We have been informed that due to a security problem at one of our competitors a list of their customer data including plaintext passwords is currently circulating on the web including relevant hacker forums.

Our Security and Compliance Team has found several of our own customers matching the publicly available list. Due to the seriousness of this matter combined with the possibility that you might be using the same login data/password at more than one parking company, we strongly suggest you to change your password at Sedo.

Sedo uses cryptographically unbreakable ciphertext for password checks and does not store your password in plaintext. This, and a variety of other security measures, ensures that your Sedo account is always safe from third parties.

We generally recommend to always use different login IDs for different sites and never hand out login IDs to any third party.

Should you have any further questions or needs, your dedicated account manager is looking forward to help.

Kind regards,

Your Sedo Security and Compliance Team

They are referring to NameDrive, which, as Domain Name Wire reported yesterday, had less than 1% of their client accounts hacked recently.

Many domainers use the same passwords at different sites, including registrars, parking companies, forums and email providers. If just one of these accounts gets hacked, all your other accounts are at risk if the password is the same! This is especially true if a site stores your passwords in plaintext. However, depending on the quality of a password, hackers might be able to recover it even if it is encrypted.

Sedo has had its share of security challenges in the past, so it is very nice to see that they are alerting their customers to this common risk.

Looking at DNJournal's List of Top 100 Reported Sales of 2006, 2007 and 2008, the top 100 median sales price changed from $124,000 in 2006, to $197,500 in 2007, to $175,752.50 in 2008. After 2007's massive upsurge of 59.27%, 2008 brought with it a 11% drop. However, 2008's median price is still 41.74% higher than that of 2006.

A New Age of End User Sales

As we pointed out last year, with domain values shooting up so rapidly, very few domain owners were devoting any of their resources to actually developing their domains. There was simply no point in developing a domain you just bought if you could flip it a few months later at a significant profit. Broadly declining PPC (pay per click) revenues did not affect this situation at the time, but they have now contributed to the rapidly falling liquidity among domainers.

None of these developments appeared to have any effect on end user sales, which remained very strong in 2008. This is understandable as end users do not care about PPC revenues and the small isolated world of the domainer-to-domainer marketplace.

Let's look at the 2008 numbers and compare them with those of 2007:

At the end of 2007, of the 105 highest priced domains sold in 2007, only 33 domains (31.43%) had been developed or redirected to a developed site, 3 (2.86%) were affiliate sites, and 10 (9.52%) were either abandoned or appeared to be under development. 4 (3.81%) domains didn't resolve at all and a massive 55 domains (52.58%) displayed PPC ads.

At the end of 2008, of the 101 highest priced domains sold in 2008, 56 domains (55.45%) had been developed or redirected to a developed site, 2 (1.98%) were affiliate sites, and 15 (14.85%) were either abandoned or appeared to be under development. 2 domains (1.98%) didn't resolve at all and 26 domains (26.74%) displayed PPC ads.

The most notable change is that the percentage of developed domains increased from 31.43% in 2007 to 55.45% in 2008.

Accordingly, the percentage of domains displaying PPC ads decreased from 52.58% in 2007 to 26.74% in 2008.

Much of the increase of developed domains can be accounted for by existing businesses (end users) purchasing these domains and using them for their websites. This is a very good sign for owners of premium domain names.

At the same time, actual development on part of domainers has remained virtually non-existent. Combined with shrinking PPC revenues, the future seems bleak for domainers who do not own premium domains and are unwilling to adapt themselves from an environment conducive to PPC parking and domain flipping, to one where the wholesale market has dried up, development is king, and opportunities abound for the small number of domainers who are, by accident or design, still flush with cash.

(Now the only thing that's missing is for those geniuses who brought us the 2007 bubble to start talking down premium domains and tell us that the sky is falling so they can scoop up our assets for pennies on the dollar. Then the cycle will be complete and we'll be back in 2001, as predicted here.)

Domain Registration Growth Continues

Despite all economic troubles, the number of registered domains kept growing during 2008. However, growth has slowed down quite a bit. Over the course of 2008, the growth rate of registered domains dropped from a 30% growth rate to a 15% growth rate. gTLD domains (like .com, .net, .org) went from over a 30% growth rate in 2006 to under a 10% growth rate in 2008. ccTLDs (country code domains) noticed a similar decline as their growth rate fell from 37% to a 26% growth rate. The majority of the newly registered ccTLDs can be attributed to specific TLDs like those for Russia and China.

