Every good domain is taken. Here’s why.

Kevin Ham built a $300 million web company in Vancouver you’ve probably never heard of. You are likely familiar with his work as you drop vowels from the domain names of your favorite web startups such as Flickr or Tumblr, or try selecting a name for your new company or product. Kevin Ham built a domain name empire named Agoga, cutting exclusive deals with local registrars and national governments, attracting over 30 million unique visitors a month according to an article by Paul Sloan in the June issue Business 2.0 magazine.

Think of a name, any name, and it’s probably already registered as a .com domain. Most sites blocking your path to a memorable and descriptive names are owned by domain squatters, businesses buying domain names in bulk and running targeted advertisements from Google and Yahoo!. Domain names are not only memorable, they influence a site’s ranking in search engines, since a site URL containing the phrase “kittens” has a higher possible correlation to kitten content than a URL without the keyword match. Kevin Ham owns over 300,000 domains, virtual real estate in our online lives. He assembled the portfolio over many years of work, taking advantage of changing technologies, business environments, and legal terms. He is just one example in a global domain industry collecting millions of dollars a year prospecting new names.

Paying off registrars

Each top-level domain on the Internet owns one or more root nodes defining the availability and location of sites such as MySpace or eBay. Ham wrote automated programs in the late 1990s that could download a listing of all registered domain names, a root zone file, on a daily basis, comparing multiple versions to identify expiring domains of value. In the beginning Ham ran the programs on a few desktop machines in his office, but he quickly stepped up his operations to stay ahead of competitors.

Ham worked out exclusive deals with domain registrars, snapping up expiring domain names on a direct connection from the registrar’s computers into the VeriSign root nodes at the heart of the U.S. Internet. He paid 10-times the typical domain registration fee in exchange for such privileged access to the domain name ecosystem. Ham was able to snap up over 10,000 domains in late 2000, just months after imploding Internet brands vacated their offices and their web brands.

Today registrars directly engage in the game of expiring domains, letting customers set triggers and alerts for a premium price or directing them to a domain resale marketplace.

The Money

Wedding shoes domain screenshot

WeddingShoes.com is one of Han’s many sites setup to serve visitors relevant ads from Yahoo. The site offers related keywords, often at higher CPC payouts, for site visitors who would like more advertisements.

A simple site targeting wedding shoes earns Han’s business about $9,100 a year. Not bad for a $8 domain purchase and what he reports and about $7 in maintenance costs per year.

Free trial periods

Each top-level domain sets its own terms and conditions for ownership, sometimes requiring a company to operate within the borders of the assigned country, or settling conflict resolution terms. Each top-level domain often has a money back guarantee on purchased domain names varying from 5 to 30 days. Domain name prospectors purchase thousands of domains at a time, run advertisements on each site, and get their money back on the worst performers when their trial period has ended.

Buy out an entire country

I often joke about the top-level domains assigned to small islands in the South Pacific which exist for a few hours each day at low tide. The 12,000 inhabitants of Tuvalu, a member of the British Commonwealth, earn $4.2 million every year by leasing the .tv top-level domain. That’s $348 a year per resident in exchange for helping videobloggers find a more desirable web address.

Cameroon map

Ham took things one step further, negotiating with the country of Cameroon for rights to the .cm top-level domain. A special deal with the Cameroon government gives gives Agoga control of any wildcard domains, domains requested by a web browser but not yet registered. It’s a gold mine attracting 8 million unique visitors per month to pages full of ads served by Yahoo.

Cameroon currently has about 167,000 online users spread across 39 ISPs according to the CIA World Fact Book. Leasing the unused space for .com typos makes good business sense for the local government.

Domain acquisition companies are already pursuing similar deals in Colombia and Oman, .co and .om respectively, hoping to capture a few more commercial typos without directly targeting the trademarked names and their legal troubles.

Summary

The Business 2.0 article is full of great stats and stories from the underworld of the domain trade. If someone was buying up property in the physical world and putting up hundreds of thousands of billboards at a time, I’m sure the governments and advertising industry would be forced to respond to the crowded skyline full of more advertisements than buildings. In the virtual world domain names are as plentiful as the numbers and characters that string them together, and on-demand advertising from large companies like Yahoo and Google help line the pockets of these prospectors every month.

