Domain Name Panelists MeetingOctober 16

II. The Domain Name Industry Today

M. Scott Donaheyadr@scottdonahey.com

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Domain Name Panelists Meeting, October 16, 2006

• Registration for purpose of selling• Registration so that mark owner is

blocked from registering• Registration by a competitor of the mark

holder to disrupt• Registration to attract users looking for

mark owner to web site for profit

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Domain Name Panelists Meeting, October 16, 2006

• Search engines (Google, Yahoo/Overture,etc.) now serve as de facto Internetdirectory

• 90% of searches today through searchengine, only 10% browser searches

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Domain Name Panelists Meeting, October 16, 2006

• Value of Browser Search marketestimated to be US$550 million

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Domain Name Panelists Meeting, October 16, 2006

• More than 80 million DNs now registered

• Over 1,000 active “domainers” (DNsprimary or sole source of income)

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Domain Name Panelists Meeting, October 16, 2006

• More than 25,000 reported DN sales from10/03 to 1/06

• Average price for oneword.com DNs =US$48,997

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Domain Name Panelists Meeting, October 16, 2006

• Publicly traded companies acquiring DNportfolios, buying/selling DNs, ParkingDNs

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Domain Name Panelists Meeting, October 16, 2006

• Publicly traded companies include:Internet REIT – 400,000 DN portfolio. 30employees. HQ Houston, offices in NY and SF.Investors include Perot Investments, MalveronLLC, Jacobson Family Investors

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Domain Name Panelists Meeting, October 16, 2006

• Valueclick• Fox Time Warner• Marchex• Daum

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Domain Name Panelists Meeting, October 16, 2006

• Sites on which links to other sites areorganized, indexed, and made searchable

• Linked sites pay per click (PPC). Revenueis shared between DN registrant andparking service

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Domain Name Panelists Meeting, October 16, 2006

• Google, Yahoo/Overture

• Sedo, Skenzo, moniker.com,TrafficClub.com, Hostex, Fabulous.com,ParkingDots.com

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Domain Name Panelists Meeting, October 16, 2006

• Google and Yahoo are being sued by PPCadvertisers who pay premiums to getsearch directed click throughs

• Suits allege that many click throughs arefrom parking sites and are the result oftyposquatted DNs that bring traffic toparking sites

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Domain Name Panelists Meeting, October 16, 2006

• Specialist registrarsLaw firms register and manage domain namesfor their clients – Ladas & Parry LLP & LadasDomains LLCFor corporations, registration and managementof DN portfolios

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Domain Name Panelists Meeting, October 16, 2006

• Corporation Service Company,Wilmington, Delaware

• International Data Group, Boston

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Domain Name Panelists Meeting, October 16, 2006

• In April 2006, 35 million DNs registered.Of these, 32.7 million were used, but neverpermanently registered

• Used during 5 day grace period, allowedto lapse, then registered again, startingnew grace period

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Domain Name Panelists Meeting, October 16, 2006

• “Tasting” done by registrars. Makedeposit with registry

Example: Verisign charges $6 per year for .comDNs

• Registrar registers 50,000 DNs forUS$300,000 deposit

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Domain Name Panelists Meeting, October 16, 2006

• DNs parked on PPC web site

• 5 day grace period used to cancelregistration without obligation

• Names immediately reregistered andparked

• Eventually drop unproductive DNs andpermanently register those generatingsignificant traffic

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Domain Name Panelists Meeting, October 16, 2006

• Registrar Dotster being sued by NeimanMarcus and Bergdorf Goodman fortyposquatting

• Dotster employee allegedly offered to sellbergmangoodman.com for $1,000

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Domain Name Panelists Meeting, October 16, 2006

Full Service Registrar• Registers DNs, manages portfolios,

operates parking service, brokers DNs

• Fabulous.com – owns 550 thousand DNsfor own account

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Domain Name Panelists Meeting, October 16, 2006

• Some recent examplesgames.com, US$10.5 milliongolf.com, (by Time Inc.), rumored price US$25million

morgage.com, US$250,000

irs.com, US$11 million

sex.net, US$450,000

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Domain Name Panelists Meeting, October 16, 2006

• Online media cover the DN industryexclusively, reporting on legaldevelopments, sales, parking revenuetrends, ICANN, etc.

• DN Journal (www.dnjournal.com), DNForum (www.dnforum.com), CircleID(www.circleid.com)