Of course, it's important to emphasize that even a lower growth rate means that the number of registered domains is still on the rise! And much of the drop in gTLDs can probably be attributed to the introduction of new rules affecting the domain tasting industry.

The End of Domain Parking

Domain parking in the traditional sense is dying a slow but certain death. Earnings from parking revenue dropped significantly over the course of 2008; as both search engines and parking companies tried to maintain their profits during the economic downturn, domain owners found themselves at the short end of the stick. Alternative monetization solutions like mini-development or auto-development have sprung up for those who own dozens, hundreds or even thousands of domains and don't want to concern themselves with actual development.

The LLLL Craze Is Over

On November 2nd, 2007 the last available four letter dot com domain was registered. This was the start of what was going to be an unbelievable reseller bubble; many people argued whether this bubble would ever pop or not. In early 2008, some domainers started selling their lower quality LLLL .coms for $15 to $20 each. There were quite a few larger investors as well and they were hanging on to their domains in the hope of further price increases.

In the spring of 2008, things really picked up and at one point, the lowest quality LLLL .coms were fetching $35 to $45 per domain. Higher quality domains were regularly seeing end user sales.

Over the subsequent months, things slowed down. Lower quality LLLL .coms became very difficult to sell for more than $10 and we're almost back where we started. Still, it's only a question of time until things pick up again; it is possible that by 2010 or 2011 we'll see a second, more mature and sustainable price increase for LLLL domains.

LLL Domains Cool Down

At the start of 2008, low quality LLL .com domains regularly sold at $6,400 per domain. Within a few months, this minimum had increased to around $7,000 per domain. Then everything started to quiet down and the value of most LLL domains slowly decreased. At the end of 2008, low quality LLL .com domains were selling in the range of $4,500. That's still pretty good, but nothing like the predictions we heard from top domain experts in early 2008 that even the worst LLL domains would sell for more than $10,000 by the end of the year.

End User Sales Remain Strong

When the market was at its strongest in 2008, Fund.com sold for about ten million dollars in the most expensive reported domain sale of the year. DataRecovery.com also sold for a fair amount (over $1.6 million) in March, when the industry was at its peak. As if to demonstrate that the domain industry will tough out the hard economy, Kredit.de and Invest.com both sold for over a million dollars later on in the year when the economic crisis was already in full swing.

More recent transactions like FinancialAid.com selling for $480,000, SC.com for $300,000 and YP.com for a very nice $3,850,000 demonstrate that the domaining game will continue on even through harsh times.

2008 – A Year To Remember

It is likely that 2008 will go down in history as the year that the wholesale sector of the domaining industry hit an all time high and went on to drop very rapidly in the same year. At the same time, retail sales remained strong.

It is unknown what the future holds, but it seems that the worst is over and that the domainer-to-domainer market will slowly start to rebuild itself. The primary lesson for all domainers is that we should depend neither on other domainers, nor on parking companies for our monthly income.

Looking at DNJournal's List of Top 100 Reported Sales this year (2007) and last year (2006), the top 100 median sales price has increased from $124,000 in 2006 to $197,500 in 2007.

That's an upsurge of 59.27%, which is a pretty good representation of this year's bull market in premium domains.

Owners of LLL (three letter) domains have seen the values of their domains increase by at least this percentage over the course of 2007, and the same applies to many top generic domains whose sales either remained private or simply did not meet the $100,000 threshold to be included in this year's top 100 list.

Is there a drawback to this continuing boom?

Fears of the domain market overheating have shown to be been unfounded so far. The real concern may be that with domain values shooting up so rapidly, very few domain owners are devoting any of their resources to actually developing their domains.

After all, there is simply no point in developing a domain you just bought if you can resell it a few months later at a significant profit. Broadly declining PPC (pay per click) revenues do not seem to affect this situation at all, at least for the time being.

How severe is the situation?

