Is Domain Speculation Fair?

Since the early days of the web, enterprising individuals have been buying up and hoarding potentially valuable domains in droves. Called domain speculators, many associate these people with the gold miners of the old American West.

EURid, the non-profit registry of the .eu TLD, estimates that as many as 50% of domain name registrations are made by speculators with no interest in developing a website. Some of these names belong to everyday people trying to cash in on a valuable piece of web real estate, but the vast majority of these them are registered by domain tasters.

These “tasters” register as many as one million names per day, taking advantage of a loophole in ICANN regulations that allows them to drop a name within five days for a refund. The same domain can be “tasted” by various entities for months on end. If a name turns out to be valuable- usually because it has some level of traffic- it is kept, often unavailable to the average webmaster for several years.

To an extent, most of us speculate domains. At one point I owned about ten names that were potentially valuable. Take that and multiply it by the large number of domain owners, and even if every one of us only has an extra domain or two, it leaves a lot of domains unavailable to be registered. More importantly, these names are the cream of the crop.

Probably the best name in my portfolio (which is rather dismal to be honest) is gamerforums.net. I registered it after it expired two years ago. Though not a .com, gaming is a very popular niche and many video game junkies spend a good bit of time on forums. I have received value estimates ranging from $300 to $3000 for the name, and have no problem keeping it until someone pays the right price.

But is this fair? I could keep the name for the next ten years, waiting for it to garner value, but there might be someone out there who can’t afford it but would make good use of it. Most of us have at one point or another discovered the perfect name for a new website, only to find it registered and unused by some speculator in Florida. Wouldn’t it be in the best interest of Internet users for the name to only be available to someone willing to develop an active site?

There are those who say domain hoarding is fair. They will tell you that holding a domain is like buying a piece of valuable property, and investors speculate property all the time. Keep in mind, however, that land is significantly more expensive than domains, which are in essence leased for a period of time rather than bought permanently.

Domains are priced so low that it’s no surprise that 50% of registrations are never developed, but imagine if half the earth’s best land was owned by speculators, sitting undeveloped. We would all be living on the worst land- deserts and lowlands- while all the waterfront property would be held by someone “waiting for the right price.” This happens to an extent in the real world, but no where close to the size and scale of the problem in the digital realm. Finally, you can’t buy a house or parcel of land and ask for a refund fours later.

Photo: Flickr