December 2009         DNJournal.com     The Domain Industry News Magazine

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Welcome to DN Journal Newsletter #37! This publication is sent only to subscribers who registered at DNJournal.com to receive our free monthly newsletter and email notifications when new articles are posted on our site. You may unsubscribe at any time by sending a removal request to editor@dnjournal.com.


Plunge in Parking Revenue Spurs Spate of New Domain Monetization Options in 2009 

With a severe recession gripping the global economy through much of 2009, domain parking revenues continued a freefall that has been underway for close to two years now. That situation, coupled with a lack of transparency in the PPC field (primarily due to Google and Yahoo's refusal to divulge what percentages of revenue they actually pay out for domain traffic) left domain owners scrambling for new monetization options that might offer better results.

Though there have been some signs that PPC may finally begin reversing course in 2010, domain owners and entrepreneurs who are offering new solutions, aren't waiting around to see how that plays out. Whatever direction parking goes, the downturn made it obvious that more monetization options are needed to end domain owner's reliance on a single revenue source that they have no control over. 

Dozens of alternate choices have already been introduced, but to date, none has progressed far enough to clearly demonstrate that they can consistently beat parking for monetizing large portfolios of domains. However, several promise superior results for specific categories of domains. The answer may be to divide portfolios and assign the categorized parts to the platforms that can provide the best returns for each category. 

Root Orange is among a group of new players that is trying to attract the cream of the portfolio crop - generic domains that define entire categories of products and services. They are doing so with a unique service that allows multiple businesses to share the same domain name via local usage rights assigned to specific geographical locations. 

The platform, devised by Princeton University classmates Camilo Acosta and Frank Langston (who serve as Root Orange's Co-Presidents) was impressive enough to win a a prestigious Princeton University Business Plan competition last spring. We hooked up with 

Acosta and Langston to find out how they came up with their idea to allow individual names to be used by multiple users, thus increasing the potential revenue each name can produce for domain owners. 

Langston:  We saw Google was serving geo-targeted ads on search results pages and started to wonder why the same principle couldn’t be applied to domain names. After a lot of research into domaining and geo-targeting technology, we discovered no one was doing this or had thought of it in this way before. We decided it was a great opportunity, got a team together to start building the service, and submitted our patent.  We read “The Domain Game,” which was a great primer on the industry, and the real estate analogy clarified for us the simplicity of our model.  A lot of people still don’t understand the world of domains, but they intuitively understand the value.  We want to help bridge that gap for the sake of domain owners and small business owners alike.  

DN Journal: In a nutshell, tell us how the system works both technically and from a business marketing point of view.

Acosta: We partner with domain owners to lease generic domains to local businesses that can benefit from qualified local leads.  We are devoting significant resources to efficiently market to small businesses and sell the localized leases.  Domain owners usually have a backlog of people who’ve contacted them about names and these serve as hot leads for us as well.  These are often people that wanted to use the domain but were turned off by a high purchase price.  We encourage owners to help spread the word in their networks and actively market the names they have in our inventory. 

Langston: On the technical side, the first step is for domain owners we work with to point their names to our nameservers.  We then route all requests for that domain based on the user’s location using a combination of geo-targeting technologies.  Our customers set up their business’s profile in our system for SEO purposes and give us the URL for their website. Our customers benefit from a directory structure when it comes to SEO. Whenever a user from their area types in a domain our customer has leased or clicks on it as a search result, they will be routed directly to our customer’s website local to them.  On all of our domains, there is a small bar at the top of the page (an iframe) that allows the user to change their location if they’re looking for a business in a different area. 