Let's look at the numbers:

Of the 105 highest priced domains sold in 2007, only 33 domains (31%) have been developed or redirect to a developed site, 3 are affiliate sites, and 10 are either abandoned or appear to be under development. 4 domains don't resolve at all and a massive 55 domains (52.58%) display PPC ads.

While we can safely assume that many retail sales (from domainer to end users, or among end users) go unreported and therefore do not show up in domain sales charts, I'd love to see some examples of premium domains being developed into a profitable business not just by large companies but above all by domainers and up-start companies.

Such domains could serve as shining examples to truly reinforce the monetary value and marketing power of generic domains to potential mainstream buyers, who are – for the most part – still sitting on the sidelines.

Like many in this field, Kevin, originally a family doctor, had no idea that domaining would become his career. Having achieved initial success with a webhost directory (originally a part-time venture), Kevin started offering domain registration services and provided his clients with lists of available domain names. At the the time of the dot com bust, thousands upon thousands of registered domain names were not being renewed. That was good news for Kevin's domain list business, but made it difficult to keep track of things manually. So he built a better mousetrap.

Network Solutions, the sole retail registrar of .com domains at the time, published a root zone file twice daily. This file contained approximately 5 million names and did not show when domains would be expiring. Kevin soon found a way to turn this list into a list of domain names that would soon be available. He wrote a script to compare the current lists contents to the previous one. He determined that names that disappeared from the list would become available 5 to 6 days later in the middle of the night on the West Coast of the United States.

Armed with this exclusive knowledge, Kevin would spend the night attempting to register these domains, typing in multiple browser windows on multiple computers to improve his chances. Many times, he was successful. However, many times he was beat to the punch by other domaining pioneers. He discovered that programmers like Yun Ye (Ultsearch) had developed scripts to register desired domain names instantly upon expiration. Not to be outdone, Ham wrote his own scripts. His success rate increased, but he still felt he could do better.

Kevin Ham made a bold move by going directly to registrars to seek assistance. He helped them write software to grab domains quickly after expiration. In exchange, he paid registrars up to $100 for their help in padding his portfolio.

Kevin was amassing quite a selection of domain names. Most of those were simply blank pages, earning him nothing unless sold in the aftermarket. But then Frank Schilling told him about GoTo.com (later bought by Yahoo!), a search engine that would pay him to place pay-per-click ads on his sites. His first day with GoTo, he made $1,500.

In early 2002, Kevin Ham was bringing in more than $1 million a year. Still, there was more he could do. He began domain tasting, returning the domain names with little traffic for free and registering the most visited domains. In an effort to streamline the whole enterprise, he pulled his domain names from registrars and set up his own. He then founded HitFarm, an ad company designed to do what Yahoo! was doing for him, without the commission.

Kevin’s software was also grabbing plenty of trademark typos for him as well, resulting in claims of typo-squatting by trademark holders. Concerned about legal risks with tasting and typo-squatting, he has since abandoned the practices. He’s found a better way.

Many domainers may be aware that entering almost any domain name followed by the ccTLD .cm results in a search page full of pay-per-click ads. (Example, www.dailydomainer.cm) This, of course is a clever use of Cameroon’s .cm ccTLD to essentially typo-squat every .com domain name in existence, and even those not yet registered. What many domainers did not know until last week is that Kevin Ham is the man behind the curtain.

Cameroon, an African nation of 18 million with just 167,000 computers, was using a very small portion of its virtual real estate. Like hundreds of other domainers, Kevin Ham saw that .cm is a reasonable typo for .com. But Kevin was the only one to seize the opportunity – and he succeeded: His team worked to negotiate a deal with the government of Cameroon, which in turn created a wildcard DNS record to reroute any .cm domain name to Agoga.com. Of course, .cm domains that have actually been registered are not subject to the rerouting, but all other possible combinations of letters, number and hyphens are. Kevin then pays the government of Cameroon an undisclosed portion of his pay-per-click windfall.

The true genius of the system? He did not have to go out and register the millions of domains he is effectively parked on by using the wildcard. Since he does not own those domains, his legal liability to trademark holders is hazy at best. Noted domaining attorney John Berryhill agrees. "You can't really say that [wildcarding] is targeting trademarks. It captures all the traffic, not just trademark traffic."

