However, as always, the additional ‘grace’ period had to be disgracefully abused. The modus-operandi used to be as follows:
Companies/persons would register those domain names which spelt similar to popular domain names, popular misspellings or generic names. Advertisements would be placed on these websites through programs such as Google’s Ad-Sense program and in the five day ‘grace’ period people visiting the website through the domain name would end up clicking on the advertisements thereby generating revenue for the domain owner. Once the 5 days grace period lapsed the domain would be returned for a full refund thereby generating a tidy little profit for the domain taster.
The problem with domain tasting, apart from the ethical angle, is that it deprives genuine users the use of the domain, as very often once a domain is dropped by one taster it is picked up by another taster who will then circulate it to another taster. Since the entire process is carried out by automated bots it costs the taster hardly anything. The dead-weight loss for society however is higher.
In order to combat the practice of ‘domain tasting’ ICANN came up with the following solutions: 1. They first decided to stop refunding the transaction fee of $ 0.20 if more than a certain number of domain names were returned by the same company. 2. Consequently ICANN increased the penalty to the cost of registering the domain name. Both these measures combined have resulted in the domain name returns decreasing by almost 99.7%.
This is an interesting model of how internet governance and how ICANN has managed to successfully adapt itself to face a new problem. In other news I’m glad to note that the Government of the United States has finally granted ICANN some measure of independence.