Domain name market out of control?

Have you ever tried to look for a good domain name for your company, one of it's brands, or a project and found the good ones you wanted were taken? Did you end up with a secondary domain name because you couldn't get the one you wanted?

Did you notice many of those you wanted were parked and not even being used? That may be because investors or speculators (aka squatters) buy up domain names in bulk like virtual real estate just so people like you can buy domain names from them at inflated prices instead of the registrar at the base price.

How is this fair? It isn't and unfortunately, there aren't enough rules setup to regulate this. People can buy domain names for relatively cheap from registrars at $10/name or less in bulk so someone with some money to invest can purchase literally 100's, 1,000's or even 10,000's of domain names to potentially sell to some people with money. People can purchase several popular domain name extensions including the most popular .com as well as .net, .org, and many others dirt cheap without any requirements.

Many domain names sell for $1,000's on reseller markets such as AfterNIC or Sedo with some speculators hoping to hit the jackpot and have one of those domains that sell for $100k+. The domain name market is basically a capitalist environment with no cap and domain names for sale to the highest bidder.

A simple thing like a domain name can have a huge impact on marketing your business. Something as simple as having a domain name that matches your brand can make it a lot easier for potential buyers to find you. Even buying up similar or misspelled domain names similar to your company and/or its brands can help keep you from potential disaster of people attempting to cause harm to your company. And apparently there are some people or major corporations out there who are willing to spend a small fortune on the right domain names. This is likely encouraging more investment by speculators like a snowball effect.

Although a group called ICANN regulates the domain name market, but they impose few rules to regulate this situation. Even the companies that actually serve up the root domain name extensions such as .com,.net,.org, etc do little to regulate the market either. Only a handful of those such as those responsible for .gov and .edu even impose requirements.

Some domain extensions assigned to countries aren't even being used by them, but by foreigners who found it appropriate. For example, .tv may be a country extension, but since it also doubles as the abbreviation for television, you may find many foreign production companies are purchasing domain names with this extension.

So what's the solution to regulate this market? How about this:

• Raise the bar at the lower end from the low $10/name to something closer to $100/name and distribute that income to ICANN and the company responsible for the domain extension being purchased.
• Put a cap on the reseller market to something more reasonable such as $10,000 so that speculators can still make a profit but don't have the jackpot incentive.
• Require companies responsible for domain extensions do background research on buyers appropriate for their extension. For example, if someone wants a .com, they should provide a business license or some other proof they have a reason to use the .com for their business. If they want a .org, the business should provide their non-profit information. Most of this information can be researched on various state and possibly country websites within a few minutes making it worthwhile for the time invested in research.

Right now there's a huge variance in prices anywhere from the $10 domain names you may find on eBay to well over $100k on reseller market websites. So, apparently some people eventually want to dump some of their domains and others are holding on to them for the right price, but someone just looking for a domain name may not know it's even for sale or how much and when they're given a price, they seem shocked.

What potential buyers may not realize is that part of pricing is the domain extension and with most people familiar with .com, those domain names can go through the roof with pricing whereas many other extensions can still be purchased directly from the registrar because speculators don't bother buying them. They know most people haven't even heard of the extension and therefore they're less valuable. For example, the closest business extension to .com would probably be .biz, but not everyone has heard of .biz so it's not an extension you'd know to type in if you're guessing where the website is for your favorite business or you might question if its even a real business if they don't have the .com.

ICANN's answer to this issue is to apparently continue adding new domain extensions. But then what happens with trademarks, copyrights infringements, etc? For example, do you think Microsoft, who already owns microsoft.com, would buy something like microsoft.biz (if they didn't own it already) from a speculator for their $100k jackpot they want or sue them for it using Microsoft's own attorneys they already have on staff and put the speculator in the poorhouse? This could even happen to an innocent new business owner that just happen to start a new business with the same or similar name to another who has a trademark on theirs.

Over the years we've been in this market, we've also acquired dozens of domain names we don't use. We had to go through 100's or even 1,000's of domain name lookups and dozens of manhours just to find maybe a handful of decent domain names. It could literally take weeks to build a decent portfolio of a few dozen names. Most were for the process of brainstorming names for our parent company's various brands.

Now we have some of these domains for sale and posted on our website but if giving up a few dozen domain names meant freeing up 100,000's of other domain names others are holding, it would be well worth our sacrifice to have the chance to pick up a better domain someone else was holding and decided to drop.

Someone should step in to help regulate this market better because it shouldn't be so tough to find a decent domain name.

Publish Press, an Enterprise Effect company, provides marketing services for small businesses.