It’s a scheme so innovative, Kevin Ham took out a patent on it. He’s currently working on deals to make similar arrangements with Colombia (.co). Oman (.om), Nigeria (.ne) and Ethiopia (.et).

What’s next for Kevin? He’s now working on developing some of his most marketable domains. He has started Reinvent Technologies to turn his top domains into valuable companies of their own. His first choice? Religion.com.

Read Paul Sloan's entire article here or get the current issue of Business 2.0.

Daily Domainer comments

The Man Who Owns The Internet is clearly a landmark story for the domain industry, second only to Masters of Their Domains (Dec. 2005), which had introduced Richard Rosenblatt and thousands of new domainers to the power of domains. While several commentators have focused their attention almost exclusively on the .cm stunt (mostly in a negative/jealous way), the article has already started attracting new capital and new faces to the domain industry.

Here's how it could work.

Domainers control a large portion of the web's traffic. According to Frank, the world's top six domainers alone receive more than 300 million unique visitors to their domains each and every month.

Right now, most domainer-owned domains are parked, which means that they show nothing but PPC (pay per click) ads provided by Google or Yahoo. If domainers were to set up uniform wikis with paid-search listings and relevant content on each of their domains, these sites would continue to receive the type-in traffic they already get.

Additionally, they would start to attract search engine traffic as well, which would be drawn to the domains due to the unique and relevant content appearing on them.

If domain owners reinvested all the profits from each of their sites into attracting more and more traffic (through PPC ads and other means), eventually the balance of power could shift from the search engines to these vertical sites.

How?

Increasing numbers of end users who are looking for information about, say, Antarctica will no longer enter "Antarctica" into Google but simply type Antarctica.com into their browser's address bar.

Initially, the balance of power would only shift for that one keyphrase, but if repeated over enough popular domains, end users would realize in increasing numbers that visiting a domain directly is often the most accurate way of finding relevant information about the keyword(s) contained in the domain.

Traffic to these domains would skyrocket and reinforce itself over and over again. At some point, a conglomerate of domainers could set up its own search engine and advertising network, and there is nothing that Google could do about it.

However, Frank points out that none of this actually has to happen for a massive shift to occur.

All it would take is for investors to finally understand the real secret of Google's initial success (excellent search results and cooperation with syndication partners), as well as the disruptive potential of domains to attract, inform, entertain and monetize their visitors all by themselves – without Google's involvement on either side of the equation.

As soon as investors "get" that, there are two possible outcomes:

1. Values of domains will skyrocket and domainers will be bought out by Google, Yahoo and/or Microsoft to the tune of billions of dollars.
2. Google, which is currently overvalued because investors do not see any alternative, will lose some of its market capitalization.

Sounds like a plan? Frank is not sure whether he actually wants to go for it:

If it's so simple, why not try to out-Google Google? [...] Why bother when your cup already overfloweth.. Many domain owners are content with revenues from Google or Yahoo so it's difficult to marshall the interests of all six parties to roll-out a uniform implementation. Still, as a Google stock holder — keeping a disruptive technology at bay by keeping its masters disagreeable is no foundation for $450+ per share.

The Daily Domainer first reported on the initial signs of domainers developing their own content networks two months ago. Back then, it was all about the "Death of Domain Parking". But Frank Schilling has taken this vision to the next level. What do our readers think: Can domainers give Google a run for its money?

The difference is that, instead of advertisers paying for each click their ad receives, they would only pay for a click through to their website if the click resulted in the site visitor taking a specific action on the site, such as buying a product or completing a form.

The most obvious flaw with this concept is that it removes the incentive for advertisers to work on improving the conversion rates of their websites. If they can get all the traffic they want and only have to pay for actual sales or subscriptions, there is no need for continually tweaking their website layout, advertising copy, and other factors that have a direct effect on conversion rates.

It is unclear how Google CPA will affect domainers who earn money from parked domains. There are several factors here that we must consider.

