35 million names registered in April. 32 million were part of a kiting scheme. A serious problem gets worse.

Out of 35 million names -- 32 million were part of a kiting scheme.
During the month of April 2006, a little more than 35 million domain names were registered. Of these names, 32.7 million were used - most again and again - but never permanently registered. These 32.7 million names were part of a scheme - a growing abuse of the domain system -- one I wrote about in my last blog article. It's an outrageous practice. I used to call it the add/drop scheme. After thinking about it, I think the name "add/drop" sanitizes the practice too much, so I've decided to call it something closer to what is actually taking place. The name I've decided upon is "domain kiting."

Why I call it domain kiting.
Here's why I chose to call it domain kiting. All of us are familiar with the illegal practice of check kiting. Quite simply check kiting involves taking advantage of timing and the banking system to generate cash that simply isn't there. In many ways that is what domain kiting does. Domain kiting takes advantage of timing and the domain name system in an abusive and improper way to generate cash.

In a nutshell, here's how domain kiting works.
Domain kiting registrars put up mini-Web sites -- loaded with search engine links -- for domains names for which they never pay. When people land on these Web sites and click on the links, money is made. It's easy to spot one of these registrars as the number of total registrations they make often far exceed the number of permanent registrations -- or names for which they actually pay. This is why during the month of April 2006, out of 35 million registrations, only a little more than 2 million were permanent or actually purchased. The vast majority of the rest were part of the domain kiting scheme.

Now let's drill down a little further into domain kiting 101.
A registrar who participates in this scheme - Go Daddy and its affiliates do not participate in this scheme - makes a large deposit - sometimes a huge deposit - at a registry. Then the registrar registers as many domain names as the deposit will allow. For example, if the registrar makes a $600,000 deposit at VeriSign Registry, they could register 100,000 .COM domain names as .COM names cost $6.00 per year.

It's all about catching Internet traffic.
For each domain name registered, the domain kiting registrar puts up a simple Web site filled with search engine links and hopes users land on that page and click on the links. Anytime an Internet user lands on one of their mini-Web sites and clicks on one of the links, money is made.

Domain kiting registrars abuse the 5 day refund period to work their scheme.
After a domain name is registered, a registrar has five days to cancel a domain name registration - i.e. drop the name - and get their money back. Domain kiting registrars abuse this rule and cancel the lion's share of the names they register just before the five day period expires - so they get their money back. But then something unexpected happens. After names are cancelled or dropped, the domain kiting registrar goes out and immediately registers the same names again. The domain kiting registrar will then put the same simple Web site back up for each domain name, wait another five days and then cancel all the names again -- just in time to get a full refund. And for most names caught up in the domain kiting scheme, this process will repeat itself over and over and over.

Domain kiting registrars rarely pay for the names they use.
By not actually paying for the names they are using, domain kiting registrars are able to generate profits, even if their mini-Web sites only generate 50 cents or more per year. And if they find, over time, that certain names never generate any revenue they stop registering them altogether. It's only the names that have value - to you as an Internet user - they register over and over and keep off the market - names for which they of course never pay.

Domain kiting registrars only purchase the names that prove to be real money makers.
There are those cases when, if a domain name proves to be especially profitable, domain kiting registrars will actually step up and register the name. They're not stupid. They won't take a chance on losing a name that generates much more than the annual cost of a registration. However, this is clearly the exception.

Meet DirectNIC.
You might find the registration statistics of DirectNIC somewhat interesting. DirectNIC registered more than 8.4 million domain names in April 2006, but only permanently registered -- or paid for -- 51.4 thousand of those. The trend was the same in March, when DirectNIC registered 7.6 million names and only permanently registered -- or paid for -- 52.5 thousand. Whatever could DirectNIC be doing? Why are they dropping and re-registering all those names - again - and again - and again? And why doesn't ICANN care?

But wait, there's more -- many more.
And the list of registrars, that register many more domain names than they actually purchase, goes on and on.

ICANN fiddles while the Domain system burns.
I will point out that at this time, unlike check kiting -- there is nothing illegal about domain kiting. Of course, domain kiting should be illegal. ICANN is perfectly happy with the practice. In spite of many complaints they have done nothing to put an end to it.

ICANN's favorite comment.
Since my last blog article a number of people have contacted ICANN and quite predictably, but sadly, ICANN has had no comment.

Domain kiting is out of control and must be stopped.
This domain kiting practice needs to be stopped. It benefits only those few organizations that are pillaging the domain name system. It takes millions of good names off the system, and makes them unavailable for the purposes for which those names were originally intended. It places an unnecessary burden on every registry.

A letter to ICANN I sent in 2004.
I wrote a letter bringing this matter to ICANN's and VeriSign's attention as early as October 8, 2004. So both ICANN and VeriSign have known about this practice for quite sometime -- but have looked the other way.

A letter sent by the .ORG registry.
While VeriSign has been suspiciously quiet on this whole issue -- why is that VeriSign? -- the Public Interest Registry, the registry that manages .ORG recently wrote ICANN complaining about the practice.

C'mon Dr. Twomey -- make Cambridge proud -- put an end to this nonsense.
I am once again calling upon ICANN and its President and CEO, Dr. Paul Twomey, to step up and put an end to domain kiting and the pillaging of our domain name system. C'mon Dr. Twomey. Come through for us. Just this once. Please!