Internet overseeing organisation ICANN will vote later today on whether to introduce a new system aimed at closing a loophole in domain name rules that enables speculators to register thousands of domain names effectively for free.
The method, called "domain tasting", has proved highly controversial in the past year and, its critics argue, is costing the industry money as well as restricting choice on the internet.
The ICANN board will decide whether to allow an amendment to the contract that covers all .org domains, currently held by non-profit organisation PIR, that will enable PIR to charge five cents for every domain registered with it that is returned within five days - something that it hopes will remove the financial incentive for so-called "domainers".
If the amendment passes and appears to work, it is likely to be rapidly adopted by other registries such as .com, .info and .net.
Under the current rules all registry owners must allow a five day grace period on any domain bought from them - the idea being that if someone makes a mistake in, say, the spelling of a name, they are able to get a full refund.
However, with advances in internet technology, and "pay per click" billing systems, it has become viable for companies to register hundreds of thousands of domains and "taste" them to see if the domain is likely to make more than the $6 registration fee over the course of a year.
If a domain previously had links spread over the internet, thousands of web surfers will end up at the website and if enough of them click on sponsored links put up on the site, each paying the owner a few cents a time, it is possible for the domain name owner to make a small profit. This profit, multiplied by hundreds of thousands of domains, is what has driven the domain tasting industry. If a domainer decides the name will return less than $6 over the course of the year, it returns it within five days and claims a full refund.
Since the domain tasting approach only works in bulk, however, it has caused an enormous amount of extra processing and cost on the part of registry owners as tens of thousands of domains a day are registered and then, soon after, returned. Some estimate that as much as 99 per cent of domain registrations are now for domain purposes.
PIR's solution is to charge domain registrars - those buying the domains - a five cent fee for every domain they return "when the number of such deleted registrations is in excess of 90 per cent of the total number of initial registrations". For example, if someone returns more than nine out of 10 domains registered, they will be charged five cents per domain.
The amendment is an attempt at a compromise between the registries - who still profit from a $6 registration fee when a domainer does decide to stick with a domain - and the domainers who claim they are working within a system and refreshing the stocks of countless domain names that expire every day. The five cent fee is what PIR feels it costs it on average to register the domain, process the charge, and then unregister and refund the fee.
PIR is also particularly concerned about domain tasting because most of its registrants are non-profit organisations that are not technically savvy, many of which occasionally forget to renew their internet address, only to see it instantly snapped up by domainers. The result is that an organisation's website vanishes and is replaced by a series of sponsored links.
PIR has also been attempting for years to bring down the cost if its domains so people in developing countries can afford to register internet addresses. But with a lower registration price, the domainers' incentive to temporarily register domains is greatly increased as they do not need to make as much money from each domain to turn a profit.
Striking a balance
Whether the five cent fee and 90 per cent threshold will strike the right balance remains to be seen. And there will be dispute over the wording which allows PIR to decide over what timeframe the 90 per cent figure is to be applied. It is also likely that the amendment itself will cause controversy as it is the first time a new "registry service" system has been used by ICANN, and it appears to have gone virtually unnoticed by the internet community.
PIR's request for the contract amendment has been ongoing since May this year when it was told by ICANN's security council that it didn't think the suggested changes would affect the stability of the internet.
Following a series of meetings, PIR formally requested the amendment on 22 September, and ICANN published it for a 15 day public approval period on its website on 25 September.
However, that notice is buried deep within ICANN's website and it is clear that no one has seen the amendment because there has been no complaints or discussion. With that 15 day period ending on 9 October, ICANN posted the approved amendment on 11 October, but decided a board vote was required to bring it into effect.
Asked about this seemingly opaque process, ICANN corporate affairs VP Paul Levins told us the issue of domain tasting had been extensively and publicly discussed at its recent Marrakech meeting and it was no secret that PIR was proposing the change. He pointed out that all the documents had been posted on ICANN's website, the newly agreed procedures had been followed, and ICANN had encouraged PIR to "consult with the community members before submitting their application".
And in future?
Levins noted however that: "A significant portion of the community has been interested in solutions to domain tasting, and this could help address this practice."
But he stressed that this did not mean ICANN was against domain tasting: "ICANN is still considering the proposal put forward by PIR. Even if it is accepted, it means ICANN has assessed that the proposal does not threaten stability or security nor does it create any competition issues."
As for other possible future requests by other registrars: "ICANN will follow its process agreed by the community through the PDP [policy development process] that delivered it and that has been well advertised and participated in."
Nevertheless, it is predictable that domainers, many of whom also provide the advanced domain registration services that enable the net to function so smoothly, will not be happy.
One, Paul Stahura of eNom, supplied his own solution to the domain tasting issue in a presentation at ICANN's last meeting in Marrakech. Stahura suggested domains be split into two classes where domains could be tasted by registrars under one classification, but if a request was put in to buy a specific domain it would be sold and moved into a separate classification.
PIR's amendment would make that model unworkable, so it can be expected that not everyone in the industry would be happy with its approval. Levins told us that any appeal against the board decision - if it comes - would have to be put through ICANN's reconsideration committee.
Whatever happens, and whether you see domain tasting as a menace or as an example of free trade creating new business models, one thing is for certain: this won't be the last we hear of it.®