1. If (but more likely, when) Google launches Google CPA, many of Google's current AdWords advertisers will jump at the opportunity to get free traffic without having to watch conversion rates. Such a free-for-all scenario will be a nightmare for domainers and lower all our incomes dramatically.
2. On the other hand, if Google is going to require minimum conversion rates from CPA advertisers, then it's really just the same as CPC. If you pay $5 per signup and Google tells you that you must generate at least one signup in every 100 clicks to continue advertising with them, then you might as well pay $0.05 per click. Statistically, most advertisers that are allowed to remain active would generate one signup per less than 100 clicks. The outcome: Google will actually earn more money from those of its advertisers who love the CPA option as a gimmick but do not realize that they would actually spend less if they simply paid per click. In this scenario, income for domainers with quality domains could actually increase.
3. As for those who are saying that Google CPA will eliminate click fraud: it won't. On the contrary, it will make it much easier. Instead of having to click on thousands of ads through hundreds of proxies and hijacked computers around the world, professional click fraudsters will just need to click on a handful of ads and complete the corresponding actions (submit a form etc.) to generate a much larger amount of financial damage. More click fraud means less advertiser confidence, which could lower overall earnings both for Google and domainers.

With the buzz of Google’s latest round of Google CPA testing, people are definitely talking about the program on the Net. Readers of Kevin Sloan's The Key and Frank Schilling's Seven Mile blogs have been voicing their opinions candidly on the issue and there’s some definite banter going on DomainState. I haven’t seen anyone commenting on there yet who is actually participating in the test program, so if you’re already a part of the new Google CPA test service (or even if you’re not), write in here and let us know what you think of it all.

The issues:

The number of cybersquatting disputes filed with the World Intellectual Property Organization (WIPO) in 2006 increased by 25% as compared to 2005.

WIPO sees this as evidence that cybersquatting is on the rise. However, so is Internet usage and domain name ownership in general. Additionally, in its Proposed Program and Budget For 2006/07 WIPO congratulates itself that its own awareness-raising activities (!) are at least partially responsible for the increase in UDRP cases:

It is estimated that in 2006/07 the income of the Center will be around two million Swiss francs, of which almost 1.5 million Swiss francs is for UDRP procedures (at an estimated rate of three new cases per day). A gradual increase in the number of Arbitration and Mediation procedures is also expected, based on an expected increase in the types of intellectual property transactions that lend themselves to resolution through procedures other than court litigation, and a continuation of the Center’s awareness-raising activities. [emphasis added]

WIPO's press release continues:

Practices such as ‘domain name tasting’ risk turning the domain name system into a mostly speculative market. Domain names used to be primarily specific identifiers of businesses and other Internet users, but many names nowadays are mere commodities for speculative gain. The rate at which domain names change hands and the difficulty to track such mass automated registrations challenge trademark owners in their pursuit of cybersquatters. With domain names becoming moving targets for rights holders, due consideration should be given to concrete policy responses.

At least in theory, domain tasting allows registrants to continually register, drop and re-register trademarked domains under different identities, making it difficult to track who actually owns the domain.

But is this actually happening on a large scale? Most large domain tasters seem to taste for the purpose of finding profitable domains that they can actually keep. To stop domain tasting almost entirely, all it would take is to get VeriSign (which remains unmentioned in the press release) to charge a $0.05 fee for each deletion.

In 2006, a total of 1,823 (gTLDs and country code Top Level Domains (ccTLDs)) complaints alleging cybersquatting – the abusive registration as domain names of trademarks – were filed with WIPO’s Arbitration and Mediation Center (Center), representing the highest number of cybersquatting cases handled by WIPO since the year 2000.

As stated, the number of annual cases isn't even back at 2000 levels yet. Here are the actual numbers:

2000 – 1,857 cases
2001 – 1,556 cases
2002 – 1,208 cases
2003 – 1,100 cases
2004 – 1,176 cases
2005 – 1,456 cases
2006 – 1,823 cases

WIPO then describes how recent developments in the domain industry have contributed to the perceived problem of mass registrations:

The combined effect of developments such as: the use of ‘Whois’ privacy services for registrations; the growth in the number of professional domain name dealers and the volume of their activity; the use of computer software to automatically register expired domain names and their ‘parking’ on pay-per-click portal sites; the option to register names for free for a five-day ‘tasting’ period; the growth in the number of accredited registrars; and the establishment of new gTLDs, is to create greater opportunities for mass registration of domain names. Such registrations are often anonymously undertaken on a serial basis without particular attention to third-party intellectual property rights. Traditionally, cybersquatting involved the registration of domain names by individuals seeking to sell the ‘squatted’ domain name. Nowadays, ‘domainers’ derive income from the large-scale automated registration of domain names. They acquire domain name portfolios, buy and sell domain names, and park domain names, claiming a significant share of the well over 100 million domain names that are now registered.

