The company, called NameMedia, is being led by Kelly P. Conlin , 46, a veteran media executive who previously had been chief executive of International Data Corp. in Boston and Primemedia Inc. in New York. NameMedia has already hired 75 people in its office near Route 128 to buy, sell, and develop businesses around Internet domain names.

NameMedia, which already is profitable, says it owns more Internet domain names than any other party and draws more than 25 million consumers monthly to its vast collection of websites. It makes money when computer users type the name of one of its sites, such as photography.com, bookstore.com, or jobfinder.com, into the Internet address bar and then click on advertising links.

The article goes on to explain that NameMedia will be following the current industry trend and is planning to develop some of their most valuable online properties.
On top of the 650,000 domains in their own portfolio the company also says to have exclusive rights to sell or monetize 350,000 additional names. I would imagine that those numbers includes the GoldKey and ActiveAudience domain parking services.

I am sure we will be hearing more about them.

[Update]

I needed to find out more about the 350,000 additional names, since I wanted to know if there’s any partnership besides the domains parked with GoldKey and ActiveAudience. Goldkey has a little over 66,500 domains pointing to their DNS in the registery according to the zonefiles [webhosting.info]. Active Audience has about 5,600 names pointing to their dns [webhosting.info]. So this adds up to 72,100 domains. Even if you would add some domains that are parked via domain forwarding, I would doubt that the total amount of domain names from those parking services is higher than 100,000. So it has to be assumed that NameMedia includes a partnership with one or more portfolio(s) with a another 250,000 domain names.

There are 700,000 names in the zonefiles pointing to the BuyDomains namesservers [webhosting.info].

And here comes the Press Release.

Basically the article is a reprise of his blog post. Once again, he does provide numbers, but he does not provide any statistics or more detailed information on the registrars that he accuses of registering and deleting the same names continuously within the grace period. As far as we could tell in our research, names do indeed often get tested multiple times in a row. But this testing occurs via different registrars and different corporate entities.

The article seems to attract the usual crowd, the GoDaddy supporters and the critics exposing some of the stains on GoDaddy’s clean sheet: Starting with information on how GoDaddy defaults all domain registrations to domain parking and ending with comments on how GoDaddy auctions names that are potential trademark infringements.

If all of this traffic testing really puts such a huge load on the registries, you can only wonder why ICANN and the registries have allowed this practise to continue for so long. The answer probably is (as so often): Money! The registry and ICANN earn money off every domain name kept. $0.25 annual ICANN fee and $6.00 annual registration fee for Verisign for any .COM name kept. So the cost to allow this testing only increases as the “keep rate” of the tested domains goes lower and lower. I would imagine that this rate is probably below 0.5% now and dropping. Any of the testing registrars care to comment?

The Web addresses being amassed by these companies have generic-sounding names like moviedirectory.com and internetgames.com. They typically don’t get enough traffic to make it to the top of Google or Yahoo! search engine results. But the owners of these sites hope that Web surfers will happen upon them by typing an obvious-sounding word or phrase directly into their browser’s address bar — a process called direct navigation. For example, someone interested in motor scooters might try motorscooters.com.

Most of these domains do not need to rely search engine traffic, because people actually do type them in. People use domains as a method of search.

Some interesting data:

Those clicks add up. Direct navigation sites generate an estimated $150 million in revenue per quarter, according to RBC Capital Markets, a Toronto-based investment bank. That’s 7.5 percent of the $2 billion in total search engine revenue each quarter.

[...]

Traffic to Marchex sites has grown substantially, from 21 million unique visitors in July 2005 to 28 million this March. The sites generated revenue of $11.3 million for the company in the first quarter of this year, which is more than a third of the company’s total revenue for that period.

And here is something that I found quite interesting:

Some domain-name companies are eyeing so-called user-generated content, in which members of the public contribute content for free, to expand their generic Web sites. That’s clearly the strategy of Demand Media, the company that recently bought Bellevue domain-name registrar eNom.

Demand Media’s lead investor is Richard Rosenblatt, former chairman of the wildly popular social networking site MySpace.com. MySpace allows people to post content such as text, photos, music and more. The site has become one of the most popular on the Web and was sold to Rupert Murdoch’s News Corp. last year for $580 million.

