Today’s post will mostly be a point of view thing. But I invite you to share your thoughts as long as it’s “clean”.

As the title says, there’s been more recent talk about registrars “warehousing” domain names. Let’s see what’s going on.

Lately many people complained that certain registrars are warehousing by keeping customers’ expired domain names for themselves. As in a customer (supposedly?) doesn’t renew the domain name, and the registrar retains it instead of letting it follow the routine domain life cycle.

Before going on, I’d like to give a sort of recap what the “routine” domain life cycle is. This especially applies for .com.

When a .com domain name expires, its sponsoring registrar is billed by a “higher authority” called the Registry for one year. However, the Registry gives the registrar up to 45 days to have the expired name deleted and be refunded, especially if they’re not able to secure any renewal payment within that period.

I’ve blogged before that a popular practice for the past few years is some registrars try to auction their expired domain stock within that 45-day period before letting them go. Although it can be potentially more costly, it can at least cut down the waiting time.

Well, it so happens some registrars don’t drop those within their auction period. If no one bids on them, they still keep them.

They appear to keep only those that have residual traffic. They lace those domain names with ads, get paid for any ads that users click on, then probably dump them if they’re no longer profitable.

Another way to possibly make money is sell them to interested users. Some users pay a king’s ransom, others manage to negotiate to a more mutually-acceptable price.

Here’s a difference, though: they don’t necessarily sell or monetize them under their registrar name. Rather, they use a separate entity to deal with that.

Even though I ain’t a lawyer, I’ve since learned that one can run at least 2 or even more private business entities using different names, especially in the U.S. So I can have maybe Dave Zan Enterprises and Zanny Dave Inc and be considered “separate” entities, yet they’re actually owned by the same party which is me.

I can’t really be completely or accurately sure, but that “appears” to be what certain registrars are doing. Or at least the people running those registrars, anyway.

Just recently, it was revealed that Go Daddy created a separate company called Standard Tactics LLC where various expired domain names are kept with. Someone once queried them about this, and Standard Tactics replied they’re into researching trends in the industry. (whatever that means…)

However, many (if not all) domain names with Standard Tactics show a parking page with ads. If that isn’t monetizing it in some way, I’ve no idea what that is.

It was also blogged about a few months ago that domain registrar Tucows does a similar thing. TheDomains discussed about it, and even had a Tucows executive (the big boss, I think) join the fray.

The gist of the outrage various people are calling out is this deprives them of their chance to take a shot of grabbing an expired domain name. I do agree that being the case.

I might sound philosophical by saying this, but isn’t history replete with lots of examples of certain people doing that? I mean, someone discovers something that gives them an edge over others, uses that to become successful, but practically “leaves” them out?

Take maybe real estate speculators, for example. Especially those with money to burn, they buy certain pieces of land and either put up billboards or find willing buyers, and they can make good money out of it.

That can “leave out” certain people who otherwise want to buy those pieces of land for their own interests. But…first come first served is fair, right?

But that’s where the analogy stops. Domain registrars don’t really “own” domain names just like their customers, although they arguably have more “say” as they have direct access and control towards those registrations.

Then again, I observed that many of those complaining are “domainers” or those who like to thrive in the business, citing this activity as being “unfair” to them. But…what about the arguably average Internet user who doesn’t really understand how these things go, yet also wants to be able to register their desired domain name that might be available soon?

For me, if those guys want this to be more fair, then I’d say they ought to be more fair to those other users too. All’s fair in love and war, after all.

On the side, ICANN requested comments months back on modifying their registrar accreditation agreement. One of the things they concluded last October is to look into registrar warehousing, so time will tell what’ll happen.

But unless, say, ICANN or the Registries caps specific limitations to this, we’re going to see this going on and on. Hat tip to the following where you can also read more on the subject:

ICANN: http://forum.icann.org/lists/raa-consultation/msg00072.html

DomainNameWire: http://domainnamewire.com/2008/12/03/standard-tactics-llc-how-godaddy-profits-from-expired-domains/

TheDomains: http://www.thedomains.com/2008/10/29/tucows-now-selling-the-expired-domains-they-kept-from-their-customers/

TechCrunch: http://www.techcrunch.com/2008/12/03/godaddy-uses-standard-tactics-to-warehouse-domains/

Again, feel free to share your thoughts.

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