Yes, all of this is happening. But only an infinitely small percentage of domainers is involved in cybersquatting. Millions of domains are registered each year, and the – by comparison – ridiculously low number of UDRP cases (1,823 last year) shows that cybersquatting is only a very minor problem that is more than adequately addressed with current policies and procedures.

There is a rapid growth of domain parking sites, on which links to other sites are organized and indexed. These links usually operate on a ‘pay-per-click’ basis with registrants and parking services sharing revenue generated by web traffic.

WIPO conveniently fails to mention Google and Yahoo, who are the main beneficiaries of parked domain traffic. An estimated 10% to 15% of Google's ad revenue is generated through parked domains. Nevertheless, only a very small percentage of these domains falls under the "cybersquatting" category. Microsoft is more aggressive and is Quietly Making Untold Millions by diverting typo traffic to their search engine.

Increasingly, service providers are offering Whois privacy services allowing domain name registrations to be made through a proxy registrant, which is often a registrar-related entity. One reason for such identity-shield developments is to avoid registrants receiving ‘spam’ as a result of their contact details being made publicly available on the Whois database. WIPO panel decisions are beginning to explore the practical implications for the UDRP of these developments, for example in terms of whether or not the privacy service discloses the identity of its client once the service has been alerted to concerns of trademark infringement. The fundamental assumption of the UDRP is that the formal respondent for case purposes is to be found in the applicable Whois database.

It should be up to each defendant to decide whether to ignore the proceedings, to respond under the protection of anonymity, or to identify himself when responding. Each case should be judged on its own merits and the burden of proof should be upon the complainant.

The "bad faith" component of UDRP proceedings is a joke anyway and usually results in WIPO panelists trying to divine the thoughts in the head of a registrant at the time he registered a domain. This often creates the both Kafkaesque and Orwellian impression that a panelist first makes up his mind about a case and then retroactively projects his conclusions into the registrant's head at the time he had made the registration, and finally uses these "findings" to support his decision. (See "Think The Wrong Thought – Lose Your Domain?")

In summary, WIPO's press release is sensational and prone to misinterpretation. It raises some interesting points but fails to offer any solutions, which would actually be quite simple. Concerned about domain tasting? Tell VeriSign to introduce a $0.05 deletion fee or simply try to "press-release" Google and Yahoo into stopping the monetization of domains that are less than 5 days old. Concerned about cybersquatters? Continue to encourage those who believe they have been victimized to file a UDRP case. UDRP works well enough for many cases, despite serious shortcomings such as the "bad faith" clause which might be fixed in the future.

Most domainers are not interested in cybersquatting and probably resent WIPO for painting them with the same broad brush, and take pleasure in ridiculing those clueless mainstream reporters who misunderstand the issue.

Like most breakups, it wasn't pretty.

A few days ago we received the following email in our inbox:

Dear Domain Owner,

As someone with a valuable domain portfolio, we would like to invite you to open a direct account on DomainSponsor. We are known in the industry as the leader in domain monetization with a strong focus on quality of service and revenue growth. With a direct relationship you will experience this level of service and additional benefits.

To take advantage of this offer, please go to [...] and complete an online application. Once you have done so, please send an e-mail to Jim Grace at [...]. As your Account Manager, he will approve the application and present you with a special revenue share as part of this offer.

If you have any question or concerns, please contact Jim as well. Thank you. [...]

If you have received this message in error, or wish to opt-out from receiving future email correspondence from DomainSponsor please click here and reply “unsubscribe” in the subject line.

Regards,

DomainSponsor Support Team
DomainSponsor.com [...]

The message seemed strangely out of character at the time so we quickly discounted it as spam, some sort of phishing attempt or simply a "joe job".

