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A registrar who also engages in domain tasting can inadvertently create ripple effects throughout the domain name industry. Thus, domain name owners must exert pressure on ICANN to reduce this risk.
We are now experiencing ripple effects from the subprime market and its repercussions on related markets. However, there are situations where a problem in one market causes problems in seemingly unrelated markets. For example, the crisis that started in July 1997 with the collapse of the Thai baht led to sinking equity markets across Asia and ended up involving Brazil as well. It reached across hemispheres simply because Asian banks, when forced by the crisis to reduce their debt, couldn’t find takers for their Asian assets and instead had to unload others, such as their Brazilian holdings.
Similarly, there can be a problem when registrar functions and domain tasting are conducted by the same entity. Unmonitored coupling of seemingly unrelated markets can be devastating to our industry. For example, if a domain passes the tasting test but its revenue unexpectedly drops, the tasting entity may not be able to absorb the loss and may have to declare bankruptcy. In such a case, the customers who registered domain names through this entity will temporarily be unable to receive service. Nevertheless, tasting companies that use debt to finance their tasting transactions are even more vulnerable to unexpected drops in domain name revenue.
Of course, tasting will continue even after elimination of the five-day grace period. But it will become more risky and, thus, increase the chances of ripple effects.
There are three plausible, proactive solutions involving ICANN. The group can set debt reserve requirements, prohibit registrars from engaging in domain tasting, or put in place plans for mitigating such risk, for example by having someone temporarily take over the management responsibility of the defaulting entity’s domain names.
Thus, domain owners should put pressure on ICANN to investigate the likelihood and magnitude of the ripple effect and get intimately involved in the solution.
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ICANN has been completely incompetent on the issues of domain tasting and domain kiting. It is far more content to merely discuss matters than take any action. Indeed the whole problem of domain tasting was largely one of ICANN’s making.
Domain Tasting was, and still is, an industry. Front companies were set up as registrars purely for the purpose of domain tasting. The bulk of domain tasting was carried out by such operations.
“For example, if a domain passes the tasting test but its revenue unexpectedly drops, the tasting entity may not be able to absorb the loss and may have to declare bankruptcy”
Tasted domains, especially those that are not trademark infringing ones or generic terms, tend to have a lifetime that may be limited by the rate of link decay. The ease with which networks of domain tasting registrars could shuffle the tasted domains without every having to pay for them was an amazing con job. Despite it being an apparent problem, it took the Dell case and Google to force any action on the matter from ICANN. Even then, the action from ICANN was too late.
When the resolution on curtailing domain tasting was added to the ICANN budget for Fiscal 2009, the effect was immediate. Many of the domain tasters drastically limited their activities. This is the new/deleted/transfer graph for .com over 2008.
http://www.hosterstats.com/Detailed-com-Statistics-2008.php
The graph for activity in 2008 shows a massive drop in activity from 01/June/2008 onwards. The graph for 2007 shows .com being hammered by domain tasting activity.
http://www.hosterstats.com/Detailed-com-Statistics-2007.php
The same drop off can be seen in the .org TLD when PIR introduced anti domain tasting measures in 2007. Almost the complete day’s drop in .org was being tasted.
http://www.hosterstats.com/Detailed-org-Statistics-2007.php
The domain tasting activities of some .org registrars ceased completely with the introduction of that measure. Other massively reduced the numbers of domains that they were tasting.
To a domain owner such as myself, ICANN’s activities seem more concerned with travel to exotic destination and fine dining than dealing with the requirements of domain owners. With domain tasting and dodgy registrars, ICANN did not so much fiddle while the domain business burned - it provided a full symphony orchestra. How can any domain owner in his or her right mind have any confidence in ICANN?
Unfortunately, I think that there are still many large companies taking part in domain tasting, and ICANN does little or nothing to prevent this from happening. Domains are becoming increasingly more difficult to get our hands on and it is even worse that we have these companies exploiting many of the good ones. Hopefully, this issue will be resolved at some point.