Fabulous will list its domain name portfolio on BuyDomains, Afternic.

At first glance, NameMedia and Fabulous seem like competitors. Both NameMedia’s BuyDomains and Fabulous offer a huge portfolio of premium domains for sale. But the two companies have inked an agreement to list Fabulous’ domain portfolio on both BuyDomains and Afternic (the latter was recently acquired by NameMedia).

This makes sense. Premium domain names don’t really compete with each other for sales. Sure, if someone is looking for blog related domains they might choose amongst a handful of good domains that are owned by different parties. But if someone wants a particular premium domain, they can only buy it from one person. By listing Fabulous’ domains on BuyDomains, BuyDomains sales reps can offer a greater selection to customers. Fabulous will benefit from BuyDomains’ US sales presence.

This is great for Afternic as well, which will see its inventory explode. Between BuyDomains’
and Fabulous alone the site will have over 1 million listings. This should help it compete with Sedo. Sedo and Afternic both court domain registrars to supplement domain searches with their aftermarket listings. Sedo sometimes wins based on the number of domain listings on its site (over 5 million). In fact, Sedo recently grabbed Dotster’s business from Afternic. The new listings should help Afternic compete for these registrar agreements.

NameMedia, owners of BuyDomains, currently has a portfolio of 800,000 domains. Fabulous has over 500,000 domain names.

MyDomain.com is offering a coupon for a $4.99 .mobi domain registration.

.Mobi is hot. The domain, designed for mobile devices, has seen lots of aftermarket activity since its release last year. The best known sale is Flowers.mobi, which sold for $200,000. More recently Sportsbook.mobi sold for $129,800.

Domain registrar Dotster, through its MyDomain.com site, is offering a happy hour discount on .mobi domains. Dotster invented the “happy hour” discount marketing event. On Tuesday, January 30 beginning at 4PM ET, customers may visit the MyDomain.com site to get a coupon good for a two year registration .mobi registration for $4.99. The coupon is valid from January 31 to February 12. Only 500 coupons will be distributed.

MyDomain’s standard .mobi registration fee is $49.98. If you’re interested in registering .mobi domains here are the two year prices at select registrars:

GoDaddy $29.98
Moniker $24.90
Dotster $49.98
NetSol (not available for some reason)
Register.com $119.00

Many registrars offer discounted pricing to their best customers.

MyDomain is an example of a domain registrar segmenting its customers by operating multiple sites. Whereas Dotster charges a regular price of $14.95 for a .com domain registration, the MyDomain site charges only $8.50. The irony is Dotster was once the “cheap registrar” and helped start the fall in domain registration prices. Register.com has implemented a similar segmentation program in the past.

If you want a free domain from Dotster, complete the 2007 Domain Name Wire survey. 50 randomly selected respondents to the survey will receive a coupon good for a free domain name at Dotster.

MGM wants the domain WarGames.com. But it faces an uphill battle to win this war.

Metro-Goldwyn-Mayer Studios Inc., better known as MGM, wants the domain WarGames.com. MGM owns the rights to the 1983 film WarGames and the company is gearing up to release a sequel.

There’s one small problem: the domain WarGames.com was registered in 1998 by Rogers Cadenhead.

What follows is an inside look at MGM’s UDRP attempt to grab the domain from Cadenhead. Domain Name Wire has procured copies of MGM’s original complaint and Cadenhead’s hot-off-the press response. (If you are unfamiliar with UDRP, see Understanding Domain Name UDRP).

In order for MGM to gain rights to the domain, it must convince a panel of arbitrators three things:

1. The domain name is identical or confusingly similar to a trade or service mark in which the complainant has rights.
2. The domain registrant has no legitimate rights or interests in the domain name.
3. The domain name has been registered and used in “bad faith”.

Let’s review each of MGM’s claims and then Cadenhead’s responses.

Trademark

MGM claims to have the rights to the name “Wargames”. In its UDRP complaint, MGM writes:

In 1983, MGM released its WARGAMES motion picture, starring Matthew Broderick in his first starring role, and Ally Sheedy. WARGAMES was nominated for three Oscar awards and, in addition to the critical acclaim, WARGAMES also enjoyed significant commercial success. The theatrical release of WARGAMES was very successful, grossing more than $53 million at the box office. In addition, MGM has sold more than $35 million worth of its WARGAMES goods and services for distribution via television, the home video, and ancillary markets.

Since WARGAMES was released in 1983, MGM and its marketing agents have invested heavily in marketing under the WARGAMES mark, devoting more than $10 million to advertise its goods and services through a variety of media including, but not limited to, television, radio, magazines, newspapers, and the Internet.

As a result of MGM’s marketing and commercial success, the WARGAMES trademark is immediately recognizable as connected with Complainant and its well-known movie. As listed above, MGM owns a federal trademark registration for its WARGAMES services.