“Consumers want more than just a link to something else,” said John Kane, vice president of business development for eNom. “We’re using the same concept of what Richard had built at MySpace.”

Demand Media has accumulated 150,000 domain names so far and is “aggressively” looking for others, Kane said. ENom, now a subsidiary of Demand Media, will handle the technology infrastructure of the new company. ENom will expand its staff 30 percent to 50 percent by the end of this year, and plans to move into new offices, more than doubling its space, in June, Kane said.

The idea of combining user generated content with domains is nothing new. But maybe there’s some potential in allowing users to create content on a larger group of domains in order to drive additional traffic and advertising revenue.

Major Acquisitions Establish Internet REIT as a New Force in Online Advertising

Internet REIT (iREIT) [...] today announced its acquisition of the Netster.com web portal and major portions of the Netster domain name portfolio. Netster is the latest in a series of strategic acquisitions for iREIT, which has acquired over 50 portfolios of Internet traffic in the past fifteen months, including such high-value domains as Bands.com, OfficeSupply.com and AfricanAmericans.com. The addition of the Netster portfolio gives iREIT more than 400,000 domain properties under management and brings the company’s total portfolio of traffic up to 50 million visitors per month.

[...]

Direct navigation comprises more than six percent of the US and UK search advertising markets and could exceed $1.2 billion in ad revenue by 2007, according to Susquehanna Financial and RBC Capital Markets.

Top Investors, Industry Talent Rally Behind Internet REIT

Internet REIT (iREIT)[...] today announced that it has raised a new round of equity and debt financing led by Maveron LLC, the venture firm co-founded by Dan Levitan and Starbucks Chairman Howard Schultz. The round of funding also includes significant investments by existing investor Jacobson Family Investments (JFI), as well as Perot Investments, the investment firm founded by H. Ross Perot. With this round of funding, Dan Levitan, Managing Partner, Maveron LLC and Steve Blasnik, President, Perot Investments join the Board of Directors.

Yellow Pages said yesterday it picked up the suite of sites — including autos.ca, debts.ca, doctors.ca and RVcampgrounds.ca — from Montreal-based Emall.ca Inc. for $2.5-million. It is a tiny investment compared with the close to $4-billion Yellow Pages has spent in the past year to buy the former Telus Corp. phone book business in western Canada and a range of specialized classified publications across Canada including Auto Trader.

But Yellow Pages chief financial officer Christian Paupe said the acquired Web addresses will “become a very precious inventory. Online is the future. We don’t exactly know how this space is going to evolve, exactly. But I’m convinced this was a no-brainer for $2.5-million. Their worth over time will be very significant.”

Indeed. $6250 per category-specific domain seems like a good deal, even though it’s probably a new high for a .CA portfolio sale. But for a Yellow Pages directory provider, this is a no-brainer purchase, indeed.

Yellow Pages chief executive Marc Tellier said some of his new sites, such as attorneys.ca, may feature basic editorial content, such as advice on how to select a lawyer, as well as contact information for local advertisers.

Time to renew your .CA domains Looks like emall still got a couple of them left as well.

[Thank you Adam]

[via OnlineMediaDaily, ClickZ, SearchEngineWatch, Forbes, Peter Ejtel and others]

Some interesting quotes:

Industry analysts estimate that roughly 15 percent of all Web traffic originates this way.

Google won’t disclose how much revenue it is earning from ads on these types of sites, but chief executive Eric Schmidt said in an interview last week, “It’s a lot of money.”

Pay-per-click speculation market soaring – Computer Business Review

(July 21st, 2005): There are close to a quarter of a million domain names a week being registered for just a few days, while people “test” the traffic potential of those names before discarding them, chief executive Stratton Sclavos (VeriSign) told analysts yesterday.

We can assume that with this public report of this topic, the amount of domains being tested at a time has at least stayed at the same level if not increased. Bob Parson’s article has some more up to date statistics, probably collected from zonefile information:

During the week of March 27 — April 2, 2006, 5,822,881 .COM names were registered. Of those names, only 455,918 .COM names were actually retained after the grace period expired.

