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 October 17, 2000  

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The Cyber Lottery
Buying URLs for fun and profit.

By Matt Farr

Anyone who's been a part of the Internet for more than 700 hours (free from AOL in your first month) can tell you a story about cyber squatters. Cyber squatters are people or companies who register URLs for trademarked names with the intent of making money by selling them to their rightful owners for a hugely inflated price.

If I've already confused you, URL stands for Uniform Resource Locater. A URL is like a street address: it's a unique set of letters and numbers that can point to any number of things, such as files and documents. On the World Wide Web, your URL is your unique address. Well-known URLs include amazon.com, ebay.com, yahoo.com, and rustybrain.com. A URL may also be referred to as a domain name or web address.

Each URL consists of two parts: the name and the domain extension. The name is the first part, like yahoo. The domain extension is the part that comes after the dot, like .com, which is the most popular and desirable extension. At present, there are 252 domain extensions, of which the vast majority are country codes, such as .uk for United Kingdom. 

Anyway, back to cyber squatters. Cyber squatters are the loathsome trailer trash of the Internet. There's a company in China that bought hundreds of American trademark names with the Chinese domain extension (.cn), including Procter & Gamble, and then attempted to profit from it. Or there's the guy who bought up URLs for political candidates - and then linked each URL to the opposition contender if the actual candidate wouldn't cough up any cash. Or my personal favorite, which still exists: www.whitehouse.com - it's a porn site! (The real White House site is at www.whitehouse.gov).

Cyber squatting is a losing proposition. People who have registered trademarked names have already lost legal cases by the bucket load. If you somehow register dietpepsicola.az (.az = Azerbaijan) before Pepsi does, don't expect to make a profit. They'll sue you faster than you can say "phenylketonurics."

But here's an issue that's similar, completely legal, and yet morally troublesome. For want of a better phrase, let's call it Cyber Hoarding.


CYBER HOARDING

Cyber Hoarding is the process of buying up domain names with the intent of selling them for a profit. (The difference between a squatter and a hoarder is that a squatter sits on a URL to which someone else has a legal right). A good domain name is like a good piece of real estate; it's all about location. In the case of a good URL, the shorter and more memorable the better. For example, it's a whole lot easier to type in msn.com than it is microsoftnetwork.com - indeed, at the time of this column, Microsoft hasn't even bothered with forwarding microsoftnetwork.com to msn.com, even though they own both domains.

There are millions of short, memorable web address possibilities. Open your dictionary, find a short word or two, add dot com, and you've got the makings of a good URL. The trouble is, if you can think of it, so can someone else - and they've probably already bought the rights to it.


TRY IT FOR YOURSELF

  1. Go Network Solutions, or any other domain registration service. You can find a list of them at ICAAN.

  2. Type in a word or phrase that sounds like it might make a good Web site. I've done this hundreds of times, but for the sake of example, this time I typed in: greatidea.com

  3. Hit search.

  4. Whoops! Already taken, wasn't it? Bummer.

  5. Now go up to the address bar of your browser. Type in the URL that you just searched for. Add www to the beginning of it, like so: www.greatidea.com .

  6. Nothing? Chances are, there is no web site with the address for which you just searched. You probably got a page that said something like: "The page cannot be displayed: Cannot find server or DNS Error." This means that no Web site exists for this URL, even though someone owns it.

    If you care, you can find out who the owner of this nonexistent Web site is by going to the Whois function at Network Solutions or another registrant.

  7. In the case of greatidea.com, I got something even more interesting. When I typed www.greatidea.com into my address bar, I actually got a Web page. It says, in part: "This domain name is listed for sale at www.domaintradezone.com"


WELCOME TO THE INTERNET. BUY YOUR LOTTERY TICKET HERE.

This, then, is what the Internet has become: a great new scam to make a fast buck. If you visit domaintradezone, you'll find 184 URLs for sale, from $4500 for prohibitive.com, to $50,000 for gotmoney.com. Only two of these 184 auctions actually include existing Web sites - the rest of them are simply lottery ticket URLs.

