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.

 

[DotWeekly]

The above author in the article in post #1 says, "when a valuable domain doesn’t sell..." at TDNAM GoDaddy warehouses it. Hmmm...I've purchased tons of domains at TDNAM for $4/$5 plus renewal fee.

My question is, "How valuable can a domain be if it doesn't sell for $5?

That's the problem! People like yourself that do not understand what they are doing!

So here's a little education...........

Go to Godaddy.com and click Auctions, then the tab Expiring.

Now all the domain names shown are Expired Domains… that is important!

Once you have either the domains listed with the highest Price or the Highest Traffic, keep in mind that these domain names are "Priced" higher (not $10 to start) with most having NO BIDS.. these are the ones you are looking for as these are the ones Godaddy warehouses.

Godaddy is pricing these higher for a reason. Many have traffic and they simply feel that the domains are worth a much more. If they sell them at the higher price, Great (for them) if not, they keep them. Some of them may have lower traffic but just a higher starting price. Why? Because it’s making money Parked for them! Just another reason to Out Price the domain so nobody will bid. Again, if somebody bids at the inflated starting price, they make the extra money and sell...

Godaddy has Hundreds of domain names like this listed and many end daily with No Bids. Not all have high traffic stats but most range from the $x,xxx range to the $xxx starting range for the opening bid with even much higher Buy It Now’s!

For an example, Godaddy has DiscountFurnitureOutletOnline.com listed. It's an expired domain with a starting bid of $1,300, not $10. Who is going to place a $1,300 starting bid or use the $6,500 Buy It Now? Nobody that I know! The 1,436 traffic Godaddy is reporting will clearly make money parked and if nobody wants to bid $1,300 or use the $6,5K BIN, it makes it very easy for Godaddy to keep it!

It's simply Not Right, nor Fair to "price" certain EXPIRED domain names differently then the other expired domains. Then to top it off... Keep certain domains for themself that happen to "not sell"....

 

[MicroGuy]

That's the problem! People like yourself that do not understand what they are doing!

So here's a little education...........

Go to Godaddy.com and click Auctions, then the tab Expiring.

Now all the domain names shown are Expired Domains… that is important!

Once you have either the domains listed with the highest Price or the Highest Traffic, keep in mind that these domain names are "Priced" higher (not $10 to start) with most having NO BIDS.. these are the ones you are looking for as these are the ones Godaddy warehouses.

Godaddy is pricing these higher for a reason. Many have traffic and they simply feel that the domains are worth a much more. If they sell them at the higher price, Great (for them) if not, they keep them. Some of them may have lower traffic but just a higher starting price. Why? Because it’s making money Parked for them! Just another reason to Out Price the domain so nobody will bid. Again, if somebody bids at the inflated starting price, they make the extra money and sell...

Godaddy has Hundreds of domain names like this listed and many end daily with No Bids. Not all have high traffic stats but most range from the $x,xxx range to the $xxx starting range for the opening bid with even much higher Buy It Now’s!

For an example, Godaddy has DiscountFurnitureOutletOnline.com listed. It's an expired domain with a starting bid of $1,300, not $10. Who is going to place a $1,300 starting bid or use the $6,500 Buy It Now? Nobody that I know! The 1,436 traffic Godaddy is reporting will clearly make money parked and if nobody wants to bid $1,300 or use the $6,5K BIN, it makes it very easy for Godaddy to keep it!

It's simply Not Right, nor Fair to "price" certain EXPIRED domain names differently then the other expired domains. Then to top it off... Keep certain domains for themself that happen to "not sell"....

Thanks for the explanation Jamie. Rep+

 

[krx]

There's a good article on this at successclick dot com (don't think I can link to it).

Bottom line (his, not mine): boycott ripoff artist registrats and stick to "domainer friendly" registrars like Fabulous, Moniker, and Rebel.

 

[Seabass]

I agree with Jamie.

I think the whole thing stinks. If they are doing nothing wrong then why did they go to great lengths to hide what they are doing from us.

This is only one facet of what Godaddy has started to do lately in terms of acting creepy.

Here's a couple other nice things they are now doing:

1. If you do a redirect, their DNS kicks in but they don't allow the domain's traffic to redirect immediately. They leave their ads on you domain for anywhere b/t one to six hours, before they allow the redirect to kick in, so as to make some extra PPC change before the redirect kicks in. I sent them a nasty email yesterday about this. There were TM ads all over some of my prized generics and I hit the roof and let them know it too.