DN Journal: Timing is always a key factor when launching a new business. With PPC revenues going through a historic slump, interest had probably never been higher in alternative solutions that might produce a better revenue stream. You are just getting out of the gate, but how do you feel Root Orange returns will fare vis-a-vis domain parking:

Langston: For domains that describe local products or services, we absolutely think our service will deliver returns far superior to parking or any other monetization option. Timing is crucial.  We have identified two major trends that we think combine to make this the perfect time for our model to be successful.  First, traditional domain monetization options, particularly parking, are delivering historically low returns.  Second, over 70% of local small and medium-sized businesses 
now have an online presence.  More and more are coming online every day, and they are all looking for ways to stand out from the crowd.  It’s this second trend that’s critical to our ability to deliver great returns for domain owners, even relative to the good ‘ole days of parking.  Ten, even five, years ago the dynamics were completely different among local small businesses.  Root Orange would have been dead on arrival, but today the market has matured and the timing is right. 

DN Journal: Generic product or service defining domain names with type-in traffic would obviously be the best candidates for your system. If people believe that have appropriate domains, how do they submit them for approval and what criteria will you be applying to determine the domains you will accept?

Acosta:  Domain owners should email us at domains@rootorange.com with a list of names they feel could be a fit.  We then scour the list and choose those that are good fits for Root Orange.  Our criteria is simple: we want names that describe local products and services and avoid any verbs, qualifiers, or adjectives.  We like names such as DivorceLawyer.com (Editor's Note: this domain is currently using the Root Orange system) and avoid names such as TheBestDivorceLawyer.com.

Langston: We're looking for names that would appeal more to a local provider than an e-commerce player.  We see whether there are any local advertisers for the domain's keywords.  It needs to be a term people are looking for to ensure we're delivering leads for our customers, and it needs to be in line with how the business envisions themselves so that they want the domain in the first place.    

DN Journal: Let’s close by giving each of you an opportunity to provide any other thoughts about the Root Orange program that you think potential clients should know.

Acosta:  Root Orange maintains a strict confidentiality policy.  Domain owners can rest assured that conversations with us will remain private.

Langston:  We are fortunate enough to have strong financial backing and the support of domain industry veterans and plan on sticking around for the long-run.  We’re looking forward to getting to know more people in the industry!

2009 - The Year That Domainers Stopped the Trademark Interests and Began to Turn ICANN Around

Editor's Note: The article below is a guest letter from Phil Corwin, Legal Counsel for the Internet Commerce Association, the non-profit Washington, D.C. based trade association that represents the interests of domain name owners. In it Corwin details what the ICA was able to accomplish in 2009 and why it is so important for domain owners to protect their own rights by supporting the organization in 2010. DN Journal supports the efforts of the ICA and our Editor/Publisher Ron Jackson, is a member of the ICA's Board of Directors. 

2009 has been a challenging year for domain investors. While the Internet Commerce Association can’t change the economic environment, ICA can – and is – fighting for you against wrongheaded laws, bad judicial decisions, and mistaken ICANN policies.  

If you’ve been following ICA ’s activities at www.internetcommerce.org you know that we has been speaking out for domainer rights throughout 2009 – and having a real impact marked by important victories.  

We took on the trademark interests and succeeded in blocking the most outrageous recommendations of ICANN’s Implementation Recommendation Team (IRT) – particularly the Universal Rapid Suspension (URS) proposal that would have gutted domain owners’ rights at new gTLDs. And the trademark interests were openly planning to quickly impose these same unfair procedures on .com and other existing TLDs in your domain portfolio.  

Phil Corwin, Legal Counsel
Internet Commerce Association

ICA’s steadfast opposition led to ICANN’s Board interning with a new policy process that included ICA – and that has just recommended a balanced approach to trademark protections at new gTLDs that not only preserves but also strengthens domainer rights in many ways – including a declaration that holding a large domain portfolio is no indication of bad faith, and creation of a “safe harbor” defense that recognizes domain parking as a bona fide business activity.  

ICA has shown that it can make a measureable difference in protecting your rights and your domain portfolio’s value – but we need your support to continue our vital work!  

Because the trademark interests aren’t done with trying to dilute domain registrants’ rights. Both WIPO and the CAC are now proposing their own versions of “fast track UDRP” that would threaten all your .com and other generic TLD domains and is even worse than the URS.  

Once again, ICA is leading the fight against this blatant attempt by UDRP providers to encourage more UDRP filings at your expense – by providing trademark interests with a faster, cheaper UDRP that will lead to more reverse domain name hijacking, and less ability for you to defend your domains.   