The domain portfolios of these domain companies are now big enough they have begun to correlate users across multiple sites, targeting the best possible advertisements based on past visits to any member of its portfolio. The article mentions Ham now plans to build more features into his site, perhaps selling a turnkey wedding shoe selling site along with his domain.

Crazy stuff, but at least I’ll know where to direct my anger the next time every good domain for my next idea is squatted.

31 comments

Commentary on "Every good domain is taken. Here’s why.":

  1. illovich on wrote:

    Domain squatting has bothered me for a long time, but I’m not sure what I think should be done.

    Part of me sees the inherent right of a speculative visionary to acquire thing someone might see as valuable in the future, so they can sell it — but on the other hand, it seems akin to publishing a list with every movie/book title you can think of so that whenever anyone writes something new they have to buy the rights to the title from you. Now that I think about it, it’s akin to keeping a list of every business name you can think of so that new businesses might have to negotiate with you for rights to their names.

    I guess lately I’ve been coming down with a more Lockian view that simply having a domain registered should not allow an individual to keep it if they are not actively using it.

    But who could you count on to enforce this? For some reason, I can’t see this being an issue for whoever ultimately collects revenue for websites, as it probably increase the amount of revenue they receive in some way.

  2. Bob on wrote:

    The whole domain name registration system is flawed and was poorly designed to begin with, why should any one person or group be allowed to own thousands or hundreds of thousands of domains.

  3. Jesse Gillespie on wrote:

    There is one obvious solution to 90 % of domain squatting – to eliminate the trial period. This period essentially allows squatters to game the system, paying nothing while still reserving the domain. Many of them repeatedly register, and return the same domains over and over again.

    If the trial period was eliminated, then there would be a non-negligible cost for holding domains, limiting speculation to the few truly profitable domains.

  4. Geoffrey Alexander on wrote:

    I was personally hit by this when the domain name I had under my OWN NAME was scarfed up by this fellow (or his ilk) and held for ransom for four years before being thrown back in the pool (I own it again, thanks). It seems the hosting solution I had previously (which kindly offer registration) neglected to mention it was registered in their name, not my own (I am wiser now, and register directly through Nettica) and sold it off when I left them as a provider.
    I could have paid commercial fees for using my own name (that is to say, continuing to — it was already a legitimate marque for an active site at once time) but chose to wait them out (my name is shared by quite a few but certainly less lucrative than “Wedding Shoes” for example). And sure enough, after a few years I was able to retrieve it. The only good thing I can imagine comes of this episode is:my experience brought the issue to the visibility of my audience andwhoever it was parked that domain for this period of time is out at least a small amount of money.

  5. Isofarro on wrote:

    Regarding your section of Free trial periods, its a little more sinister than you suggest. Domain registrars have 5 days between registering a domain name and either paying for it or returning the domain name to the expired domains pool.

    One group of domainers became a domain name registrar to exploit the loophole this offers. What they do is register thousands of expiring/expired domains in one go, and at the end of five days, those which have returned an income are kept, and those that haven’t are returned.

    But the sinister part comes into play when the domain name is returned, its set back to expiring, so the same process can be reused again for the next 5 days. Registrars can repeat this process a number of times.

    I see one registrar actually offers a 4.5 day trial period to customers for about 10 cents per domain. Being a registrar means you do this for free. Of course, domain names earning an income are registered. Its the ones that might have potential that go through this cycle a number of times.

    I’ve seen this called “Domain Kiting” or “Domain Tasting”.

    Have all the good domains gone? No. There’s decent ones expiring all the time. Not all of them are snapped up by domainers. Yes, the three and four letter ones are out of reach, the ones with existing page ranks are snapped up by domainers, but useful meaningful ones are still around. (But perhaps this is just my perception – I keep an eye out for web development related .com domains, and grab a few nice ones every month – for the normal .com registration price, not the auction. Perhaps I’m niche enough to regularly get the domain names I see expired).

  6. Choole on wrote:

    The problem is less that it’s unfair and more that these sites impoverish the web as a whole. An honest “site not found” message is much more useful than a web page pretending to be a valid resource.

    Really, there should probably be some kind of DNS reform to make domain names less valuable. Removing restrictions on top-level domains might be a start.

