Domain kiting / domain tasting has got me thinking recently after a friend of mine who’s in the design arena lost a clients domain, the registrar dropped it and a different one picked it up instantly.

The registrar that picked it up was eNom. eNom is one of the biggest registrars in the world, 2^nd only to Go Daddy who I think we all know pretty well.

The registrar who had the domain in the first place sent out notices, there’s like a 45 day period after the domain expired for my friend to buy it again, but the emails were going to the wrong email address, someone else originally registered it and my friend was just looking after the site overall, so my friend never really got these emails and since it dropped the client is not very happy.

After the registrar dropped the domain eNom picked it up and is now basically kiting it. How did eNom catch this domain so quick? eNom has the largest domain aftermarket drop-catching tool, called Club Drop, for eNom it’s all about catching dropped names and trying to sell them again at a profit, to sell them they have a service called Afternic where they list their domains for sale, straight away the bidding on the domain starts at like $200. (Price varies for different domains). Now I’m not 100% if they own Afternic or not, but it’s fully integrated into their site, and eNom are fully integrated into theirs.

For my friend to make an offer on the domain (owned by eNom) he has to use a service called Afternic. Afternic which is an eNom company charges like $55 to ‘track down, contact and negotiate with the owner’. So for my friend to even try to get this domain back, has to pay this $55 fee, so he did, and he made the $200 offer to them, Afternic came back and said the owner wants $600, all this is starting to get expensive so he’s decided not to bother anymore and eNom have made $55 from him + more from anyone else who wants to buy the domain.

And now since he’s made that offer, there’s a notice on the Afternic page for the domain that says “Due to a prior offer on this domain, you must offer more than $200″

To me this is all a scam, buy dropped domains, charge people for an automated service that allows you to make an offer on the domain, up the amount they want for it, since your already invested in buying it your most likely to pay the higher amount anyway…

Anyway, while that domain is sitting there waiting for offers it’s being hosted on their servers with a template full of keyword driven ads, so in the meantime, until someone buys it, they’re making money from it.

Now here’s where it gets super profitable. Welcome to domain kiting / domain tasting. Registrars are using a five-day “grace period” to keep domains for free, for as long as they want. When a registrar registers a domain with ICANN (company that regulates domains) ICANN offer them this 5 day grace period to either, pay and keep the domain or not pay and loose the domain, so what they do is, keep it for 5 days, drop it so they don’t have to pay, then pick it back up again 2 seconds later for 5 more days. Again and again and again.

eNom never actually paid for the domain that dropped. It’s theirs for free basically. They get to make money from the ads on it; they get to sell it at auction all for profit, and they are charging heaps for the chance to make an offer on it without spending a cent on the actual domain.

What the…? It’s a loophole in the ICANN policies on domain registration

It’s a simple hole to fix but no one’s complaining loud enough to fix it.

Biggest problem I have with domain kiting is that the majority of domains you want to buy now days aren’t paid for, they’re just kited, squatted on until people pay a premium for them.

For example, this is an old article but interesting none the less, Bob Parsons, CEO of Go Daddy wrote about domain kiting a while ago, mostly he was targeting 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?

You can see the full article about domain kiting / domain tasting on Bob Parsons blog, it’s interesting and all about domain kiting.

eNom actually have a useful tool out there called RegistrarSTATS, the tool also has a domain name generator based on keywords, which is also pretty useful.

… Continued in part 2 – What you can do and how you can profit this Sunday.

In part 2 we will show you:

• Where to buy and sell domains
• What to look for when buying a domain
• How to profit from domains names
• Different strategies and methods
• And more!