Of the .COM names registered during the above week 5,366,963 – or 92.1% — were dropped during the grace period. Once again, at least 99% of these were dropped by registrars participating in the add/drop scheme.

So how is this possible? Registrars have a five day grace period for the registration of the domain in any gTLD. What this means is that a registrar can actually register a domain (at this point the registrar is charged) and then deleted it within the coming five days with a full refund. So this has lead to the practice of traffic testing/tasting domains:

A list of domain names is registered for a period from 1-5 days and then deleted again if the amount of traffic (or income) has not reached a certain threshold. Some of the testers will display a ‘parked page’ with PPC advertising and some of them will just display an empty page during the testing period. It is rumored that some registrars also offer this testing ability to their resellers & customers against a small fee per domain.

The original intention of the grace period was to allow the registrar to correct typos and this feature is also known to have been used to delete fraudulent registration attempts.
How do domainers come up with the names that are being traffic tested? They use lists of previously expired and deleted names as well as some of their own lists generated from dictionary information etc. Those are basically the same methods that domainers normally use, just that they normally do no get to actually test if there is any traffic – a name needs to be kept and paid for at least one year.

If you observe the testing cycles a little closer, you will actually also notice that some of the domains are re-tested multiple times. Basically it is safe to assume that any name that had been registered before and gets deleted, is registered again. If there’s any money to be made off the name, it’s unlikely to ever become available again.
What is the cost for the registry of doing this testing? There is is computing power used in registering the names and adding them to the zone files and deleting and removing the majority of them at a later point. I would also imagine that the registry operator needs to keep some information for accounting purposes in their database, so this would take up storage space as well. The registrar ends up paying only for the names that are kept, but also has to pre-fund the transactions during the time of the testing.

So far nothing has been done to prevent this traffic testing from happening, but there have been different suggestions (anything from ‘outlawing’ the pratice to charging fees for it) within the ICANN community.

In a preview page posted by Microsoft Research, they show some information about their new Strider Typo-Patrol. Their examples show parked domains (parked on Google’s Adsense for domains / Oingo, Domainsponsor and Sedo). In their examples they start off by mentioning a concern for adult ads under typos of family-type domain names, such as disnryland.com, which now appears to have been changed to a child friendly parking page. To protect users from “typo-squatters”, they have released their “Strider URL tracer” in order to protect your privacy. They will even protect you from traffic counting tools like Hitbox, Google Analytics and Webtrendslive.

Thinking about the history of Microsoft, their end user agreements and similar items, it seems quite surprising to me that they are now interested in protecting my privacy. Well, at least they want to protect me from their competitors. If you look at the detailed targeting available to advertisers in their new Adcenter, you know that they also like to hold data about you on their servers.

While Microsoft’s project is drawing a lot of attention they fail to mention how many of parked domains are actually hosted on their IIS server. As shown in the April web server survey by Netcraft, the domain Registrar GoDaddy has just moved 3.5 million hostnames from Linux to Windows. Since GoDaddy is one of the cheaper registrars, I would imagine that they also hold many parked domains – especially since GoDaddy parks all new registrations by default. Ah, and yes, not to forget: If you use their DNS, they take the free to park any sub-domain that you have not created a DNS entry for – basically they add “free” Wildcard DNS to your domain and point it to their own parking service.

And more related news: Bruce Perens announced that he has launched “OpenSourceParking.com“, a service designed to boost domain parking on open source software.

The project is a response to a large gain by Microsoft in the April Netcraft survey, with Windows’ share jumping 5 percent as domain registrar Go Daddy moved 4.5 million parked domains from Linux to Windows Server 2003.

So in order to correct the domain parking stats in the favour of the OpenSource webserver Apache, Perens is suggesting for everyone to park their unused domains on his new service, OpenSourceParking.com.

The first use of funds will be for operation of the parking facility: dedicated servers, bandwidth, 24/7 system administration. These are not large expenses. Programming and web design are donated. Funds in excess of that will be used to help create an effective PAC (political action committee) for Open Source / Free Software. Because it will be supporting a PAC, this project will not be eligible for IRS 501(c)3 non-profit status. A not-for-profit corporation will be organized when there are sufficient funds.

[via Netcraft, ZDNet and OSDir.com]

[Thanks Idan]