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Friday, June 27, 2008

ICANN's 'Tasting' Solution Termed Partial Success

The Coalition Against Domain Name Abuse (CADNA), a coalition comprised of 11 globally recognized brand-name companies, says it recognizes ICANN's solution to the problem of domain "tasting" as a partial success.

ICANN recently put forth a proposal to address tasting due in large part to CADNA's championing of this issue and because of objective research and analysis of the proposed solutions conducted by the coalition. Unfortunately, it is unlikely that the proposed solution will adequately address domain name tasting.

Domain name "tasting" is the process by which registrants obtain a domain name and track its traffic over the course of the five-day Add Grace Period (AGP). If it does not yield enough traffic to make it immediately profitable, the registrant drops the domain name within five days in order to get a refund of the 20-cent registration fee.

In January, the ICANN board approved a measure to make the 20-cent registration fee non-refundable. In June, ICANN voted on a further measure that would only allow registrars refunds up to 10 percent of net new registrations or fifty domain names, whichever is greater. The combined impact is that registrars will only be accountable for the non-refundable 20 cents on deletes beyond the 10 percent threshold, CADNA says.

CADNA says that since 2006, it has been the galvanizing voice on the issue of tasting. CADNA says it has worked tirelessly to raise awareness about tasting as the newest form of domain name monetization and has rallied support among businesses, lawmakers, and members of the media to pressure ICANN into taking more immediate action.

According to VeriSign's June 2007 Domain Industry Brief, $1.46 was the average amount paid per advertising click for the first quarter of 2007. Domain name speculators that place sponsored ads on their websites typically earn half of this amount per click.

CADNA's 2007 drop-catching study uncovered that 6.6 percent of dot-COM domains were registered immediately after post-expiration deletion and kept throughout the timeframe of the study. In other words, 6.6 percent of names were quickly deemed worthy of registration and development. By the end of the study, the percentage of names that were ultimately kept climbed to 25 percent, but that took sifting into account as some names were kited -- the practice of repeatedly tasting a domain. The 6.6 percent of the sample is the subset of names that immediately proved their value.

According to the results of the CADNA study, a registrant that registers 100,000 domain names would keep 6,600 of them on average. At $6.20 each, the cost of these domain names would be $40,920. Paired with the 20-cent ICANN fee for each of the 93,400 domains that were not kept, the total cost of the domains would be $59,600. In other words, the taster would have spent $9 per profitable domain name that was identified via tasting and kept beyond the AGP.

The 20 cents that the registrant wasted on the names that were not worth keeping would be easily covered by the ample profit from the good names they identified through tasting, CADNA says. The additional new cost per domain name would be $2.80. Since each click is worth 73 cents on average to a "traffic-squatter," each domain name would need to receive just an additional 3.8 clicks in year one in order to make up the difference from the "inconvenient" ICANN fee, CADNA adds.

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