|Verisign currently collects $6 on every .com and .net
domain name registration. If WLS goes through their share will
quadruple to $24 on all expiring domains that attract a WLS buyer.
Since Verisign will be granted monopoly control over those domains,
WLS subscription holders are guaranteed to get the name if it drops.
Drop catching services and other potential buyers are guaranteed to
Though WLS would be a
virtual yellow brick road to riches for Verisign, it could bankrupt
the bevy of businesses that have sprung up in recent years to
compete in the expanding market for expiring domain names. Some of
those in the line of fire, including industry heavyweights like Dotster,
Enom and GoDaddy, have banded together to form the Domain
Justice Coalition (DJC) in an effort to derail WLS.
Lawsuits have been filed and at least two U.S. Congressmen have
enlisted in the anti-WLS battle.
None of that has stopped Verisign from announcing that WLS will
roll out on October 27, but in a recent letter to Verisign,
ICANN said that several details still have to be worked out before
Verisign will be given a green light to go.
Multi-million dollar corporations are the most visible combatants
in this battle for the pot of gold at the end of the domain
rainbow, but real people are being affected as well. Small
businessmen like Gordon Martin have to fend for themselves. The
51-year-old Canadian runs an independent drop catching service at DropWizard.com.
To Martin the issue is a simple one. “As an entrepreneur I am
highly offended by a quasi regulatory organization (ICANN)
sponsoring, aiding and abetting two private companies to confiscate
an industry and our business assets,” Martin said. (In addition to
Verisign, the second company Martin refers to is SnapNames.com
who will provide the technical system for WLS).
Martin’s situation would be similar to a gun shop owner having
the authorities arrive one day with an announcement that Wal-Mart
had decided they wanted ALL of the firearm sales in town. Or to be more precise, they want the rifle and pistol business (WLS
will affect only .com and .net). The drop catchers
could still try to survive on .org and new extensions like .info,
.biz and .us. but from an economic standpoint that is
like being told “you can keep your gun shop open, but you can only
sell slingshots and peashooters.”
Martin says people like him won’t be the only ones to suffer
from a new Verisign monopoly. He sees trouble for the entire
industry if WLS rolls out. “I presume the domain reservations will
be in the usual form of a land rush over a day or two or maybe even
a week. But then what? 364
days of tough sledding?" Martin asks “who is going to add
new product, devise new ideas or start up business in the 364-day-a
year wasteland that will be created (once all of the slots on good
domains falling for the year ahead have been claimed)? And where
will the customers be for those 364 days…one day of huge interest
and then what? Watch for a massive outflux of clients that will
never be back.”
Martin also feels ICANN will lose all credibility if it
rubberstamps the WLS proposal. “What company will risk its capital
and ideas in an area that ICANN has allowed to be co-opted and
confiscated by it’s own board members for personal/corporate
profit?” he asks.
To appreciate the depth of Martin’s feelings about the WLS
threat you have to understand what it took for him to get where he
is today. DropWizard is the culmination of 30 years of hard work and
investment aimed at finally allowing Martin to do something he
Martin was born in the small Vancouver Island town of Duncan
in 1952. His parents, Joan and Russ Martin, were both
schoolteachers. While he was still a child they moved to Surrey,
a busy British Columbia town of 367,000. Martin has been in
the area ever since, though a
few years ago he returned to his small town roots by moving his own
family a little further east
to Langley, a
picturesque community of 24,000 people in the famous horse country
27 miles southeast of Vancouver. His wife Lita and
13-year-old daughter Cassandra are there too but three other
children have already grown up and gone out on their own.
Martin graduated from high school in Surrey then enrolled at
nearby Douglas College. He took on several part-time jobs and planned to work his way
through school but admitted spending too much time on Partying 101.
He soon found himself on the street looking for a full time job.
Fortunately the Bank of Montreal liked Martin enough to
overlook his transcript and give him a shot in their management
Martin paid careful attention to business and four years later he
decided he was ready to go out on his own. He knew there would
always be a demand for janitorial services so he started up one of
his own. It may not be the world’s most glamorous business but it
is one that rewards hard work with very respectable dollars. Martin
was able to build his billings
to nearly a million dollars a year and employ more than 20 workers.
