Uses and abuses
As domain names became attractive to marketers, rather than just the technical audience for which they were originally intended, they began to be used in manners that in many cases did not fit in their intended structure. As originally planned, the structure of domain names followed a strict hierarchy in which the top level domain indicated the type of organization (commercial, governmental, etc.), and addresses would be nested down to third, fourth, or further levels to express complex structures, where, for instance, branches, departments, and subsidiaries of a parent organization would have addresses which were subdomains of the parent domain. Also, hostnames were intended to correspond to actual physical machines on the network, generally with only one name per machine.
However, once the World Wide Web became popular, site operators frequently wished to have memorable addresses, regardless of whether they fit properly in the structure; thus, since the .com domain was the most popular and memorable, even noncommercial sites would often get addresses under it, and sites of all sorts wished to have second-level domain registrations even if they were parts of a larger entity where a logical subdomain would have made sense (e.g., abcnews.com instead of news.abc.com).
A Web site found at http://www.example.org/ will often be advertised without the “http://”, and in most cases can be reached by just entering “example.org” into a Web browser. In the case of a .com, the Web site can sometimes be reached by just entering “example” (depending on browser versions and configuration settings, which vary in how they interpret incomplete addresses).
The popularity of domain names also led to uses which were regarded as abusive by established companies with trademark rights; this was known as cybersquatting, in which somebody took a name that resembled a trademark in order to profit from traffic to that address.
To combat this, various laws and policies were enacted to allow abusive registrations to be forcibly transferred, but these were sometimes themselves abused by overzealous companies committing reverse domain hijacking against domain users who had legitimate grounds to hold their names, such as their being generic words as well as trademarks in a particular context, or their use in the context of fan or protest sites with free speech rights of their own.
Laws that specifically address domain name conflicts include the Anticybersquatting Consumer Protection Act in the United States and the Trademarks Act, 1999, in India. Alternatively, domain registrants are bound by contract under the UDRP to comply with mandatory arbitration proceedings should someone challenge their ownership of the domain name.
Generic domain names — problems arising out of unregulated name selection
Within a particular top-level domain, parties are generally free to select an unallocated domain name as their own on a first come, first served basis, resulting in Harris’s lament, all the good ones are taken. For generic or commonly used names, this may sometimes lead to the use of a domain name which is inaccurate or misleading. This problem can be seen with regard to the ownership or control of domain names for a generic product or service.
By way of illustration, there has been tremendous growth in the number and size of literary festivals around the world in recent years. In this context, currently a generic domain name such as literary.org is available to the first literary festival organisation which is able to obtain registration, even if the festival in question is very young or obscure. Some critics would argue that there is greater amenity in reserving such domain names for the use of, for example, a regional or umbrella grouping of festivals. Related issues may also arise in relation to non-commercial domain names.
Unconventional domain names
Due to the rarity of one-word dot-com domain names, many unconventional domain names, domain hacks, have been gaining popularity. They make use of the top-level domain as an integral part of the Web site’s title. Two popular domain hack Web sites are del.icio.us and blo.gs, which spell out “delicious” and “blogs”, respectively.
Unconventional domain names are also used to create unconventional email addresses. Non-working examples that spell ‘James’ are email@example.com and firstname.lastname@example.org, which use the domain names m.es (of Spain’s .es) and mes.com, respectively.
Commercial resale of domain names
An economic effect of the widespread usage of domain names has been the resale market (after-market) for generic domain names that has sprung up in the last decade. Certain domains, especially those related to business, gambling, pornography, and other commercially lucrative fields of digital world trade have become very much in demand to corporations and entrepreneurs due to their importance in attracting clients.
The most expensive Internet domain name to date, according to Guinness World Records, is business.com which was resold in 1999 for $7.5 million, but this was $7.5 million in stock options, not in cash. The stock was later redeemed for $2 million, “So it was $2 million.”. There are disputes about the high values of domain names claimed and the actual cash prices of many sales such Business.com.