Hmmm. Has MGM treated WarGames as a trademark? Cadenhead has a good rebuttal. Although the WarGames movie was released in 1983, MGM didn’t register for a trademark until 2001. The original movie poster for the film didn’t include any trademark notices about WarGames, although it did include intellectual property notices about Dolby Stereo, Panavision, and Metrocolor.

To prove his point, Cadenhead picked up a new copy of the WarGames DVD at Blockbuster. Nowhere on the packaging is there any indication that WarGames is a trademark.

Let’s not forget that Cadenhead registered the domain in 1998, 3 years before the trademark application was filed. A company doesn’t have to register a trademark, but Cadenhead alleges that MGM never treated the movie title as a trademark.

Cadenhead’s view is that “war games” refers to a genre of games. Cadenhead had planned to open an online store at the domain selling war games. More on that later.

Use of WarGames name

MGM claims that it uses the Wargames name to promote its products. The complaint states “As part of its marketing efforts, MGM uses domain names containing its WARGAMES mark, including to promote its WARGAMES goods and services.”

Before reading on, visit www.wargames.net and review the contents of the site.

Are you back? What did you find on the web site? I didn’t find anything about the Wargames movie. A Google site search for Wargames on the Wargames.net site returns no results.

Abuse of MGM trademarks

MGM claims that Cadenhead has registered a number of MGM trademark-infringing domains. In addition to wargames.com, Cadenhead registered rockyvii.com, rockyviii.com, and rockyix.com. He registered these domains the same day MGM announced the Rocky VI movie.

When MGM contacted Cadenhead about Wargames.com and the Rocky domains, Cadenhead responded that he registered the Rocky domains to prevent them “from falling into the hands of a pornographer or some other disreputable publisher” and he expressed a concern over “domains that appeal to children” being used to provide adult content. MGM claims that Cadenhead is being disingenuous:

First, it appears that, with a few exceptions, Respondent’s crusade to prevent domain names containing well-known trademarks from falling into the wrong hands has been limited to domain names containing MGM’s trademark. Second, none of , , , or are particularly targeted at children, and Respondent does not appear to have registered other domain names that appeal to children as part of his alleged campaign. Third, and most importantly, Respondent never contacted MGM to alert them to his allegedly preventative registration of any of the domain names.

Although Cadenhead stands his ground on his reason for registering these domains, he’ll never win the argument. Few people would believe this was his actual reason for registering the domains. However, Cadenhead does have a history of donating domains. He gained fame for registering BenedictXVI.com before the new Pope was announced. He donated the domain to charity. (Cadenhead did immediately agree to give the Rocky domains to MGM).

As a personal aside, large companies can save themselves the hassle and legal expenses of trying to get domains back by being proactive. Why didn’t MGM invest a few grand in thinking of and registering domains that might be relevant to its movie franchises? The company probably paid its outside lawyers at least $1,000 to correspond with Cadenhead about the Rocky domains.

Cadenhead’s History

Next, MGM tries to paint a picture of Cadenhead as a notorious cybersquatter. In addition to the BenedictXVI.com domain, MGM points to Google and Microsoft trademarks:

In addition to the domain names containing MGM’s trademarks, Respondent has registered domain names containing the trademarks of others: , which contains the famous GOOGLE trademark, and , which appears to have been registered by Respondent shortly after Microsoft’s announcement of its new ZUNE mp3 player. Printouts from the WHOIS database reflecting Respondent’s ownership of the above domain names are attached as Annex M. Respondent does not publish active websites at any of these domain names, instead redirecting them to his blog at , which contains advertisements and sponsored links. Thus, Respondent benefits financially from diverting traffic to his website. As discussed above, Respondent has admitted that he gains financially from traffic to his websites, and it appears that he has engaged in a pattern of diverting traffic from high-traffic domain names for his own financial benefit.

Cadenhead responds to each of these registrations, saying that neither of the companies have ever objected to his registrations and probably never will. First, Google Milking is a term he coined. When the term received press coverage he registered the domain. Cadenhead says the term was inspired by Googlewhack.com. Cadenhead points out that Google is aware of the use of Google’s name in terms such as Googlewhack, and its key employees have even referred to these sites and usage of the Google name.

With regards to ZuneDweeb.com, Cadenhead says he registered it in case he writes a technical book about the Microsoft (NASDAQ: MSFT) Zune. Cadenhead is a technology book writer and has written 21 books. His publisher claims that no company has ever complained to the publisher about the use of trademarks, such as “Java”, in how-to book titles. After all, it’s good for the company.

Cadenhead has a good case. It’s not like this is a typo of “Zune” that will generate traffic on its own. Cadenhead also points out that Microsoft has linked to some of these fan sites.

Cadenhead knew about the movie Wargames

Have you ever blogged about something or written something in public that comes back to bite you? MGM shows that Cadenhead knew about the WarGames movie because he made a reference to it in one of his books.

Cadenhead responds by saying he makes a number of pop culture references in his books. Yes, he knew about the movie WarGames. But he wasn’t aware of the trademark and didn’t register the domain while thinking about the movie. Instead, he was thinking about war games.

