The Linux Extremist

I once knew a gentleman, though I use the term in the loosest possible sense, who decided that the road to riches was paved with acquiring as many domain names as possible and then selling them on to the highest bidder. His initial investment in domain names topped at least £100,000; to my knowledge he has still to see a return on this investment.

This kind of mania for domains is mirrored elsewhere; according to The Register, EURid, the agency responsible for .eu domains, suspended some 74,000 names as they were being held by invalid registrars merely for the purposes of selling them on later.

One has to sit back and wonder at the sheer amount of time and effort expended to secure what is in effect, a rented commodity. No one “owns” a domain, per se, it’s just leased for a term from a registrar. It is a business which has a lot more misses than hits. Indeed, domain “squatting”, for lack of a better term, may be the most stupid internet business in which to be involved.

First, consider the risk factor. Not only are there responsible agencies such as EURid ensuring that domains are not used for nefarious purposes, but also anyone sitting on a registered trademark or company name is taking a gamble; they’re risking that the legitimate owner won’t sue, and would rather pay the squatter than the legal costs associated with getting the domain back. Sometimes this works, sometimes not; Tom Cruise, for all his sins, rightly chose the legal approach and acquired TomCruise.com off of a squatter. The other risk is that much of domain squatting is speculation; the squatter is taking a guess as to what domains might be popular in the future. The aforementioned squatter of my acquaintance took a guess that some companies many want a 3 letter .eu domain, and bought a great variety of them. Will they be necessary? Will a company want them? Who knows, is the answer.

The second idiocy of domain squatting arises from the difficulty of assigning a rational value to a domain name. It’s easy to do it when you have a domain name like “sex.com”; that is a rare exception to the rule, however. Contrary to popular belief, domain names do not necessarily generate traffic by themselves, if the list of hits on Sedo’s domains for sale is anything to go by. The 3 letter .eu domains may have a great value, or they may not: it is totally speculative and often times the real value is hidden as savvy companies will use an inoccuous proxy to negotiate for them.

The final stupidity of domain squatting is the assumption that having a proper domain is a key to a particular business. This is definitely not the case. A squatter may sit on a “booksforsale.com” domain, but does that make it more intrinsinically valuable than “amazon.com”? It’s not just the domain, but what one does with it that counts. A domain should be easy to remember to assist in marketing, but that domain necessarily does not have to have a direct relationship with the products and services being sold. Domain squatters often assume that this relationship is necessary; only in rare cases, such as the aforementioned “sex.com”, does this assumption pay off.

At best, domain squatters are an irritant and a nuisance; they are parasites who are trying to make a quick buck out of speculating on what others might do, rather than actually building a successful business of their own. They are hindrance, but not an overwhelming obstacle, and probably far more of them will end up losing money than ever make a fortune. One could tell them that the best way to make money is to offer a product or service that no one has thought of yet that could really benefit the community; however they’re too busy snickering at their own supposed cleverness for having sat on what they consider to be a valuable set of domains. Perhaps that, in the end, is their greatest stupidity.

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