Another high-priced domain name, sex.com, was stolen from its rightful owner by means of a forged transfer instruction via fax. During the height of the dot-com era, the domain was earning millions of dollars per month in advertising revenue from the large influx of visitors that arrived daily. The sex.com sale may have never been final as the domain is still with the previous owner. Also, that sale was not just a domain but an income stream, a web site, a domain name with customers and advertisers, etc.
Two long-running U.S. lawsuits resulted, one against the thief and one against the domain registrar VeriSign. In one of the cases, Kremen v. Network Solutions, the court found in favor of the plaintiff, leading to an unprecedented ruling that classified domain names as property, granting them the same legal protections. In 1999, Microsoft traded the name Bob.com with internet entrepreneur Bob Kerstein for the name Windows2000.com which was the name of their new operating system.
One of the reasons for the value of domain names is that even without advertising or marketing, they attract clients seeking services and products who simply type in the generic name. Furthermore, generic domain names such as movies.com or Books.com are extremely easy for potential customers to remember, increasing the probability that they become repeat customers or regular clients.
Although the current domain market is nowhere as strong as it was during the dot-com heyday, it remains strong and is currently experiencing solid growth again. Annually tens of millions of dollars change hands due to the resale of domains. Large numbers of registered domain names lapse and are deleted each year. On average 25,000 domain names drop (are deleted) every day.
It is very important to remember that a domain (name, address) must be valued separately from the website (content, revenue) that it is used for. The high prices have usually been paid for the revenue that was generated from the website at the domain’s address (url.). The intrinsic value of a domain is the registration fee. There is no such a thing as a current market value for a domain: It just takes what somebody pays.
The Fair Market Value of a domain can be anything from the registration fee: The lowest known past selling price, the highest known past selling, price, the most recent selling price, or just any past selling price and any of these (or any sum resp. division etc.) is usually added to the current or expected revenue from the web content (advertising, sales, etc.). Domain (name + ext.) should not be mixed with website (content + revenue). The estimation by appraisers are always the addition of what they would like that a domain is worth together with the effective/expected/desired revenue from the web content.
Some people put value on the length of the SLD (name) and other people prefer description capability, but the shorter a SLD is, the less descriptive it can be. Also, if short is crucial, then the TLD (extension) should be short too. It is less realistic to get a domain like LL.travel or LL.mobi than a domain travel.LL or mobi.LL. This illustrates the relativity of domain value estimation. It can be safely put that the revenue af a web (content) can be easily stated, but that the value of a domain (SLD.TLD aka name.ext) is a matter of opinions and preferences. In the end, however, any sale depend of the estimates by the domain seller and the domain buyer.
People who buy and sell domain names are known as domainers. People who sell value estimation services are known as appraisers.
According to Guiness Book of World Records and MSNBC, the most expensive domain name sales on record as of 2004 were: Business.com for $7.5 million in December 1999, AsSeenOnTv.com for $5.1 million in January 2000, Altavista.com for $3.3 million in August 1998, Wine.com for $2.9 million in September 1999, CreditCards.com for $2.75 million in July 2004, and Autos.com for $2.2 million in December 1999.
More recently though in 2006 / 2007 there have been some high value names sold including www.sex.com for $12 million, www.porn.com $9.5 Million. For the complete and up to date list of domain name sales you should check out Ron Rackson’s website.
Domain name confusion
Intercapping is often used to clarify a domain name. However, DNS is case-insensitive, and some names may be misinterpreted when converted to lowercase. For example: Who Represents, a database of artists and agents, chose whorepresents.com; a therapists’ network thought therapistfinder.com looked good; and another website operating as of October 2006, is penisland.net a website for Pen Island, a site that claims to be an online pen vendor, but exists primarily as a joke, as it has no products for sale. In such situations, the proper wording can be clarified by use of hyphens. For instance, Experts Exchange, the programmers’ site, for a long time used expertsexchange.com, but ultimately changed the name to experts-exchange.com.
Leo Stoller threatened to sue the owners of StealThisEmail.com on the basis that, when read as stealthisemail.com, it infringed on claimed trademark rights to the word “stealth”.