The boss of the industry’s largest domain name registrar thinks the latter scenario is closest to the truth, and he has a fair bit of evidence to back his theory up.
Bob Parsons, chief executive of Go Daddy Inc, told us yesterday he reckons a handful of North American companies gamed the system, registering thousands of premium .eu names in order to auction them off for big multiples of the purchase price.
Parsons’ theory is that a number of companies found a loophole in the registrar accreditation agreement offered by EurID, the .eu registry operator, that allowed them to gain a big advantage when the floodgates opened for .eu registrations last Friday.
According to Parsons, and substantiated by the list of accredited registrars published by EurID, hundreds of companies permitted to interface with the EurID registry were US-based paper LLCs, most of which were likely fronts for a vastly smaller number of companies.
Parsons originally thought that about 600 of the 1,100 registrars permitted to take .eu registrations may have been phoney. He told us he’s done some more digging, and reckons that number was an understatement.
The .eu landrush was set up in such a way that each registrar had to queue to request a .eu name. They put in a request, and if the name was available they got it. If it was not available, they headed to the back of the queue, and the next registrar in line got to take a crack at another name.
To be fair, EurID gave accredited registrars one place each in the queue. The problem was, according to Parsons, that the bar to becoming accredited was so low — essentially demanding little more than a 10,000-euro payment — that some companies acquired dozens or hundreds of accreditations.
Clicking through a random selection of firms on EurID’s list of registrars, one thing becomes quickly clear: dozens of them don’t even have web sites, which is pretty much a prerequisite of being a legit domain name registrar. You don’t sell these things by mail order.
Parsons said that a few domain name companies — he named Dotster, SnapNames and eNom, all known for secondary domain name services — created paper LLC companies in order to secure multiple accreditations and thus more places in the queue.
This gave them a better chance of securing the names their customers wanted, and gave them a better chance of securing a bigger price from their customers. One company in particular, which Parsons referred to in a blog posting as Company X, was particularly prolific, he said.
He wouldn’t name the company in question, but Pool.com, a subsidiary of Canada-based Momentous.ca Inc, is a likely candidate. Pool, which declined to comment for this article, was claiming an 80% success rate in securing .eu names on its web site yesterday.
While .eu names are selling for less than $15 a year on sites like Go Daddy, Pool is charging an acquisition fee of $60 and, in the event that more than one customer requests the same name, the company will auction it for the highest price.
If some of the premium generic names hit prices of four figures or beyond, as some observers are predicting, it’s easy to see how Pool.com could recoup 10,000-euro accreditation fees fairly easily, if it is indeed Company X.
Go Daddy, the largest registrar by unit market share, did not set up any dummy registrars to participate in the landrush, Parsons said. The company has lost out on some revenue as a result, he admitted.
We didn’t do as well as we should have done, Parsons said.
The practice of purchasing multiple accreditations to secure multiple connections to a domain name registry is not new. VeriSign Inc, custodian of .com and .net, has been complaining for years about the practice, which creates a big load on the registry infrastructure.
Companies such as Pool, Dotster and SnapNames offer services that give people the chance to register expiring domains at the moment that they drop, or are deleted from the registry. Companies have been known to purchase several ICANN accreditations to increase their chances of catching the drop.
Beyond that, domain name firms gaming the system is a phenomenon as old as the competitive market for domain name registrations itself. There are few domain firms of note that have not had some kind of allegation along these lines, or worse, leveled against them at some point.
It’s also worth noting that the typosquatters with an eye for traffic generation have also been hard at work, registering .eu names that have equivalents in the .edu namespace, which is dedicated to US-based educational institutions.