Ten years after he started he sold the business and used his
entrepreneurial experience to move on to the financial services
In 1998, Martin and two partners purchased a mutual fund
dealership to launch a major new initiative. 3 years later they took
over Canada’s largest credit counseling company and merged it into
their operation, boosting billings to 10 million dollars a year.
Martin also spent a lot of time advising start-ups on raising
capital, writing securities documentation and obtaining venture
capital. As his company grew and the usual “corporate culture”
took root, Martin found the new environment and his “Attila the
Hun” management practices were not a good mix.
He also wanted more personal time and soon fell prey to a fatal
attraction that has claimed many in the domain business –
computers and the Internet. “I told my wife back in 1998 when I
bought my first computer that someday I would make my living off the
net”, Martin recalls. “I still putter in the financial business
but must admit the net has now become my first love!”
Domain pioneer Rick Schwarz invited Martin to join his
private chat board where Martin learned the ropes from some of the
most successful people in the business. “I’ve literally had a
million dollar net education given to me free,” Martin said.
“I can’t thank Rick enough for including me on his board
as I was a complete neophyte in net terms.”
Martin spent over a year pursuing expiring names for himself then
decided last year that there was room in the market for a new
commercial drop catching service. He formalized what he had already
been doing on his own and Drop Wizard was born. Nothing in
Martin’s background suggests the kind of technical computer skills
one would need for such an operation. Martin explains, “I have
moderate skills in html but no coding experience. However, I
have a technical guy that I used for our financial business and he
has done all the coding work in return for a small percentage of the
Of course there were other obstacles that had to be overcome.
“The biggest problem was finding registry support for a startup.
I was lucky that AW Registry listened and even though
they weren’t accepting new customers at the time, they made room
for me”, Martin said. The hot new Australian registrar Fabulous.com
is also a partner now.
Even though the company is well established today, there are
still daily challenges to face. “From a monetary point of view the
biggest risk is in the daily credit.
On average it can range anywhere from $10,000-$50,000 a day
(owed to the registrars). There is the risk of not being paid after
purchasing domains on behalf of clients”, Martin said.
Another problem is
having to regularly reinvent the operation to keep moving forward in
the fiercely competitive drop catching game. Martin said “there
has been a constant need to re-code the site to handle the enormous
growth we’ve gone through. It
has literally required a “new site” almost every 6 weeks since
Martin also has to deal with rapid fire changes in the industry
at large. Drop Wizard originally charged a flat fee for successfully
catching domains, but this summer’s successful debut of Pool.com’s
new auction model (offering a set opening price that is usually
followed by an auction among those who seek the same domain) forced
existing drop catching services to scramble to keep up. Martin says
“I don’t like the Pool business model. However they brought it forward, the public accepted it and
they’ve become dominant in the existing market, pushing aside
other successful companies.”
To meet the challenge Drop Wizard had to abandon the set price
format and start auctioning domains as well. It was the only way to
keep registrar partners who otherwise might have been attracted by
the higher payouts Pool can afford with the funds they receive from
high auction bids. Martin said “We resisted changing to an auction
system months beyond when I should have acted and it has cost us
dearly in market position.”
Now nearly all of the drop catching services (with the notable
exceptions of SnapNames and GoDaddy) use auctions as well. The trend
has not been popular with domain resellers and has in fact prompted
many of them to switch from the anti-WLS camp to the pro-WLS side.
However, Martin believes those people will be very disappointed if they
think they will acquire good names at low prices in a WLS world.
“They’re dreaming," he said.
“They seem to think that the small buyer will win out but
we’ve already been approached by large buyers who are prepared to
buy up our ENTIRE capacity (for WLS land rush subscriptions) and at a premium
price that is higher than what we would otherwise be charging. And I
know these kinds of offers have been made to every company.”
Martin also does not buy the common complaint that the current
system has made all good domains unaffordable to the average person.
“I see bargains go every day through our system because the
bidders aren’t always up on all the domains dropping.