  7. Matt on wrote:

    Yeah, domain squatters really bother me. They offer no added value to the internet- they just suck money out of it. I ran into this when trying to register a domain for my company. I wanted it to be simple, just volitans.com. But that was already registered. The guy said he would sell it for anything between $800-$1500, which he said was “very reasonable.” Yeah, my butt its reasonable. I didn’t have that kind of money, and that was probably how much I’d make in a year on my software. I offered him $150, which is really more than it is worth. He declined. So I registered volitans-software.com for $10 a year. Screw that domain squatter.

  8. Martin Edic on wrote:

    Actually there are still many .com domains available in spite of these companies grabbing up the real estate as fast as they can- I register 3-4 a week (pretending I’m putting a nest egg aside for my retirement!).

    Google’s recent announcement that they are going to stop supporting sites built exclusively to display Adsense ads without any relevant content was a shot across the bow for the domainers. Simply parking domains to generate ad revenue will get more difficult.
    I’m more curious why the domainers are suddenly the subject of major news coverage in the last few weeks. I think it may be because a major domain auction is starting in NY this week and this publicity is going to push the prices up as the rest of the world starts to see the light.

  9. John Lascurettes on wrote:

    @Matt:
    Here’s the only problem I see for you, Matt, registering volitans-software.com. For every customer that punches in “volitans.com” trying to find your product, that squatter is counting it as one more reason to continue squatting on it. Ironically, one of the ways you could regain those customers immediately instead of forcing them to search for you is to put a text ad on the squatted page. Parasites. Total sleazy parasites.

    The trial period seems to be unneeded by anyone in this day and age except the squatters and exploiters. Registrars should be required to actually buy them and thusly really make the individuals at the end of the chain commit to paying for them. Period.

    The other thing that should happen, but it’s a harder public habit to break, is to get people away from thinking .com has to be the TLD of choice. Certainly for any geographically-specific business .US, .UK, etc. holds a certain value. I don’t understand the aversion from .info, .biz and some of the others that most seem to have.

  10. Pikemann Urge on wrote:

    There are two ways I can think of to give the big finger to domain name squatters.

    Use more unconventional names (or just made-up ones).Just use your IP address (e.g. http://123.123.123.123) – I know a number isn’t as nice as a proper name but people don’t seem to mind with regards to radio stations.

  11. Felipe Fermin on wrote:

    Being in the web hosting / design business myself, domain squatting has usually been a hindrance to me, but there’s a lot of workarounds, for example, you can slightly modify the domain name to be acquire, and this has always work for me and my clients.

    Nevertheless, I agree that something must be done. But only if objectivity and impartiality can be guaranteed. Price is the main issue here. I recall that not long ago I had to turn down a $1500 domain for a $9.95 one because of its price. ICANN should get part of the blame here.

  12. Joel on wrote:

    Digital Carpetbaggers.

  13. Stephen Welton on wrote:

    Great information. .tv will continue to expand and grow by leaps and bounds in the years to come if users drive it’s success through ideal marketing strategies based on the users needs.

  14. Patrick on wrote:

    Domain squatting is old news and has already been competitively fought by the entertainment industry since the mid-90s.

    Even though the .TV domains never took off to represent entertainment/television on the internet, as .COM is only supposed to signify commerce and commercial use, the industry has done many changes to its advertising to prevent squatters from ruining their movie releases.

    For example, the biggest change was the addition of -themovie.com to domains of movies, like http://www.transformers-themovie.com or putting an entire title into a domain like panicroomthemovie.com. Now it does seem stupid to type out a longer domain but for the time these advertisement companies keep the website updated , who really would care?

    After 6 months and a dvd release in every country, the website becomes floating junk until someone falls into the stopped promotion of a film they never got to see. This happens a lot and really is a bigger bane to the organization of sites on the internet than anything else.

    By playing off people’s familiarity of the .COM , ad companies, bloggers, and people alike have dismissed the correct organizational domains readily available from ARPA and have just bought .COM’s to push their opinion or wallet size further.

    I register about 3 domains a week and run sites on each one, so the ideas are not all taken. However imagination has become an excellent tool. Hopefully people will have less trouble in the future, but you never know. In 10 years the internet we know won’t exist and it will be a set network where we share all our personal information to one core library.

  15. Joe on wrote:

    It seems to me the primary value of having the ‘perfect’ domain name is that it is short or distinctive enough that people can remember it and enter it directly into the address bar. But how often do you actually do that? Myself, I have most sites I use bookmarked, because I have too many to try to keep memorized. If your site is built well and addresses your content well, people should be able to find you with google even if they have no idea what the url is.

