domain grace period scheme

[March2005]

Below is a pricing quote from the Go Daddy founder that I cannot figure out. Does anyone have any insights?

The full article is here, but I will not link to it, so copy and paste it.

www.bobparsons.com/adddropscheme.html

Here's the quote from Bob Parsons:

It doesn't take much for a name to stay in an add/droppers portfolio.

How does the add/dropper decide which names to keep? As long as it throws off more revenue than the opportunity cost associated with the .COM one year registration deposit - this amount is very low and could be as little as 36 cents. For example, the deposit required to register a .COM name is $6.00. If a add/drop registrar has an annual interest cost of 6% the name only needs to earn them 36 cents for them to keep in their portfolio (36 cents = $6.00 x 6%).

 

[Duckinla]

I think you're assuming the $6 is borrowed? In that case, the $6 has to be paid back at some point and an additional $6 has to be borrowed each year to re-register. After 5 years you would owe $30 and have an annual interest payment of $1.80 on a domain that makes 36 cents annually. As you can see, you will quickly fall behind. In reality the domain needs to make $6.36 to break even. Or maybe you mean 36 cents in additon to the $6?

By the way, I think Bob Parsons is mistaken. I have been told that ICANN wants the add/drop scheme because they feel that the more ability companies have to test domains, the more total domains will exist as a result. ICANN believes that the net positive of more overall kept registrations outweighs the negative of the testing period. I think Bob Parsons might just be criticizing a service that other registrars offer and his company does not. He needs to get on board and start offering his customers this service.

 

[jdk]

I believe he means in addition to the registration fee of $6.

 

[Honan]

He is talking about the "five day window during which a newly registered domain name can be deleted or dropped and the registration fee is then refunded by the Registry" to the registrar
I think he means if a name will earn 36 cents in the 5 day period and then the name is drpped and refunded, the registrar has paid the interest on the deposit of $6 for a whole year.
And then repeat the same thing every 5 days for a year without paying any interest.

 

[Duckinla]

I realize now that the (mis)information comes from Bob Parsons article directly, sorry, didn't recognize it as a quote at first. It talks about keeping a domain in the portfolio, so definitely not referring to the drop period.

It reads as if a domain actually only has to have revenue of 36 cents per year to stay in a portfolio. I think it is intentionally misleading and intended to damn the "big-guys" and generate support for a self-serving point. Anyone who talks about making money on domain parking typically talks in terms of making more than the registration fee.

The whole article reads to me like the mattress salesman trying to explain why his product doesn't keep up with the industry by offering any kind of satisfaction guarantee and how a satisfaction guarantee is somehow bad for you anyways. I ain't buying it.

 

[mike031]

he has a very good and valid point.

i don't know if icann is going to do anything though, afterall... all these guys that have been doing this for the past year or so (not too many of em, around 5 or so big players) are the largest domain holders in the world and they spend $x,xxx,xxx yearly on domains and will continue to do so.

last i checked, it was all about the big bucks... don't know, maybe that will change.....how soon? good question... i don't see this being settled or even being properly evaluated unless individuals and/or companies start slapping eachother with lawsuits. that just might be the next step needed.

 

[Duckinla]

I don't get at all how this only benefits the big players. Taking the risk out certainly helps the little players like me and you. I have probably 200 domains registered last year at Godaddy that I will let drop this year. That's $1,400 in wasted registrations. This year I am at Moniker I can watch a name for 4 days and drop it for 25 cents. The same 200 bad names will cost me $50 to drop instead of $1,400 in registration fees. That frees me up to take a lot more risks and pursue a lot more opportunities. Seems to me the little guy has much more opportunity now to compete with those who have the deep pockets and investor money to better absorb the losses.

 

[mike031]

it's neither for the smaller/poor "domainers" or bigger "players" --- it is for registars. if there is an error, typo, fraud or whatever other problem...there is a 5 day window to get it fixed if handled properly.

there are always loopholes and it's tough to come up with a system that is perfect but the way things are, there is just too much abuse and other problems stirring.

it was a brilliant idea to start with this traffic testing, whoever first thought of it...but it has definitely gotten out of control.

 

[Duckinla]

Like I said earlier, I believe ICANN wants to maximize new domain creation.

Consider that at 25 cents per failure, I could test 5600 new domains and incur the same $1,400 loss that I had last year on 200 domains. Of those 5600, if I keep one percent, that's 56 new long-term domains that would not have been created otherwise.