A little extra effort would pay large dividends,” Martin
“It seems to me the most vocal critics of the existing system
are those who spend the most time in the chat rooms complaining.
I don’t know how they find the time. I do know I seldom see
them reserving names! The
reality is they just want it handed to them and they seem to think
the WLS will do that." he added.
Still many people have resigned themselves to the idea that low
cost high quality catches have become a rarity and are in danger of
Martin sees that as evidence that domains have simply caught up with
other forms of valuable property. “I see a beachfront home and I
would love to own it, but the price is astronomical and well beyond
my means. Nothing guarantees us a priority in life unless we earn
it. The current domain market reflects the value of the underlying
asset. Those who can afford to participate do and those that don’t
have the financial means need to improve their efforts,” he said.
Martin is certain that today’s well-financed winners will be
the same players who will win under WLS. The only difference he sees
is a new can of worms being introduced by the WLS system. “With
the lack of ongoing daily interest, clients drying up, the lack of
improvisation and new products, I believe this will negatively
affect the reseller market.
"Is there another Pool out there? Is there another way of doing
this business? Monopolize
the market and we’ll NEVER find out.” Martin adds, “I ask
someone to show me an example of a monopolized market that enjoys
innovation and progress. I’ve never seen it.”
Martin also has an answer for those who think today’s
labyrinthine system is just too confusing for the general public to
understand. “I have not seen an industry where outsiders really
understand the process. I
don’t fully understand what a realtor or a lawyer or a painter has
to do to succeed in their respective industry.
I don’t know how to operate heavy equipment and I’ve
never discovered just how much a dealer actually pays for a car.
If I want to participate in their industry I must learn the
ropes and if they wish to participate in domains they must learn
ours,” Martin said.
While the specter of WLS persists, Martin advises people to be
wary of the WLS “pre-registrations” being offered by Verisign,
with others likely to follow. “In the worst case scenario you
could see every registrar that takes reservations requiring payment
up front. Imagine paying $60 or so for a reservation for a single
domain at 160 different places….and you can bet most registrars
will not want to give you a refund for an unsuccessful effort.”
Martin predicts “they will offer alternative services or a
transfer to a different reservation instead of a cash refund. It
reminds me very much of the beginnings of our .ca drop
service. I found myself laying out $150US for every $60 domain we
caught. The administrative requirements shortly became a nightmare
with tracking refunds etc. We had to drop several Canadian
registrars who wouldn’t provide alternate arrangements.”
Of course all of this becomes moot if one of the current lawsuits
results in a restraining order against WLS. Martin says “I can’t
comment a lot here as we may be launching legal action ourselves.
I will say that the lawyers I have consulted with are
favorable to our chances of legal success. This does represent a confiscation of our business.”
Though Martin is adamantly opposed to WLS he is not foolish
enough to be caught unprepared if the new service survives its run
through the legal gauntlet. Drop Wizard will try to keep the doors
open. “Yes we will continue with the .org and other extensions”,
he says. “As far as I know Drop Wizard was the first service to
offer the regional extensions when we implemented the .ca (Canada)
last year. We are about
to go live with the .co.uk this week.
And I will be implementing the rest shortly.”
Martin also hints at an interesting new service. “I looked at
WLS a year ago when it was announced and quietly built an
run it in beta for the last year (undetected so far).
It will fracture the WLS system and quite frankly hand ICANN
some issues it REALLY isn’t going to like. Still I’m torn
because I’ve reached the stage in life where I just want to work,
do a good job and make money. I
don’t need this grief but I see little alternative when
confiscation of my business is on the horizon.”
Given everything that has happened in the two years he has been
in the business, one has to wonder if Martin has any regrets. “Yes
and no”, he said. “It has been a very exciting time. I’ve
never been in a business where I have to re-invent myself every 72
hours or so. Some
stability would be nice but there’ll be plenty of time for that
when my kids finally throw me in a nursing home as they regularly
threaten to do!”
If you would like to comment on Ron Jackson’s article, write firstname.lastname@example.org.
For a different perspective on WLS, see
Howard Hoffman's Guest Column.
other previous cover stories are available in our Archive
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