ICA’s position is clear – any changes in the UDRP must be fair, balanced, and uniform reforms that address the concerns of 

domain registrants and trademark holders. ICA will oppose any attempt by the individual UDRP arbitration providers to give away your rights to trademark holders.  

But to keep making a difference we need your continued support.  

As 2009 draws to a close, we urge you to join the ICA , or renew or upgrade your membership (join or renew at http://www.internetcommerce.org/membership_application), or make a donation (donate at http://www.internetcommerce.org/donate).  

ICA dues and contributions are tax deductible business expenses for U.S. taxpayers (see below for details).  

Annual memberships in ICA start at less than $1 a day – a small price to pay for an insurance policy that helps protect your portfolio value.   

In addition to representing the domain industry at every ICANN meeting held in 2009, as well as in the halls of Congress and other decision centers, ICA

  • Filed a friend-of-the-court brief with the 9th Circuit Court of Appeals that helped  reverse a lower court ruling, and revived CFIT’s lawsuit against VeriSign’s sweetheart contract that allows unjustified increases in .com pricing.

  • Filed a brief with the Kentucky Supreme Court to uphold its quashing of the Governor’s outrageous attempt to seize domains as “gambling devices”.

  • Spoken out within ICANN to successfully stop governments from gaining unwarranted control over geo-names at the second level of new TLDs.

Looking ahead, 2010 will bring new and unanticipated challenges – and opportunities:

  • While we succeeded in quashing the Snowe bill, CADNA and others have openly stated their intent to seek Anticybersquatting Act changes that dilute domainer rights and vastly increase your legal liability. 
  • We are exploring proactive initiatives for domainers, including potential legislation to make domain theft a designated crime with serious consequences.

We welcome your feedback on how we are doing and where we should be focusing. ICA has given the domain industry a seat at the table within ICANN, Washington, and those other places where the decisions are made that affect the fortunes of every domainer.  

ICA is only as strong as the combined support of our members and contributors.

And 2010 is shaping up as another year in which our industry will face serious challenges – and new opportunities - on many fronts.  

With your continued generous support we pledge to keep fighting the good fight for all of you.  

Thank you! And best wishes for this holiday season and the coming New Year!

Philip S. Corwin 
Legal Counsel
Internet Commerce Association

ICA will be updating its website in January 2010 to list new members, reflect the upgraded status of those members who have renewed at a higher level, and delete those members whose membership has expired. By acting today you will ensure that your support for ICA is properly noted in the New Year.

ICA operates as a Business League under Section 501(c) (6) of the Internal Revenue Code. United States residents cannot deduct membership dues or contributions (such as donated domain names, or the proceeds of the auction of such names) as a charitable contribution for Federal income tax purposes. However, for U.S. tax law purposes, dues and donations to a business league (including non-cash donations) are generally deductible as a business expense, except for that portion that is devoted to lobbying and political campaign expenditures. The ICA does not anticipate incurring any political campaign expenditures in 2010. ICA estimates that ten percent (10%) of its dues and donations received for 2010 will be devoted to nondeductible lobbying expenses, as defined for U.S. Federal income tax purposes. ICA is required by Federal law and regulations to provide this estimate of the percentage of members’ dues and other receipts which will be devoted to lobbying expenses for the calendar year 2010.

The above general information may not be relied upon as tax advice, and any affected ICA member or donor should consult with the member’s own tax adviser regarding the proper treatment of their ICA support under the tax laws of the U.S. or any other nation. In particular, affected ICA members should consult with their tax advisers as to whether the excess of the auction sale price for a donated domain name, over the member’s cost for the domain name, should be reported as income or gain to the member for U.S. Federal income tax purposes. 

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Sincerely,
Ron Jackson
Editor/Publisher
DNJournal.com

 
The DN Journal Newsletter is produced by DN Journal - The Domain Industry News Magazine located at www.DNJournal.com. Contents may not be reproduced or redistributed without expressed written consent from Internet Edge, Inc. (Copyright 2009)

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