The next day, we received another email, this time from TrafficClub.

Dear TrafficClub account holder:

As you know, Moniker is constantly working to provide you with the best Domain Asset Management services available, including TrafficClub, one of the highest revenue generating monetization services on the market. We want to keep you updated on some product transitions taking place at TrafficClub.

Due to changes occurring within the monetization industry, several Pay Per Click partners are changing their rules and guidelines and therefore are no longer a fit for our network. We continue to work closely with our highest performing partners, and have temporarily redirected your account(s) through one feed. As you know, we're committed to making sure your revenue remains high throughout this transition process. As a result of this shift, you may even see an increase in revenue.

We are currently developing alternate solutions and will update you as new partners and products become available. Moniker will continue to work to bring you targeted advertising, increased value and the best monetization options available.

Sincerely,

Moniker's TrafficClub Support Team [...]

This email was even more confusing. It appeared to be "spin pure", without any explanation of what had happened, and left us quite puzzled. Had we fallen victim to a guerilla marketing campaign? Was someone out there impersonating parking companies with the goal of creating confusion in the marketplace?

No. Both emails were real, and strangely enough, both were about the same issue – even though neither of them addressed it directly!

TrafficClub had always been offering its members a choice between DomainSponsor, Google and Skenzo feeds. TrafficClub got the first two of these feeds from DomainSponsor. But according to DomainSponsor, they were instructed by Google to stop dealing with TrafficClub, which left TrafficClub with just one feed: Skenzo.

When Moniker was about to announce the breakup, DomainSponsor performed whois lookups on all of TrafficClub's clients and sent them the email we quoted at the top of this post. Moniker hastily reacted with the email shown above. When confronted with accusations that DomainSponsor was trying to steal TrafficClub's customers, Ron Sheridan of DomainSponsor posted the following explanation to several domainer forums:

[...] we sent out an e-mail inviting TrafficClub customers to deal directly with DomainSponsor.

We would like to apologize if our email notification appeared as “spam”. We were attempting to reach out to customers who were enjoying our DomainSponsor program via TrafficClub. We felt we had good reason and justification to do so but the email did not speak to the reason we were forced to send it. The email was created and sent in haste and failed to give the larger context.

Background: On mid day Friday we were notified by our largest upstream PPC provider that we were to immediately terminate our participation in TrafficClub. We quickly notified TC and apprised them of the situation. TC asked for more time which seemed reasonable. While we were not given more time on our end, we decided to extend the deadline to Wednesday (yesterday) midnight and absorb any financial and legal risks ourselves.

We were expecting an announcement by TC to those customers affected. As of 5:00pm pst on Wednesday no announcement seemed forthcoming, and we saw that as a direct reflection on us. We decided it was necessary to send an announcement on our own. We have been very happy with our relationship with TC and it is with great sadness that we had to terminate it. This was not a DS decision or a TC decision…it was something forced upon us.

We think this development which precipitated our email, is part of a larger effort from the large upstream providers to exert more control over their distribution. In that context, our main concern is to ensure we abide by our terms of service thus ensuring our clients the most sustainable and highest performing experience. That said we could have and should have handled the specific communication better, and we apologize to those directly impacted especially the TrafficClub team. We welcome anyone who has concerns to contact us directly and discuss with us.

Monte Cahn, the CEO of TrafficClub, presented the following explanation:

As some of you may know, Google decided to make some sweeping changes with their partners regarding 3rd and 4th party feeds. TrafficClub.com was unique as it allowed multiple feeds to compete on a domain by domain basis and select not only the feed but the landing pages that monetized the best for each domain.

DomainSponsor/Oversee was one of 3 Google feed in TrafficClub and WAS considered a partner until yesterday when they decided to do whois look ups and aggregate all contact information they had on TC customers on every domain name and directly solicit our customers. In my opinion and after a direct conversation with their management (after I was even solicited), their intent was to take advantage of the situation and steal our customers. They were actually planning this for days.

Sometimes it takes a while to discover the true colors of companies and their management.

The great news is that they flushed themselves out of the system and revenue and performance will increase as a result. TrafficClub will only get better when we learn from experiences such as these.