Not that I'm going to do that, but you can see how it would help ICANN to maximize the number of new domain registrations...even after cancellations.

 

[mike031]

go for it, while its allowed...why not! but sooner then later, a clause will be added where abuse/excessive usage of this won't be tolerated and of course there will be consequences if you don't play by the rules.

might be just a slap on the wrist... might be big $$$ penalties. who knows.

 

[March2005]

I still do not understand Bob Parson’s quote, but I do not care much about it anymore because I understand the rest of the article I think.

By my math, it seems like if a domain name made 8.3 cents during the five-day test period, then the company would keep it.

That sounds like a risky game. I do not think that five days is enough time to test most names. Maybe they hold onto all names that get a certain amount of traffic; or every name that gets at least two PPC clicks or something like that.

Are there some domain names out there that are not actually registered, because they are dropped for one second 73 times each 365 day cycle? That sounds like a risky game as well, unless the company had some serious hardware to keep that afloat.

 

[Duckinla]

By my math, it seems like if a domain name made 8.3 cents during the five-day test period, then the company would keep it.

It's not quite as cut and dried as that. If the 8 cents came from one visitor, that would be too risky to keep. If it made only 2 cents but had 30 visitors, that would be a safer choice. 1 visitor is 5 days doesn't let you make any statistical predictions. With 30 visitors you assume the keywords will optimize some, improving click through rates and values.

I don't know if the 25 cent drop fee applies to everyone, but if it does it would kill the register/drop/register scheme as 73 quarters would be $18.25 over the year.

 

[Honan]

IMHO, the article is explaining how registrars monetize domains for the 5 day grace period

It is called add/drop because they add them for 5 days and then let them drop and get the refund. It appears the ICANN fee is not even charged during the first 5 days however I don't know for sure.
So the registrar's expenses are limited to the interest paid on the $6 they borrow to pay the refundable deposit. Multiply by xxx,xxx every week.

 

[Duckinla]

If you read the article a second time I think you will see it's not so much about gaming the 5 day period for revenue. It's more about trolling with a big net for a small amount of keepers. That's how I read it anyway.

If there is no cancellation fee for the big guys, Bob should make that the platform of his arguement. I think anyone could agree that there must be some kind of cancellation fee. No one should be able to tie up domain names for 5 days without some cost for that time period. If Bob stops arguing against the entire system and starts arguing for a minimum cancellation fee (say 25 cents like you pay at Moniker) I think he will have a much more supportable arguement. Once you get the cancellation fee at the right price, it will reduce the trolling.

 

[labrocca]

It's a good article from Parsons. Something I 100% agree with him on...however I thought this was funny.

It started when the search engines arrived.
When search engines arrived on the Internet, Registrars and other enterprising individuals learned that it was possible to place search engine links on website pages. When Internet users landed on those pages and clicked on those links, there was money to be made. This was the genesis of a whole new Internet industry, which for lack of a better name, I’ll call traffic monetization.

Odd how he is taking credit for the term "traffic monetization"...what an ego this guy has.

 

[LeeRyder]

which part of

for lack of a better name

did you fail to understand?

 

[Julio]

I done it 2 times. One was because I didn't know that .us names you could hide your info by paying for privacy and i cancelled the name. The other I missed typed the name that I wanted.

 

[labrocca]

which part of


did you fail to understand?

which part of

I'll call

did you fail to understand...???


There isn't a "lack of a better term" since TRAFFIC MONETIZATION has been a coined phrase for years now. He should have stated...

"which has been commonly called Traffic Monetization".

 

[wrdekle]

Catch and release (this 5-day cancellation period) practice is basically like drift-nets in the ocean. They gobble up everything and take everything worth taking. In little under a year, almost everything worthwhile in ASCII (that is receiving viable traffic) has been registered by the big domain portfolios while they "released" all the domain names they registered which did not yield traffic.

Bob is clearly against this because it is counter to Godaddy's business model. Go-daddy is like a bait shop that serves the individual fisherman. But no one will want to buy bait because the drift-net fisherman have drained the entire ocean of anything worth owning! The little guys who are still dabbling in ascii are then basically schmucking around in worthless domain names. The only refuge independent domainers have currently is IDNs because the Big Boys cannot practice Catch and Release on domains which have yet to have natural traffic. Once IE7 launches and type-in traffic patterns emerge, the Catch and Release fishermen will practice the same trick on IDNs, language by language that they did for English domains.

 

[March2005]

Here is more on this issue:

http://www.circleid.com/posts/how_domain_name_tasting_works/