiary of The Go Daddy Group. Standard Tactics, LLC is a wholly owned subsidiary of Special Domain Services, Inc. Special Domain Services, Inc. is also the parent company of GoDaddy’s Domains By Proxy, a whois privacy service that helps people shield their information from the whois database.

 

[Ben42]

ICANN Registry Agreement for .com. Section 3.1, b, iv, A & B
These are required for each registrar agreement. Base on this, they are in violation. Pretty Clear Cut I would think.
http://www.icann.org/en/tlds/agreements/verisign/registry-agmt-com-01mar06.htm

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

To me all the registrars that hold names believed to be valuable are in violation. They are Registration centers not Auctioneer and sales offices! The rules are in place because they are the keeper of the names.

This is like a library, once a book is returned, saying, "Wow, this book is really popular! Lets put it on this special shelf with the other popular ones and charge people $1000 if they want it! Then of course they have to return it after a year still and if they don't pay the renewal fee's...WE CAN SELL IT AGAIN and AGAIN! Muhahahaha!"

"Oh, and if people don't like that, we'll sell the books on the black market, because no matter where we sell them the names will always belong to us!"

Complete crap.

 

[ecigs.net]

Google/Yahoo or parking company serves up ads which are nothing to do with your chosen keywords - can put the domain owner in big legal trouble.
(aka - chillibeans, although I think FS will kick their ass eventually)

I just had to pull a domain from my sedo account for the same reason

If you have a domain like Chillibeans.com, you don't trust a third party to manage it for you (that's what parking is). What you do is brainstorm an idea that isn't trade marked and you implement your idea with a well thought out website. Anybody parking possible TM domains is just waiting to get slammed. The problem is that a huge number of domain owners couldn't get a site online if their domain name depended on it. I've seen enough posts at NP where people are asking for ideas as to how best use a domain name. If you don't have a plan for a domain name first, don't buy the domain at all.

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

To me all the registrars that hold names believed to be valuable are in violation. They are Registration centers not Auctioneer and sales offices! The rules are in place because they are the keeper of the names.

This is like a library, once a book is returned, saying, "Wow, this book is really popular! Lets put it on this special shelf with the other popular ones and charge people $1000 if they want it! Then of course they have to return it after a year still and if they don't pay the renewal fee's...WE CAN SELL IT AGAIN and AGAIN! Muhahahaha!"

"Oh, and if people don't like that, we'll sell the books on the black market, because no matter where we sell them the names will always belong to us!"
Complete crap.

If a person owns a great domain and it gets massive amount of traffic, that person has to be totally crazy to wait until the last few days to renew the name.

What will keep your registrar out of your portfolio is if your portfolio is paid up in advance. My money names are renewed for more than 5 years each. This is good for the Search Engines and it is the best safety mechanism. Nobody can steal your names if you pay your bills.

 

[gazzip]

DomainNameWire blogged that Go Daddy will shut down Standard Tactics:

http://domainnamewire.com/2008/12/17/go-daddy-to-shut-down-standard-tactics-llc/

:blink: Power to the Bloggers, so that's NetSol and now GoDaddy that have ...come to their senses



.

If you have a domain like Chillibeans.com, you don't trust a third party to manage it for you (that's what parking is). What you do is brainstorm an idea that isn't trade marked and you implement your idea with a well thought out website. Anybody parking possible TM domains is just waiting to get slammed. The problem is that a huge number of domain owners couldn't get a site online if their domain name depended on it. I've seen enough posts at NP where people are asking for ideas as to how best use a domain name. If you don't have a plan for a domain name first, don't buy the domain at all.
.

Parking should be seen as a legitimate business model and we should get the tools to choose/approve or deny which ad shows on our parking page IMO

If we did and then the owner made a bad choice of what ads to display, then sure, its their fault.

...especially when people are allowed to get trademarks for words like chillibeans, villas, Inca etc

JMHO

ps - I have keywords set to sheepskin that only ever show ads for Skin Products...says it all !


.

 

[Ben42]

If a person owns a great domain and it gets massive amount of traffic, that person has to be totally crazy to wait until the last few days to renew the name.

What will keep your registrar out of your portfolio is if your portfolio is paid up in advance. My money names are renewed for more than 5 years each. This is good for the Search Engines and it is the best safety mechanism. Nobody can steal your names if you pay your bills.

I agree, but there are other reasons that names drop besides forgetting to pay. It just is very unethical IMO that Registrars can hold a name for profit, it is a conflict of interest.

To me this is no different than ticket scalping but worse as the registrars have access to all the tickets. What if guys at ticketmaster held all the best tickets and then put them up on stubhub for auction? Pretty much the same thing.

 

[MicroGuy]

It was great to hear Bob Parsons announcement that Godaddy has stopped warehousing and will list all of it's formerly-warehoused revenue domains for $10.

http://www.bobparsons.me/1stAnnualDingDong.html?watch=1&wnow=1