2. If you let a domain expire they now remove it from your account much sooner than before (at what exact day I am not sure). This is so you won't renew it and most likely will forget about it and then they can make PPC money on it until it goes to auction, whereby they make money again off of the domain sale.

Ok......many will argue that with #2 if I don't pay for the domain then it is no longer mine, but I think I should be able to renew it up to the deletion stage and I think the domain should be in my account, as an expired domain, available for renewal, even at the $80 fee. However, it's not in my account.... they remove it so you forget you were ever the owner. Most other registrars leave it in your account for a long time. I do know some take your domain immediately after non-payment, but I expect more from Godaddy

 

[DomainNameWire]

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

From what I understand, no prohibitions have been passed to stop warehousing. So it's in the agreement that they comply with any prohibitions, but there aren't any.

 

[midnight251]

Here's what I think, but I know it will never happen. When a name drops, it should go straight out to the general public and first come first get, for reg fee. Registrars should not be able to keep names after they drop and auction them off.

 

[Dean]

I find a lot of the replys amusing and somewhat hypocritical. You want them to drop so basically you can reg them and then sell them in the future to make money. Well thats what the registrars are trying to do also. If you dont like it go spend xx,xxx-xxx,xxx to become a registrar and you can do it to. At the prices we have come to expect for registering a domain where there is only a few cents profit per domain for registrar, maybe no profit at all after staff and other costs are added, registrars have to make money from elsewhere. Most do it from hosting, Fabulous does it from parking, others like name.com dont seem to have anyway and that might explain why they have higher prices now as they try to become profitable. This auctioning off of expired domains is just another way for them to make money and it has a direct affect on how much we pay to reg and renew a domain. If this didnt happen we would pay more. Lower registration price lets them get more domains which when they expire could make some nice money for the registrar so it makes sense for the registrars to offer low registration prices as they can then make more of selling more expired domains.

 

[NameCharger]

If you do a redirect, their DNS kicks in but they don't allow the domain's traffic to redirect immediately..

Their 301/302 redirect process is shady. You have to change DNS to their parked servers (no big deal, this is standard procedure). Then you have to manually change the A record to 64.202.189.170 before you can start redirecting. IMO, this is a black hat procedure so GD can monetize until you contact tech support to learn about this step which is not mentioned in "Forwarding Your Domain to Another URL": http://help.godaddy.com/article/422

 

[MicroGuy]

Their 301/302 redirect process is shady. You have to change DNS to their parked servers (no big deal, this is standard procedure). Then you have to manually change the A record to 64.202.189.170 before you can start redirecting. IMO, this is a black hat procedure so GD can monetize until you contact tech support to learn about this step which is not mentioned in "Forwarding Your Domain to Another URL": http://help.godaddy.com/article/422

Agreed. This is a "known issue" that Godaddy is not motivated to correct for obvious reasons. I often wonder if the guy that created this issue got a promotion.

 

[Dave_Z]

When a name drops, it should go straight out to the general public and first come first get, for reg fee. Registrars should not be able to keep names after they drop and auction them off.

I guess it's because that's an expectation. And it so happens this industry is
one where that's largely expected.

Let's say ICANN finally says all expired domain names, especially .com, will be
placed into RGP onwards if not renewed on time, then they eventually become
available. Your next challenge is how to grab them before others beat you to
it, especially those who have more resources like more registrars.

Maybe you'll get a lucky few, maybe not. Then I guess some will complain the
other guys are having another unfair advantage by having more registrars to
try grabbing them, even though registrars are not necessarily forced to cater
to end users like you and me?

If some of you think registrars solely exist to register domains for the average
Internet user, then you might want to compel registrars like Google, Amazon,
even Microsoft to do that. I doubt they'll listen, though.

At any rate, it's supposedly being looked into by ICANN. Stay tuned.

From what I understand, no prohibitions have been passed to stop warehousing. So it's in the agreement that they comply with any prohibitions, but there aren't any.

Just one so far, but mainly to address domain tasting. We'll see.

I find a lot of the replys amusing and somewhat hypocritical.

Indeed. That's why I asked those two questions in my previous post.

 

[equity78]

The funny thing is the general public thinks they get screwed by domainers, and domainers think they are getting screwed by the registrars. Because as much as I see people here pissed at registrars I see the same by non domainers about domainers. I was at a party a while back where there was almost a need to call the police because the arguement got so out of hand. Not condoning that but it is funny how everyone thinks they are getting screwed but does not care who thinks they are screwing.