Fifty grand is a bargain compared to what you'll find at greatdomains.com. The asking price for America.com is $30,000,000. That's right - thirty million bucks. Try putting that in your business plan. Of course, that's GreatDomain's most expensive current offering - you can also find bargains like winner.com ($4 million), beautiful.com ($3 million), and bob.com ($1.5 million).

Nothing is sacred. You can buy ourlordjesus.org at www.primedomainname.com for an unspecified sum (make your offer at the site). 

It's the new lottery. At $35 bucks a year per URL, any gambler with a decent chunk of cash and a fat dictionary can buy up a whole lot of URLs and hoard them until some fool and his money come along.


OCCUPATION: PROFESSIONAL GAMBLER

THE IRS WOULD LIKE TO HAVE A WORD WITH YOU

When you make that big bet on a URL and it pays off, you stand to make millions. The IRS states:

"Gambling winnings are fully taxable and must be reported on your tax return. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos, as well as the fair market value of prizes such as cars and trips."

For now, the IRS doesn't classify the huge cash windfall that can come from the sale of a choice URL as gambling earnings. Yet.
  

For the professional URL buyer, bulkregister.com offers tools. Become a member, and individual URLs will cost you only $12 each per year. 

If you register more than 50 in any month, your cost goes down to $10 per domain per year. And if you sit at the high stakes table and register more than 2000 URLs in a month, they'll cut you in on a very special deal, which you can discuss with them in the secret room at the back of the casino.


A URL IS A GIRL'S BEST FRIEND

The granddaddy of the URL-for-sale movement, greatdomains.com, will even appraise your web address like a diamond ring. In fact, they even have a "Four C's" process for evaluating your URL.

With diamonds, the Four C's stand for:

  • color
  • cut
  • clarity
  • carat weight

At GreatDomains, the Four C's stand for 

  • characters (how many letters is your URL)
  • commerce (is your URL commercially desirable)
  • com (is your URL a dot com?)
  • comparables (other stuff)


The actual certificate supplied by GreatDomains.com. 
Click to see larger.

Since GreatDomains goes out of its way to prohibit republication of its rating system, I'll just link to their description so you can check it out for yourself. You can find it here.

GreatDomains gives you an "official certificate of value" when they've appraised your Web site. But the best thing about the GreatDomain's URL appraisal? A free GreatDomains.com T-Shirt with every evaluation!


FINDING THE PERFECT URL: ONE MAN'S JOURNEY THROUGH HELL

How hard is it to find a decent URL in 2000? Let me give you an example.

When I started this column, I wanted a cool, memorable web site name. Unfortunately, mattfarr.com was already taken, by a guy who writes and records music in Florida. [I've got no grudge against him; he's got just as much right to the name Matt Farr as I do, and he got there first.]


The other Matt Farr.

Anyway, I spent weeks searching for a good URL. I made lists during my lunch hour, while driving, even while taking my weekly shower. I poured through dictionaries, magazines, and novels, looking for good words and phrases that I might submit to my favorite registration company, register.com.

After weeks of work, I had a list of available URLs. I shared them with family and friends, trying to get a consensus as to which was the most appropriate name for a Web site that didn't yet exist.

The final list included:

  • dingbusted.com - From the fourteenth chapter of Huckleberry Finn. Jim says to Huck, "Well now, I be ding-busted!"

  • stinkyduck.com - A favorite of many of my friends

  • blackcircles.com - This was my personal fave. My slogan was going to say "black circles under your eyes are not particularly pretty, never mind how you may cover them up." Then I found that there is an "adult literature" web site called blackcircle.com (singular instead of plural). I thought that this was a little too close for comfort.

  • coherentwhimsy.com - Pretentious

  • gluesniffing.com - Cool, except that my drug of choice is beer, not glue. I envisioned hordes of avid glue sniffers being disappointed and sending me hate email.

  • gooeyskull.com - Weird, but what does it mean?

  • grumpymind.com - Hey, I'm not grumpy all the time

  • thatandadime.com - it's supposed to read "that and a dime," from the saying "that and a dime will get you a cup of coffee." Nobody understood this one but me. It probably didn't help that a cup of latte with skim low-fat foam will cost you $3.95 at Starbucks.

  • wipethatsmirkoffyourface.com - too much typing required

  • zenigmatic.com - a combination of "Zen" and "enigmatic." I finally decided this one was too hard to spell.

