defensive registrations these data considerably overstate the real demand. The available evidence also
indicates a considerable proportion of registrations, under the new gTLDs, have been made by traffic
aggregators and speculators.
The number of domains registered under
declined in the final part of 2003. In
December 2003, registrations under
declined by just over 90 000. Registrations under
both November 2003 and December 2003 by more than 50 000. By way of contrast, registrations under the
) continued to increase. The combined impact of both these trends
was that new gTLDs sharply fell in proportion to total gTLDs. This raises the question of why this
occurred and why
seems to have been hit harder than
The most likely reason for the fall off in the number of domains under
failing to renew names. This suggests that these speculators over estimated the demand for names under
the new gTLDs or were not good at predicting what names would be in demand. A counterbalancing trend,
in the case of
may have been the development towards international domain names at the second
level which had yet to occur under
While the official data were only available to the end of 2003 at the time of writing, indications from
other sources suggest
continued to lose market share in January 2004 before witnessing an increase in
February 2004. At the same time
appears to have stabilised losses in January 2004 and grown in
February 2004. This was at a time when registrations under the original gTLDs continued to grow. These
data underscore the challenges facing new gTLDs in winning market acceptance.
The role of cyber squatters, speculators and traffic aggregators needs to be carefully considered in
assessing the demand for new domain names. The cyber squatter phenomenon is well known and has been
the subject of extensive work by WIPO. Domain name speculation on generic words, not subject to
trademarks, or three and four letter strings of letters is also well recorded. Perhaps less well known is the
role that so called traffic aggregators play in the economics of domain name speculation.
The original `business model' for cyber squatting was relatively simple. Cyber squatters would
register names associated with business or social activities of other entities, with no intention to use them
other than in reselling the names at a higher price than they paid. In some cases this also involved creating
a Website with content designed to `blackmail' the entity associated with that name into purchasing that
the entity would not have otherwise cared if the registration had lain dormant).
the other hand, register domain names that may or may not be associated with trademarks with the intent of
selling them at a higher price. By June 2001, the owners of the site DomainCollection.com had
registered over 600 000 domain names which were available for resale.
From both these areas of domain
name registration a further category of registrant emerged in the secondary market for domain names.
Traffic aggregators not only speculate in domain names but provide a source of revenue for
speculators and cyber squatters. The business model works along the following lines. Traffic aggregators
enable anyone with a domain name they are not using to `park' that domain with them. If a user types or
mistypes a domain name which has been parked, they are shown or redirected to a Website which is
generally presented in the form of a directory. The traffic aggregators, in turn, sell paid links to businesses
or space to advertisers. The owner of the domain name, in turn, receives a payment every time a user
`clicks through' to the entity paying for the link. Advertised returns for `click throughs' range from
USD 0.02 to USD 1.80.
In some cases speculators or traffic aggregators register generic names that they believe may generate
traffic to their Websites. In other cases they register names that are identical or closely resemble the names
of other sites that are well known or generate significant traffic in their own right. For example, if a user