I think one of the big misconceptions is this, "I own domains and frequent domain forums and we are all on the same team." I disagree with that 100 %, I don't feel any better about someone using a drop script or a big domainer outbidding every drop than I do about Verisign or Godaddy. Some are here to get a couple domains and learn how to develop, where some are here to learn how to monetize domains, and others looking to get rich quick without working hard.

Its like someone said to me the other day, Verisign is not my friend and neither is Rick Latona, Bob Parsons or Rick Schwartz **** EM ALL, their all competition and I don't like any of them.

I also would like to state I live in an apartment building where if the rent is not on time (i.e. Paying a domain renewal) Eviction can start the next day, I am not sure why everyone champions people being late on their renewal and then saying they are the one getting screwed. I agree let them drop and no one have an advantage so anyone can reg the name.

 

[Dave_Z]

Because as much as I see people here pissed at registrars I see the same by non domainers about domainers.

Yup.

Tell you what, folks: if ICANN ever requires an expired domain to be deleted if
not renewed on time, no autoregging scripts or backorder services to gain any
subjectively unfair advantage over others. Fair?

(Yeah, like that'll happen...)

 

[-REECE-]

Too many companies in this industry are nothing but parasites, leeching every dollar they can out of people like me and you.


Customers dropping domains really is cause to celebrate! Heck, the big dropcatchers are probably hoping as many domainers as possible go bankrupt and they see some good names drop

http://img159.imageshack.us/img159/5388/monikerpl2.png

There's a good article on this at successclick dot com (don't think I can link to it).

Bottom line (his, not mine): boycott ripoff artist registrats and stick to "domainer friendly" registrars like Fabulous, Moniker, and Rebel.

 

[gazzip]

I agree with Yofie & Seabass, these issues are important and should be discussed

..Another case of Monkey see Monkey do They'll probably all do it if nobody takes the time to call them out.

...as per ICANN's lame rules.


ICANN are really the ones to blame for the majority of what's been allowed to go on for a number of years.

ICANN have been aware of the warehousing/trust issues for probably 7 years but they have'nt got the balls or the desire to deal with it by adding a policy regarding registrar warehousing.

Even the spanky new .eu has made some attempt to remove many of these "warehoused domains" from bogus shell registrars that manipulated the reg process.


There's only a few things that may change the behaviour of ICANN & the shady actions of certain Registrars.


1) Thousands of people get together to complain, that'll probably never happen as its near impossible to acheive....as mentioned by Yofie above, :red: guilty, I did'nt sign either.

2) Call out ICANN and shady registrars in blogs and news posts, embarrass them in Public to pursuade them to change their ways.
(probably the most cheap & affective way) - AKA - worked with the last actions of Numpty NetSol).

3) Don't use/support their companies, like TuCows - not always an easy option if they're all at it.

4) Wait till they get their ass sued to high heavens by some huge well funded Corp that's willing to take them on for TM or Trust issues. (something we can help with if bloggers continue to publish/expose them).


I guess the other option is to call people Cry baby Domainers then stick you head in the sand while thinking it does'nt affect you.
......................

Here's a few potential problems that can effect a wide range of people if they own a domain.....including ostridges

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

We should have more control to choose/approve which ads are shown IMO - If not we will loose big time.

.......

As mentioned by Seabass - You forward a domain or change the nameservers and some registrar decides to show ads on you domain in order to make sneaky money off you.

well how would you feel if you paid $10,000 or $100,000 for a domain and they stick ads on it that can make you loose your domain/money....all it would take for WIPO is probably one screenshot.

I have 2 domains right now that a registrar is doing this on, I uploaded 2 mini-sites and 2 days later they're still "occassionally" showing someone elses PPC ads - This is theft and very irrisponsible behaviour from a registrar IMO

..............................

Registrars put the last minute renewals up to a crazy price to put people off renewing their domain...some already have !

Registrars don't send you a renewal notice but say they did because they want your domain.....serious conflict of interest and trust issues here.

Registrars reg domains when you checked for availability - AKA Numpty NetSol

..imagine the average person checking for a new product or company name and the next day its been taken by the registrar and parked for sale.

Owner stops using a domain but its still registered for a few more years, Registrar notices/checks and then sticks a parking page on it. If a TM issue arises then the lawyers may come after the owner.

There's loads of ways Registrars manipulate the system. I think it is admirable that the likes of Yofie, theDomains.com and other bloggers take the time to point these things out, after all they're also looking out for other domainers and the general public that register a domain.

hmmm....that must make me a too....and who gives a toss if it does !

