Q&A: Cybersquatters bank on 'a good typo'

Ron Jackson is editor and publisher of the online magazine Domain Name Journal and president of its parent company, Internet Edge Inc. Tampa, Fla.-based Internet Edge also operates a domain name registrar and several other "domain monetization" businesses, and Jackson owns about 7,000 domain names focused on generic keywords. He spoke with Computerworld last week about cybersquatting and other issues related to domain name usage.

Excerpts from the interview follow:

What exactly is cybersquatting? It is one of the most misunderstood terms that is out there right now. A lot of people take it to mean that it's just owning a lot of domains. Owning a domain is no different than owning vacant land; investors look at it as real estate where they think growth is going to occur. What cybersquatting actually is -- the real meaning of the term is related to trademarks: when you go and use either a company's registered trademark or the typos of that [as a domain].

What's the motivation for registering a domain name that is similar to a famous trademark but misspelled? They would obviously want to monetize that. The misspelling part of it comes from the natural tendency to make a common typographical error. This is a practice that is very frowned upon by professionals in the business. Someone might transpose the last two letters of the word Microsoft. There could be any number of misspellings.

How much money can you make from using typos as domain names? It would very widely depending on the name. With a well-known trademark like a Microsoft, where so many people are trying to get on a given day, a good typo -- meaning one that a lot of people would make the error of typing in -- could generate thousands of dollars a month.

There could be one on a lesser-known brand that has less traffic that maybe makes $10 a month, but some of these guys might hold tens of thousands of domains. If it costs them $10 a year to register a domain, and if they make $5 or $10 a month multiplied across thousands of domains, it becomes a significant amount of money.

But doesn't this take complicity on the part of advertisers? Certainly, the only way you can monetize those domains is from the money from upstream providers [of pay-per-click ads]. They will make an attempt to try to police that, but they have so many millions of domains in their systems that it can be difficult. And a lot of [cybersquatters] will go through intermediaries, such as the [domain] parking companies.

So they would park their domain name with the intermediary? Almost in every case. The vast majority of people -- particularly the vast majority of people who are engaging in cybersquatting -- will go through a parking company. There are dozens of them, and it's such a simple procedure. Once you register the domain name, you change the name servers to point to your parking provider, and that is the company that automatically populates the pages.

How aggressive are trademark owners at chasing cybersquatters? It varies from company to company, but the majority of companies are not active at all. And that's why this problem persists, because there are people who can make a lot of money -- until recently, with little chance of getting caught or having anyone go after them.

The World Intellectual Property Organization said last month that recent trends in the domain name business include automated registrations -- That is this whole "domain tasting" issue. What that involves is that every single name that expires, every day, is snapped up by these registrars. There is a loophole in the registrar's agreement with the registry. The registry is the organization that operates the entire extension -- for example, VeriSign is the registry for the .com and .net domains. The registrar is an independent company that sells the registrations to the public.

In the contract between the registrar and registry, there is a five-day grace period. Let's say I made a mistake in typing [a domain name] in. You have five days to cancel it, and they'll give you your money back. It was meant to be a safety valve to correct honest errors. Registrars will take everything that expires and test them for five days to see if there is traffic on them. They keep the ones with traffic and make a profit.

Are all the good domain names gone? I would say in .com they probably are because that space has been so heavily mined. You can type in just about anything you can imagine, and it's going to be taken in .com if the words make any sense at all.

This story, "Q&A: Cybersquatters bank on 'a good typo'" was originally published by Computerworld.


Copyright © 2007 IDG Communications, Inc.

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