My advice is to choose your partners carefully and work with people/companies you can really trust and who are aligned with with you. If you never learn from your mistakes, you will never grow. We just learned from ours.

The Daily Domainer is with TrafficClub on this one. DomainSponsor's after-the-fact explanation

We were expecting an announcement by TC to those customers affected. As of 5:00pm pst on Wednesday no announcement seemed forthcoming, and we saw that as a direct reflection on us. We decided it was necessary to send an announcement on our own.

is illogical. Their original email didn't explain what had happened… it didn't even mention TrafficClub! Instead, it left us confused and appeared to be such blatant spam that we initially put it aside in the belief that it couldn't have possibly been sent by DomainSponsor. (Join TrafficClub – a quick plug to help them recover any customers they might have lost due to DomainSponsor's email.)

What's the bigger issue here? Apparently Google is cracking down on parking companies that aren't dealing with them directly. Skenzo is using Google, too, and it can be taken for granted that TrafficClub is working on an alternative solution, which might involve dealing directly with Google or even creating their own PPC program.

• A perfect domain name pops into your mind.
• A quick check at your favorite domain registrar reveals that the domain is still available.
• For some reason, you put off the actual registration for a few days.
• And when you come back to finally register the domain, it's taken by someone else!

In many cases, this is simply a coincidence. But there are increasing reports of domain search data being sold to domain tasting companies which then register your domain ideas to see if they attract any traffic.

No traffic? No problem. The domain taster simply drops the domain after five days. But if the domain proves popular, the taster will keep it and monetize its traffic through PPC (pay per click) ads.

Bob Parsons of GoDaddy.com was one of the first to raise hell about domain tasting. He focused on what he calls "domain kiting" – repeatedly registering a domain and dropping it right before the end of Verisign's 5 days refund period, only to reregister it shortly thereafter. This strategy ensures that the domain taster never actually pays for the domain, even though his payment is "on deposit" with Verisign and therefore tied up permanently.

GoDaddy and its associated companies do not engage in domain tasting, according to Parsons. Not that they would have to: GoDaddy already earns millions of dollars in PPC revenue off their client's newly registered and/or unused domains.

While the Daily Domainer considers random domain tasting to be a legitimate business, we believe that leeching off the domain searches of others (who expect their domain ideas to remain private) differs by several orders of ethical magnitude. Recent mainstream press reports about domain tasting in general are bad enough already.

For example, last night an Associated Press article made the rounds (read the full version here) and the arguments are predictable: Domain tasting is defended by those who are engaged in it and attacked by those who either missed the boat or consider themselves too "above-board" to take advantage of the opportunity.

Until recently, prospective domain tasters had to set up their own domain registrar to get started. But even individual domainers can now use registrars such as Dynadot or Moniker to register domains and give them back within 4 to 5 days at no charge (Dynadot). This is very helpful if you're eying several domains and are undecided which ones to use.

So what can domain owners learn from this?

• Delay searching for available domains until you're actually prepared to follow through with the registration. Better still, search for and register new domain ideas immediately whenever inspiration strikes you.
• If one of your domain searches is registered by a domain taster shortly after you checked availability of the domain, and you still want the domain, wait five days and it might become available again. Do not visit the domain during these five days, otherwise the domain taster will believe that the domain gets enough traffic to warrant adding it to his permanent portfolio!
• If you're thinking of several domains for a project and are undecided which one to use, register all of your domain ideas immediately. If you use a registrar like Moniker or Dynadot, you'll have 4-5 days to decide if you actually want to keep a domain once you have registered it. This practically eliminates the danger of impulse registrations that you might regret later.

Finally, if after reading this post and despite all our warnings you are thinking about joining the "dark side" of domain leeches and spies, here's how you could go about it.

1. Set up your own domain search tool or approach registrars that will sell you their search data (not GoDaddy of course, they are too ethical to even consider doing something like that! ).
2. Once you have gained access to the domain search data, analyze it and register promising domains to test them for traffic. The faster you do this, the better.
3. Keep domains that earn at least 5% to 10% of their annual registration fee during the first five days. Drop all others.

And last not least: Be prepared for a massive backlash from disappointed end users who will publicly accuse you of having "stolen" their domain!