I agree with Jamie.

I think the whole thing stinks. If they are doing nothing wrong then why did they go to great lengths to hide what they are doing from us.

This is only one facet of what Godaddy has started to do lately in terms of acting creepy.

Here's a couple other nice things they are now doing:

1. If you do a redirect, their DNS kicks in but they don't allow the domain's traffic to redirect immediately. They leave their ads on you domain for anywhere b/t one to six hours, before they allow the redirect to kick in, so as to make some extra PPC change before the redirect kicks in. I sent them a nasty email yesterday about this. There were TM ads all over some of my prized generics and I hit the roof and let them know it too.

....mines been a couple of days so far, The registrar is Answerable.com but the PPC ads seem to download from nuseek.com which has privacy set on it ...not good and I doubt this is necessary.

I don't know about Black Hat but it looks more like theft of traffic in order to make money :td:



.

 

[Ms Domainer]

Their 301/302 redirect process is shady. You have to change DNS to their parked servers (no big deal, this is standard procedure). Then you have to manually change the A record to 64.202.189.170 before you can start redirecting. IMO, this is a black hat procedure so GD can monetize until you contact tech support to learn about this step which is not mentioned in "Forwarding Your Domain to Another URL": http://help.godaddy.com/article/422

???

I have never had to change an A record for a redirect.

*

 

[NameCharger]

???

I have never had to change an A record for a redirect.

*

When did you setup the redirects?

Here's an excerpt of my recent inquiry w/GD rep:

Customer Inquiry
Please 301 redirect my domain <mydomain.tld> to <forwarding URL>

It won't allow me to do URL forwarding in my control panel. Or if it does, please advise me how to do so.


Support Staff Response
Thank you for contacting Online Support.

Company policy prevents Go Daddy customer support representatives from making any changes to a customer account.

In order to take advantage of our domain name forwarding service, your domain must be set to our "park" servers.

First, you will need to login to your account.

• Click here to get to our homepage and enter your customer number or user name and your password. Click on "Secure Login" to be taken into the account.

NOTE: If you have trouble logging in, our Account Retrieval System may help you. You can use this to retrieve your customer number and/or reset your customer account password. You can find this system by selecting 'Forgot Your Password?' on the home page under the login fields.


• Select Domain Manager from the My Products menu.
• Click on the domain for which you wish to change the name servers.
• Click on one of the name servers listed near the top of this page.
• Click on the Default Nameservers tab.
• Select Default Parked Nameservers.
• Click OK.

NOTE: Changes to the settings of a domain can take up to 48 hours to become effective because of the number of networks involved, and because these networks are controlled by several different agencies. This delay applies to all domains with any Registrar. Please allow for this delay when planning web sites or configuring a domain to work with your services.


Domains that are forwarding should be pointing to an IP Address of: 64.202.189.170

You will need to modify the IP Address that your domain is pointing to. I have provided the instructions below.

To change the IP address for your domain:

1. Select Domain Manager from the My Products menu.
2. Click on the domain for which you wish to change the IP.
3. Click Total DNS Control and MX Records.
4. Under the A (Host) section, click the pencil icon for the first entry.
5. Enter the new IP address into the Points To Ip Address: field.
6. Click OK.

Please allow up to 24 hours for this information to update with the Internet routing and DNS servers.


Please let us know if we can be of any further assistance.

 

[Dean]

I never had to change A record for redirect either, redirected some of my domains a couple of months ago.

 

[Dave_Z]

Registrars put the last minute renewals up to a crazy price to put people off renewing their domain...some already have !

Sample, please? I'm curious to know what registrar does that.

 

[gazzip]

Sample, please? I'm curious to know what registrar does that.

Sorry, What i was referring to by "last minute" (..rather poorly) was the Redemption Period Fees but I forgot the exact terminology

My point is, If a registrar is also warehousing, speculating, reselling, monatising domains etc then they might also be tempted to increase the redemption fees in order to put some people off renewing.

As far as I'm aware its currently up to the individual registrar to set that price, which is why they currently range from (about) $40 all the way up to (about) $200 ....and maybe more ?


Its a clear cut conflict of interest and raises trust issues however you look at it.

A wharehousing registrar has got something to gain by getting your domain - pure and simple.


JMHO

.

 

[Dave_Z]

DomainNameWire blogged that Go Daddy will shut down Standard Tactics:

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