Interwebology Musings on the Internet and Society

Parking, Tasting and Squatting

What’s the link between these words? No, it’s not a creepy combination of dogging and wine appreciation, followed by a nice long sit down in a cubicle. In fact, these words are all related to the domain name business, specifically earning big bucks passively – from little more than just owning a bunch of names.

A domain name is a simple thing: a memorable combination of letters, numbers, and dashes that translates to a numerical address so a computer can be located on the Internet. For example: google.com, en.wikipedia.org, www.number10.gov.uk. Domain names can be up to 255 characters in length, but each “label” – the bits separated by the dots – has to be less than 63 characters long.

Domain names are cheap to register (around £10 per year for a dot-com) and can be renewed by the owner indefinitely. There are lots of ways to combine 60+ letters and numbers, but each one is unique, and once it’s been taken the only way to get that same name is to buy it from it’s owner. This is where the money can get a little crazy, because a second-hand domain name is worth whatever someone is willing to pay for it. The current record holder is fund.com, which sold in 2008 for $10 million, with $50 change. porn.com comes just behind, presumably with its trousers around its ankles, with a sale of $9.5 million in 2007.

This is where the squatting comes in. Cybersquatters register domains with names identical (or very similar) to existing companies, brand names or famous people, with the intention of extracting money from the affronted party or diverting their visitors. It doesn’t generally work, because if the squatter registered the domain name in bad faith, the courts will order that it is handed over. It gets more complicated when two genuine companies have identical names, which happened in the case of the British Broadcasting Corporation and Boston Business Computing; in 1999 Auntie Beeb bought bbc.com from the Bostonians for $375,000.

Parked Domain Girl

Despite the lack of wheels, engine, gearbox and fluffy dice, domain names can be parked*. Actually, domain parking means that instead of setting up a proper website, the owner signs up with a company that fills the site with automatically generated ads. The advertisers pay for each ad click, and the owner receives a percentage of the revenue. The real losers here are the people who visit parked domains; they arrive at these advertising sewers because they type an URL directly into their browser address bar, and either make a typo or simply enter a common word, hoping that a useful site would be on the end of it.

You have probably visited lots of parked domains, but might not have noticed because, like a teenage boy’s poor excuse for a moustache, they barely impinge on the conscious mind. But if you have ever seen the most famous lady on the Internet – Parked Domain Girl – you must have visited a parked site.

We’ve parked and squatted, so now let’s taste. Under the rules of the Internet Corporation for Assigned Names and Numbers (ICANN) registrars must refund the price of registration if a domain name is cancelled within five days. Domain tasters abuse this by registering hundreds of thousands of names, parking them, and cancelling the ones that don’t look set to make a profit over the course of the year – which is the vast majority. In February 2007 nearly 95% of all domains registered were being tasted, and were cancelled within five days. ICANN introduced a limit on cancellations in June 2008, and the practice has largely vanished. And Parked Domain Girl became a little less famous.

Parked Domain Girl in Happier Times

* To pass advanced domain name investment exams you also need to reverse a domain around a corner, and turn a domain through 180 degrees without hitting the kerb.