    The other value is obviously the search engine advantage. But I suspect you can mitigate this by using the phrase you want while adding other content to it in order to find an available address. For example, if the squatter has weddingshoes.com, look for something like whiteweddingshoes.com or weddingshoesmakemehappy.com. Eventually, you can find combinations which are free.

    I wouldn’t shed any tears if (when) someone figures out a way to render these squatters’ portfolio’s worthless, but until then, you can work around it.

  16. Aaron on wrote:

    People who think that “every good domain is taken” is a bad thing are wrong. It’s exactly like complaining that “every good piece of land in Manhattan is taken”.

    Just as you can still buy a piece of land in Manhattan if you’re willing to pay the right price, these domains haven’t disappeared from the face of the earth. I’m sure Kevin Ham will sell you a domain if you’ll pay him at least what he makes from it. If you’re not willing to pay what he makes from it, then the domain should remain in his hands, not yours, because he’s making the best use of it. Who are you to say that your website is more “valuable” than his advertisements?

    Just like land in Manhattan will be owned by those who value it the most, so will domain names. It’s simple efficient economics.

    • tom on wrote:

      Aaron: You are a fool because you said said… “People who think that “every good domain is taken” is a bad thing are wrong.” And then you went on a short sighted rant comparing domain squatting to land prices in Manhattan.

      One of the great things about the internet is the low barrier to entry. But domain squatters can turn a website from a $99 exercise to a $2,000 exercise. And if you’re going to compare domain squatting to buying real land, perhaps you’d welcome the same legal framework to be applied so people can’t just turn up out of nowhere to buy and sell land. Maybe they should have to get planning permission for what kind of site you want to build? No? Didn’t think so. Your analogy was bad. But then I suspect you yourself are a scumbag domain name squatter.

  17. Fred on wrote:

    They can easily solve this problem buy making many more TLDs. They keep coming out with worthless TDS like .net or .org.

    Come out with .xxx for porn that would make .com porn domains less valuable only for squatters. They keep shooting that down for some reason.

    Or make any one to four letter combination a legal TLD. You could make up whatever you want like .z or .aaa or .abc or .xyz or .shit

    Take away the limited view of the .com and screw the domainers. The only reason .com is valuable is because it is viewed as the best choice out of 4 or 5 choices.

  18. Mat on wrote:

    There are sites out there to help search for expiring domain names – you can search by name or number of links that go to it, in this way the real people can get the upper hand. check out http://www.domdat.com

  19. xoc on wrote:

    Martin Edic and Isofaro – you are part of the problem. You don’t see a problem because you are hoping to profit from it. Profit without adding value.

  20. Morgan on wrote:

    Nice sour grapes.

    Other than the trial period, I don’t see what the issue is other than a bunch of like decade-late people wondering why their idea for a domain name is long gone. Follow that with an immense lack of creativity and you get a lot of disappointed morons.

    I can tell you why ‘your’ name is gone– it has inherent worth. Not the site, not the idea– the name itself. You prove it by the very fact that you also want it. You just didn’t want it first. The fact that you think someone else’s purpose is somehow less worthy than yours is irrelevant and childish.

    Hundreds of dollars for a single word domain is well worth the cost in my opinion if it’s for a business. Or, you could buy some creativity, literally, at somewhere like PickyDomains.com. But if your potential business is in the range of a few hundred a year, is a one-word domain name really what’s holding you back? And by your thinking, why should you even have access to a short domain name for such a minor and unimportant undertaking?

    Again, I don’t like the trial loophole. It doesn’t make a lot of sense to me.

    But other than that, the system works beautifully. And if ‘squatting’ didn’t add value, there would be no money in it at all. It doesn’t sap anything, those advertisers are voluntarily advertising precisely to get a hold of those customers that either don’t know where they are or exactly what they’re looking for.

    • Chris Northcott on wrote:

      The number of times I’ve personally run into domain squatters in the last few months has quite frankly been absolutely ridiculous.

