Tuesday, September 26, 2006

Backordering Expired Domain Names

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Below very interesting article about backordering expired domain names. Original of article here.

Backordering Expired Domain Names

Five backorder models targeting different stages of the deletion cycle are currently in play, each of which has its own strengths and weaknesses. Three of them are more likely to survive in the medium-term. However, in the long-term, it is very likely that one of these models would dominate the market. The dominant model that emerges depends on the success of coordination efforts between registrars, fee structure, and customer awareness of such services.

Thus, to increase the chances of acquiring an expired domain name, we recommend subscribing to multiple complimentary services simultaneously, or to the one-stop integrated model developed by DomainMart.

What is backorder?

Backorder is a service that attempts to register an expired domain name on behalf of an entity before someone else grabs it. Over 750,000 domains expire every month!

It should be noted that not all expired domain names can be backordered, as the registrant might renew them before being deleted by the registrars or they might be on HOLD status pending a settlement of a trademark dispute.

Domain Name Expiration and Backorder Process.

Domain names are registered for a specific time period, typically between 1 to 10 [1] years and can be renewed at any time for a maximum of 10 years. If the registrant or the administrative contact does not renew a domain name, it expires. And that's when the action to grab it starts.Registries have adopted different procedures to handle expiring domain names. I will concentrate on the .com, the dominant global extension, currently controlled by VeriSign.Domain name deletions follow the stages below:

Stage 1. Domain name registration expires.
Registrar places it under the REGISTRAR-HOLD status, whereby the domain cannot be modified or deleted, but can be renewed. This grace period varies by registrar, but usually lasts from 30 to 45 days. However, the domain will be deleted from the zone files, so the associated Website and e-mail access will stop.
The registrar must remove REGISTRAR-HOLD status to modify the domain.

Stage 2. Registrar deletes a domain name.

Stage 3. Registry modified the domain name status to REDEMPTIONPERIOD, whereby the domain cannot be modified or purged; it can only be restored. Any other registrar requests to modify or otherwise update the domain will be rejected. The domain will be held in this status for a maximum of 30 calendar days (registry grace period) during which if the registrant would like to redeem it, they need to:
- Call their registrar.
- The registrar will "restore" the domain name for a fee determined by registrar, typically US$150-250.
- This places the domain on PENDINGRESTORE status for 7 days (and places the domain name back in the zone file), so email and Website access are restored.
- The registrar must then submit a restore report to the Registry.
- Once the Restore Command and Restore Report process is completed, the name goes back on ACTIVE status.

Stage 4. If at the end of the registry grace period the name is still in REDEMPTIONPERIOD status, the domain name will be moved to PENDINGDELETE status for 5 days.

- When in this status, the domain name will be deleted.
- The registrar or the Registry cannot remove the status.

Stage 5. On the 6th day, the name is then deleted from the Registry. VeriSign currently releases all their expired domain names in batches each morning at 6:30, hence the term "the 6.30 AM domain name goldrush." Registrars know these names up to five days in advance and some have passed the information to speculators. This batch release system is unique to VeriSign. Other registrars delete their names in real-time, not more than 45 days after the domain's original expiry date. These names are then immediately available for anyone to register.

Backorder Models:

Model 1. Service By Individual Registrars
Some registrars are providing backorder services by not deleting the domain name at Stage 2, but assigning it to a party that has paid them a fee to backorder it. GoDaddy.com and eNom have adopted this model.

Model 2. Service Through Coordinated Registrars
SnapNames has adopted a second approach by acting as a single backorder application point for multi-registrars. Thus, by submitting a request through SnapNames Website, SnapNames works with the registrar of the domain name before the registrar deletes it, i.e., before Stage 2.
However, SnapNames is at a disadvantage for backordering domain names that are registered through registrars that have adopted Model 1 and not participating in the coordinated approach. If the registrar does not have its own backorder service and is not a partner of SnapNames, downstream Models 3 or 4 can capture the domain name.

Registrars that have partnered with SnapNames include Network Solutions and DomainIt.

Model 3. Service Through the Registry
VeriSign controls the .com registry and can guarantee that any domain name deleted at stage 2 is redistributed to a party subscribed to their widely anticipated launch of Waiting List Service (WLS).

WLS is provided through any ICANN accredited registrar that wishes to participate in it. This approach has two main differences from the coordinated registrar model. First, it is only offered through registrars who then can choose to offer it to their customers and second, only the registry has control over domain names in Stage 3. If there are no backorder requests for a domain name made through WLS, the domain name advances to Stage 4, after which services providing Automated Registration Software can grab it.

Model 4. Automated Registration Software
To capture expired domains, this model is based on the premise that the domain name is deleted from the registry at Stage 6. Thus, to acquire the domain name, the interested entity sends electronic requests to register a domain name through an ICANN accredited registrar. However, since a large number of parties would be interested in the same quality domains, it becomes a race for registering it first.

Proprietary automatic registration software is deployed that can place hundreds of requests for the same domain name in seconds. The resulting excessive registration requests through few registrars led VeriSign to cap each ICANN registrar to 256K bandwidth or 250 simultaneous RRPs. It was rumored that some registrars had attempted 1500 registrations for a single name in one second!

Model 5. Multi-model Strategy
To increase and guarantee that an expired domain names is registered before it is returned to the public pool of available names, one needs to subscribe to providers of service under Models 1, 2, 4 and 3 - when it becomes available, as each of these models has its own crack holes.

Model 1 is most viable for domain names registered through individual registrars that are not participants in the coordinated registrar pool in Model 2. Conversely, the coordinated registrar approach has an advantage over non-participating registrars for domain names registered through them, as they would not let it proceed to Stage 2. However, they have no control over deletions of domain names originally registered through others. Nevertheless, the success of Models 1 and 2 assume that a customer has placed a backorder request either through SnapNames or through a registrar providing the service for names registered through them. If not, then Model 3 becomes viable. However, with the introduction of WLS, backorder customers can go directly to VeriSign to bypass the registrars who would delete expiring domain names registered through them for which they had no backorder requests. Hence, the potential dominance of WLS depends on fee structure, ability of the major registrars to agree on and coordinate sharing of a centralized Website, and customers' awareness of the different programs.

Some major registrars do not yet provide backorder services through their Website.

Multi-model strategy is provided by DomainMart.

Fees and Allocation Mechanism

Two pricing and allocation models have emerged. The first uses a fixed-price with domain name allocated on a first-backorder-first-serviced basis. Others have adopted more lucrative and fair auction mechanisms, whereby the highest bidder is awarded the domain name at the bid price (an English auction) [2] . The fixed-price model providers typically charge an upfront fee and allow a customer to backorder three alternative domain names in the event the client's first choice is not secured on their behalf. On the other hand, under the auction model, a customer gets charged only if the domain name is registered on their behalf.

SnapNames charges a minim fee of $60, if only one entity requests the domain name. For multiple backorders on the same domain name, a short auction is setup. Such backorder customers are notified by email of the auction setup.

DomainMart charges the same minimum fee for simultaneously using multiple service providers under Models 1, 2 and 4. DomainMart provides additional services including appraisal of value and advise on a bidding strategy for an additional $25 (total $85), while charging $50 for the bundle of valuation and bidding advice.


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