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07|01|2008 02:41 am EDT

ICANN Board Resolution Kills Domain Tasting

by Adam Strong in Categories: ICANN / Policy, Miscellaneous

ICANN logoIn an email sent to domain name registrars this evening, ICANN announced a new resolution approved by the ICANN board, effectively ending domain name tasting. Since the GNSO had previously sent their recommendation to the board in April, the vote came as no surprise to those in the domain community.   The new policy will charge the .20 cent ICANN fee on every domain registered, whether or not it is deleted within the 5 day Add Grace Period or not.

(Read more about the new fees and the impact after the jump)

The Add Grace Period (AGP) was implemented to allow registrars a 5 day period whereby they could delete domain names that may have been registered using fraudulent credit cards, by error, etc. The system was gamed by domain tasting operations which would register thousands of domain names, test them for traffic during the 5 day window and delete domains which did not make enough money to cover the annual registration fees. ICANN fees are only charged at the end of the quarter for domain names registered, transfered or renewed so the .20 ICANN fee was avoided since the domain tasting operations would only have to pay the ICANN fee on domains that were older than 5 days.

Some in the domain name industry still are not satisfied with the policy change, but others in the domain industry believe that this will go along way to killing off domain tasting operations in mass scale.   Let’s use real numbers to show what effect this has on a tasting operation. From information we have been provided by industry insiders, tasting operations have typical success rates of around .5% . In a typical scenario before this policy a taster might register 100,000 domains and likely only keep 500 – deleting 99,500 within the first 5 days. Using the AGP loophole, the registrar would only be charged the registry and ICANN fees of $3210 ($6.42 x 500) + $100 (500 x .20) = $3310. With the new policy implemented, a registrar will be charged $3210 (500 x $6.42 ) on the kept domains and $20,000 (100,000 x .20) in ICANN fees. Using the .5% domain “keep rate”, the per name cost of a tasting operation has increased from $6.62 per name to $46.42.

It is indeed still possible that domain tasting will occur. The AGP still exists which provides the loophole to delete tasted domains. However, the added ICANN fees are on a per domain cost, so in order for domain tasting operations to be profitable they will have to be less “shot-gun” and more “sniper” precise.

The ICANN new fees are also based on a threshold of 10%. So if a registrar adds in 100,000 domains per month and is deleting more than 10% the fees will be charged. As long as the registrar is under this percentage fees will not be charged.

The resolution can be read in entirety after the jump :

Whereas, ICANN community stakeholders are increasingly concerned about domain tasting, which is the practice of using the add grace period (AGP) to register domain names in bulk in order to test their profitability.

Whereas, on 17 April 2008, the GNSO Council approved, by a Supermajority vote, a motion to prohibit any gTLD operator that has implemented an AGP from offering a refund for any domain name deleted during the AGP that exceeds 10% of its net new registrations in that month, or fifty domain names, whichever
is greater.

Whereas, on 25 April 2008, the GNSO Council forwarded its formal “Report to the ICANN Board – Recommendation for Domain Tasting” which outlines the full text of the motion and the full context and
procedural history of this proceeding.

Whereas, the Board is also considering the Proposed FY 09 Operating Plan and Budget , which includes (at the encouragement of the GNSO Council) a proposal similar to the GNSO policy recommendation to expand the applicability of the ICANN transaction fee in order to limit domain tasting.

Resolved (2008.06.26.06), the Board adopts the GNSO policy recommendation on domain tasting, and directs staff to implement the policy following appropriate comment and notice periods on the implementation documents.

Domain tasting motion approved by the GNSO Council 17 April 2008

Whereas, the GNSO Council has discussed the Issues Report on Domain Tasting and the Final Outcomes Report of the ad hoc group on Domain Tasting;

Whereas, the GNSO Council resolved on 31 October 2007 to launch a PDP on
Domain Tasting;

Whereas, the GNSO Council authorized on 17 January 2008 the formation of a small design team to develop a plan for the deliberations on the Domain Tasting PDP (the “Design Team”), the principal volunteers to which had been members of the Ad Hoc Group on Domain Tasting and were well-informed of both the Final Outcomes Report of the Ad Hoc Group on Domain Tasting and the GNSO Initial Report on Domain Tasting (collectively with the Issues Report, the “Reports on Domain Tasting”);

Whereas, the GNSO Council has received the Draft Final Report on Domain

Whereas, PIR, the .org registry operator, has amended its Registry Agreement to charge an Excess Deletion Fee; and both NeuStar, the .biz registry operator, and Afilias, the .info registry operator, are seeking amendments to their respective Registry Agreements to modify the existing AGP;

The GNSO Council recommends to the ICANN Board of Directors that:

1. The applicability of the Add Grace Period shall be restricted for any gTLD which has implemented an AGP (“Applicable gTLD Operator”). Specifically, for each Applicable gTLD Operator:

a. During any given month, an Applicable gTLD Operator may not offer any refund to a registrar for any domain names deleted during the AGP that exceed (i) 10% of that registrar’s net new registrations in that month (defined as total new registrations less domains deleted during AGP), or (ii) fifty (50) domain names, whichever is greater.

b. A Registrar may seek an exemption from the application of such restriction in a specific month, upon the documented showing of extraordinary circumstances. For any Registrar requesting such an exemption, the Registrar must confirm in writing to the Registry Operator
how, at the time the names were deleted, these extraordinary circumstances
were not known, reasonably could not have been known, and were outside of
the Registrar’s control. Acceptance of any exemption will be at the sole
reasonable discretion of the Registry Operator, however “extraordinary
circumstances” which reoccur regularly will not be deemed extraordinary.

c. In addition to all other reporting requirements to ICANN, each Applicable gTLD Operator shall identify each Registrar that has sought an exemption, along with a brief descriptive identification of the type of extraordinary circumstance and the action (if any) that was taken by the Applicable gTLD Operator.

2. Implementation and execution of these recommendations shall be monitored
by the GNSO. Specifically;

a. ICANN Staff shall analyze and report to the GNSO at six month intervals for two years after implementation, until such time as the GNSO resolves otherwise, with the goal of determining;

i. How effectively and to what extent the policies have been implemented and followed by Registries and Registrars, and

ii. Whether or not modifications to these policies should be considered by the GNSO as a result of the experiences gained during the implementation and monitoring stages,

b. The purpose of these monitoring and reporting requirements are to allow the GNSO to determine when, if ever, these recommendations and any ensuing policy require additional clarification or attention based on the results of the reports prepared by ICANN Staff.

After several months of discussion and public comment on both the budget and the GNSO recommendations, the Board has approved the proposed budget containing a provision for collecting transaction fees above a threshold during the AGP. Effective 1 July 2008, the registrar-level transaction fee will be collected on transactions, including names added on or after 1 July 2008 and deleted during the Add Grace Period above a certain minimum threshold. Each “transaction” will continue to be defined as a one-year domain registration increment caused by a successful add, renewal or transfer command, but this year any domain names deleted during the AGP (if offered) will be included as transactions if they exceed the maximum of (i) 10% of that registrar’s net new registrations in that month (defined as total new registrations less domains deleted during AGP), or (ii) fifty (50) domain names, whichever is greater. The budget assumes the transaction fee rate will remain at US ./send.20.

The second change prohibits registries from issuing refunds above a similar threshold for names registered and deleted during the AGP (although some registries have made plans to charge for such transactions independent of this motion). The implementation timing of this change has not been set, but should be expected to take place over a period of some months. ICANN staff will solicit public comments and post a registrar advisory prior to implementation of this aspect of the GNSO recommendation.

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Marlon Phillips

July 2, 2008 @ 12:28 pm EDT

OK, so this means that 100’s of 1000’s of domains will no longer be registred per day which should also mean that Versign and Icann will be reducing their fees….. Yea right……


July 3, 2008 @ 2:46 am EDT

What this means is that names that are not registered in auction will be warehoused by the registrars themselves for one year and then released in auction once the domain expires.

Right now it’s a merry-go-around where the registrars smile and nod while bending the public over. These registrars and ICANN in particular think they’re demi-gods and can do whatever they wish. They pay lip-service and take action only when threated by lawsuits and removal of authority.

Where does one even begin to document these white collar crimes. Netsols front-running of the domains is an apt example. The current situation with ICANN not policing the registrars is a utter disgrace.

crooks, all of them. ICANN needs more govt. oversight, they’re very obviously incompetent. More govt. oversight means criminal liability on the part of the registrars and the more importantly the executives within these corporations. The current system is definitely not working.


July 3, 2008 @ 8:18 pm EDT

“which should also mean that Versign and Icann will be reducing their fees


December 5, 2008 @ 7:23 am EDT

Looking through the policy, online info, and ICANN’s public comments, it seems no one has noticed that this policy won’t end tasting. Rather, it will simply change who “wins” the race for domains. Specifically, large high-volume registrars can utilize up to 10% of their registrations for tasting. Why should they have this advantage? Some of these large registrars have used tasting to front-run registrations, and some are connected to a “house” portfolios.

As it stands, the $0.20 fee has eliminated the most egregious practices, i.e. “kiting”. But the new Limits Policy just gives large registrars an unfair advantage.

Am I missing something?

Disclaimer: It makes no sense to defend squatting on trademark typos, nor all of the other problems like phishing and spam that are made simpler by the AGP. However, I would argue that registering a typo of a generic term (or any other speculative phrase that is not a trademark issue) is not an unethical practice.

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