  • rustybrain.com - it's easy to remember, and it's not too hard to spell (but I wonder how many people type "Brian" instead of "brain").


2001: THE URL CRISIS BEGINS

The list above probably took me 80 hours to compile. It seems easy, but for every halfway decent URL that I found, I probably tried 100 others. Virtually every single funny, cute, or meaningful URL that I tried was taken. Almost none of these actually had a Web site for the URL.

This hoarding of URLs by people out to make a fast buck is extremely irritating. Amputation of hands so these people can no longer use a keyboard is too lenient a sentence. They should be tied up and flogged with Ethernet cables until bloody, with a downloadable movie of said flogging made widely available as QuickTime file in the full, high resolution 480 x 260 size. They should have 21-inch monitors dropped on their skulls. They should…They should… ahem. Can you tell this infuriates me?

In any case, the really good URLs - short, memorable, and meaningful - are pretty much taken.

So what happens next?


USE IT OR LOSE IT?

Trademarks in the real world are "use it or lose it." If General Mills registers a trademark for "Critter Crunchies," they've got five years to produce some kind of product that actually uses the name. For a trademark registration to remain valid, an Affidavit of Use must be filed with the U.S. Patent and Trademark Office between the fifth and sixth year following registration. If no affidavit is filed, the registration is canceled.

To solve the problem of vast numbers of URLs that have been purchased for speculative purposes only, the governing body of each domain extension could require the creation of a Web site for every URL registration within a reasonable period of time, say six months. URLs that have obvious trademark heritage, like "go-cocacola.com" could be made exempt. Otherwise, either produce a Web site or go home.

The problem with this "use it or lose it" idea is that it's relatively easy to produce a skeleton Web site. Don't get me wrong, this would be a lot more difficult than the current practice of buying a URL and parking it forever. You'd have to pay for hosting each domain name, and you'd have to create something that showed some semblance of being a valid Web site.

But who would police the millions of URLs? Who would determine what is a valid Web site, and what exists simply to comply with the rules? It just doesn't seem practical. 

Moreover, a recent, incredibly stupid U.S. court ruling says a URL isn't property; it's more like a phone number. This numbskull ruling would probably thwart my "use it or lose it" regulation. (Why do I say this ruling was stupid? Have you ever seen a phone number auctioned for $30 million?)


A HAPPY PREDICTION

Here's what I believe will really happen.

Right now hundreds of millions of dollars have been invested in registering millions of URLs. But here's the curious thing - a URL is only yours for a limited time. Then you have to renew it. For more money.

So my prediction? In a couple of years, there will be a whole lot of URLs available again at the normal price of $35 per year. All those cyber hoarders are going to find out that nobody is willing to pony up $600,000 for rude.com (available at greatdomains.com if you're interested). Cyber hoarders will let the vast majority of their URLs lapse back into the available pool, keeping only the few that actually might bring a bounty on the open market. Before you know it, the potential of owning "dud.com" may be within your reach again.

Until then? Well, break out your dictionary and get cracking. Or hunt for bargains - at this very moment, "SeriousShit.com" is available on ebay for only $500.


"The best names in dot-com are running out." 
Elana Broitman, director of policy at Register.com, in a recent story on Wired News.


Here are URLs for some of the information referenced in this story.

Great Domains
http://www.greatdomains.com

Procter & Gamble's Chinese domain name dispute
http://www.chinaonline.com/refer/legal/currentnews/secure/C00070718.asp

Political cyber squatting
http://www.salon.com/politics/feature/2000/06/12/squatter/index.html

Inching Toward Dot-Whatever
http://www.wired.com/news/business/0,1367,39246,00.html

An incredibly stupid U.S. court ruling:
A U.S. District Court judge rules that Web domains aren't property, and therefore can't be stolen
http://www.wired.com/news/politics/0,1283,38398,00.html

The Internet Corporation for Assigned Names and Numbers (ICAAN)
http://www.icann.org

U.S. Patent and Trademark Office
http://www.uspto.gov

http://www.register.com

http://www.networksolutions.com

For sale: greatidea.com
http://www.greatidea.com

For sale: seriousshit.com, Item #469082591
http://www.ebay.com


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