Your money or your domain name!

* Domain tasting, kiting and front running

Way back in the mists of time - January this year to be exact - in my Backspin column I wrote about Network Solutions Inc. (NSI) and its practice of "front running." Given that NSI charges $34.99 for a one year registration while many other registrars charge under $10 for more or less the same service means that NSI is performing something not entirely dissimilar to highway robbery ("your money or your domain name!").

Way back in the mists of time - January this year to be exact - in my Backspin column I wrote about Network Solutions Inc. (NSI) and its practice of "front running." Allow me to quote myself to explain front running:

“Let's say you were starting a new company and you were going to, oh, I don't know, say, sell VoIP to retired sailors. You might have an "ah ha" marketing moment and decide that "callmeishmael.com" was the perfect domain name. (I use this name merely as an example because it amuses me; someone currently owns it and wants $2,288 for it. Good luck to them.) / So, with dreams of naming perfection and a subsequent IPO dancing in your head, you might well have gone to Network Solutions and searched the Whois service to see if the name was available. Should you have done so you would have run up against what others discovered: The name you just searched for was available but with a four-day 'lock' on it set by Network Solutions. This lock meant that you couldn't register the domain with a more reasonably priced registry service.”

Given that NSI charges $34.99 for a one year registration while many other registrars charge under $10 for more or less the same service means that NSI is performing something not entirely dissimilar to highway robbery ("your money or your domain name!").

I got no official response from NSI and the company (as far as I could determine) curtailed this ethically untenable practice.

There was a side effect of NSI’s practice that enabled an equally uncivilized practice: Domain tasting. A domain taster is someone who registers a desirable domain name and tries to sell it within the five day grace period. If they cancel the registration under the terms of registrar contracts with ICANN (the quasi-governmental organization that regulates the domain industry) the domain registration price is refunded. A taster’s life was very easy because NSI made the names of locked domains available to anyone who cared to examine a special domain server of theirs called reserveddomainname.com!

As an added twist when tasters cancel their registrations within the five day grace period and then re-register them, try to sell them, cancel, re-register, try again to sell them, cancel yet again and so on they are guilty of “domain kiting.”

According to Wikipedia, “In April 2006, out of 35 million registrations, only a little more than 2 million were permanent or actually purchased. By February 2007, the CEO of GoDaddy reported that of 55.1 million domain names registered, 51.5 million were canceled and refunded just before the 5 day grace period expired and only 3.6 million domain names were actually kept.”

Back in January NSI argued that their practice of front running was intended to thwart domain tasters but, of course, such an argument was completely bogus. The fact was that the NSI lock merely prevented the domain registrant from going to another registrar during the lock period and at the same time exposed the desired name to the legions of tasters and kiters who were ready to pounce once the lock expired.

On Friday, June 20, NSI issued a press release titled “Network Solutions Encourages ICANN to Adopt Transaction Fee to End Domain Tasting and Front Running.” While the underlying proposal (charging a small non-refundable fee to make a registration) is valid and useful, the fact NSI overlooks its own behavior is amazing!

This release which shows just how enormous NSI’s, er, egos are by them having the chutzpah to position themselves as having the moral high ground over the very practice they were guilty of!

Michael Arrington at TechCrunch was one of the first to call BS on the press release (the comments are worth scanning):

“Hypocrisy alert: Domain name registrar Network Solutions, which earlier this year adopted the questionable practice of registering on its own behalf any domain name searches done on its site, today urged the industry to abandon the practice.”

This prompted Shashi Bellamkonda, NSI’s Social Networking Swami (that is really his title) to respond to Arrington with:

“We have been advocating that ICANN implement a nonrefundable fee for more than 3 years because we could see domain tasting, kiting and front running were growing issues. We have public documents that prove that and I would be more than happy to provide them to you. / We published this statement today and alerted bloggers such as yourself who have already demonstrated interest in this issue. Next week’s conference is a critical moment for domain registration and issues of tasting, kiting and front running. We believe that collectively all of us can inspire ICANN to address this important matter.”

What has been missed in this particular fracas is that NSI hasn’t been the only culprit in the front running game, simply the biggest and most visible.

So why does all of this matter? Simple, the registrars are key players in the management of the Internet and they are licensed to do so by one of the most screwed-up, politicized authorities on the planet: ICANN!

This is a recipe for chaos and enabling vested interests and the result is the scandalous behavior I’ve outlined above. The Internet, the most powerful communications system in history, should not be an ATM and a game for a few select companies.

NSI’s tag line is “Solutions are power” and they’re right – when you own and control a such a “solution” with so few constraints you are really powerful. Unfairly so.

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