      Morgan: for business – yeah. I see your point. But for open source projects like the ones I hack on, cybersquatting raises the barrier to getting a project site out there artificially high. Not to mention charitable organizations and individuals. Bear in mind the original purpose of the Internet was to share useful information, not monetization of “virtual land”. (google for the ARPA/NSFnet Acceptable Use Policy; to start out with, commercial activity on the fledgling Internet was prohibited entirely). I’m not saying commercialization of the Internet is bad – it wouldn’t be where it is today without it – but the line has to be drawn somewhere. Domain squatting *does* sap from the Internet; it penalizes individuals and nonprofits in favour of big business. Whats worse is that the NICs seem to be — no, they are — on the side of the cybersquatters.Disclaimer — these are my own views and not those of my employer (who is, funnily enough, a Nominet member).

  21. Lucas on wrote:

    I totally agree with Mark. I hate domain squatters from freesoft.com i got pushed to open-soft.org. Domain squatting should be illegal.

  22. Billbo on wrote:

    There is no way that ‘every good domain name is taken’!

    Week after week I register good domains, some in .com’s, some in .net’s, some in .info’s and even other extensions. What is more this is a truly ‘free market’ – anyone can do the same. If it were a case whereby it was only members of a club that could do it then I would understand the bitterness that some people display towards domainers.

    I have to agree though that the system needs tightening up considerably, no domain testing would be a start, but only a start.

    For those that think it is a license to print money I would suggest they visit one or more of the ‘aftermarket’ sites, there you will see millions of domain names that have been registered and are available for sale, however many will never be sold but just allowed to drop (especially if they do not earn revenue from parking), thus returning nothing on the investment.

    Domaining is much like metal detecting, anybody can have a go, but those that put the research in will often turn up the hidden gold nuggets and jewels more often than those who just dabble.

    Are there still gems to be found?

    Yes, just over a month ago I managed to register 26 US State domain names (using the abbreviation ‘St’ for State) in .com, 47 in .net, and all 50 in .info, many are already getting type-in traffic and earning their registration fee back. So many are available still, just use the best computer in the world (your brain) and think of them.

    Hope you join in.

  23. Steven Michaels on wrote:

    there should be rules on domain names, much like there are on IP addresses, you need to have a legitimate use for them, not just to run ads.

  24. Alfred Fox on wrote:

    I think it goes both ways, but overall, I am not a fan of domain squatting. The many times its affected me have been enough to make me bitter towards the idea. But at the same time, no matter what field, subject, etc, there will always be someone more concerned about making money than the rest of us. I think domains should be used for websites. The Internet is becoming increasingly cluttered with ad pages, portal pages, spam in general. I personally find it frustrating. Kudos to this guy being worth 300 million, but it certainly does NOT make the Internet a better place.

  25. Joe Dawson on wrote:

    Google, Yahoo, MSN, et al., go to great lengths to force ‘content’ requirements. It’s a matter of time before they stop supporting squatters. Then it will be up to us to stop paying the ransom…

  26. cenzo74 on wrote:

    Came across this site after weeks of unsuccessful domain searching for an upcoming business. Bottom line is these squatters are the lowest of low. In the case of Kevin ham it’s not fair to the public if he’s getting 1st choice on expired names, and running bot programs to find them all, snatch them up by paying domain registers side cash, and then profiting from them. It’s sad… but this is America, where greed driven people ruin the country.

    End of story.

  27. Angela Hoxsey on wrote:

    Thanks Niall, this was some of the most helpful stuff I’ve read on domain name squatters. I am trying to get a name and will probably pay $500 or just forget it. I think the comments on this were excellent. Thanks for providing such a worthwhile discussion!

  28. Ben on wrote:

    [I]f you’re going to compare domain squatting to buying real land, perhaps you’d welcome the same legal framework to be applied so people can’t just turn up out of nowhere to buy and sell land. Maybe they should have to get planning permisiion for what kind of site you want to build? No? Didin’t think so. Your analogy was bad. But then I suspect you yourself are a scumbag domain name squatter…

    Wrong! The framework contains no other rules: just pay the fee and make sure you don’t mess with trademarks. No other restrictions, first com first served and everyone knew the rules. You probably wasted your money going out someone sold their house to buy expired domain names. Don’t hate, no one has an inherent right to names like “Hotelrooms.com” or “CheapInsurance.com”. Of course you want them to make money but someone bought them first. if you register a common name like weddingshoes.com you are NOT a cybersquater, just a smart man /woman. Now if you register veriizon.com…

    I am trying to get a name and will probably pay $500 or just forget it

    If your biz is not worth $500 don’t even start it. But of course you can pay $10 for a different and longer name.