Cadenhead has no legitimate interest in the domain

Here’s where a UDRP comes down to intent. Did Cadenhead register the domain with a legitimate purpose (e.g. starting a war games store) in mind? MGM claims that he held the domain passively until the company contacted him about the domain. Indeed, Cadenhead didn’t launch a store at Wargames.com until MGM came calling. But he did take steps to open the store much earlier and has been involved in the war games hobby for over a decade.

Intent is hard to prove. But I think Cadenhead has the upper hand here. The domain wasn’t parked with pay-per-click ads. He wasn’t trying to sell the domain (he even turned down a 5-figure offer for the domain). The domain simply wasn’t in use. (MGM claims that the domain pointed to Cadenhead’s personal web site at times. Because he had ads on his site he was benefiting financially from the domain. However, these ads were unrelated to the WarGames movie). In his response, Cadenhead gives a few examples of preparations he was undertaking.

Companies frequently try to assert that non-use of a domain suggests that the registrant has no legitimate interest in the domain. This isn’t true. Companies buy and register domains well before launching a business. If Cadenhead has considered opening a store to sell war games since the 1990s, he couldn’t wait until 2006 to register the domain. It would have been registered already.

This should be a lesson to domain owners. If you own a premium domain that you intend to ultimately use, take steps toward starting the business or opening the site. It could be as simple as writing a few emails about your plans and keeping records of them. When a state government came after me for a generic domain I owned, I had already formed a limited liability company using the name and had signed partnership documents. That should be enough to prove to a UDRP panel that you had plans to use the domain.

Summary
Keep in mind that the above analysis is abridged and doesn’t include all of the facts and allegations presented by the parties. But I believe it gives a good summary of each sides’ claims. I have no allegiance to either MGM or Cadenhead.

Let’s review the three requirements for MGM to win its case:

1. The domain name is identical or confusingly similar to a trade or service mark in which the complainant has rights.

What do you think? When you hear names like “Rocky” and “The Terminator”, you think of the movies. But do you think of the movie “WarGames” when you hear Wargames.com? Some people do, but many think about strategy and war games.

Furthermore, does MGM really have a mark to WarGames and has it treated it as such?

2. The domain registrant has no legitimate rights or interests in the domain name.

Has Cadenhead proven that he intended to use this domain for war games?

3. The domain name has been registered and used in “bad faith”.

Did Cadenhead register this domain with the intent of selling it or capitalizing on MGM’s movie?

I’ll comment later with my opinion in this case. In the mean time, I’d like you to share your thoughts.

A perspective on why click fraud won’t ruin the domain name industry.

Google (NASDAQ: GOOG) CEO Eric Schmidt learned an important lesson in July 2006. When asked at an economics conference if there was an economic answer to click fraud, Schmidt said “Let’s imagine for purposes of argument that click fraud were not policed by Google and it were rampant … eventually the price that the advertiser is willing to pay for the conversion will decline because the advertiser will realize that these are bad clicks. In other words, the value of the ad declines. So, over some amount of time, the system is, in fact, self-correcting. In fact, there is a perfect economic solution, which is to let it happen.”

Taken in the context of an economic summit, and prefacing his comments with the caveat that this was not Google’s answer to click fraud, his arguments make sense. But taken out of context, as they were in the media, these comments sound like Google isn’t doing anything about click fraud. Schmidt quickly learned that he’s now a politician. Politician’s comments get taken out of context frequently.

But Schmidt is right. There are two types of click fraud. One has an economic solution and the other has a technology and policing solution.

The first type is universal click fraud. This is click fraud that hurts advertisers equally. Examples include someone clicking on Adsense ads or sending a bot to do the same. Because this doesn’t affect one advertiser more than its peers, the fraud simply gets priced into the advertiser’s bidding. Advertisers don’t care about click prices. Advertisers care about conversion prices. If a mortgage click costs $2 and one out of twenty people completes a lead form, the conversion cost is $40. If there is click fraud, the conversion rate will go down. If the lead form starts converting at one of forty, the advertiser will lower its bid price to $1.

The second type is targeted click fraud. This is fraud against a particular company, such as a competitor. This changes the economics of the conversion price and puts companies on uneven footing. This must be addressed with technology and heavy policing.

The domain name community is concerned about click fraud. Pay-per-click is the lifeblood of our industry. In Domain Name Wire’s 2006 domain survey, 34% of respondents said changes in the pay-per-click market are the biggest threat to the industry. That’s more than any other threat.

But over the long run this issue will not affect the industry much. A combination of economic and technological forces will help. But a shift in advertising methods will make pay-per-click irrelevant. Eventually, most advertisers will pay domain name owners for each conversion, not each click. Affiliate programs already offer this platform. Google is testing it. And Idealab, the incubator responsible for launching the entire paid search market, has a new startup applying the pay-per-conversion method to search marketing (Snap.com).

So rest easy, my fellow domainers. Click fraud won’t sink us.

Just don’t click on any ads on your own domains.

Paid listings will no longer by ranked solely on bid.

Yahoo (NASDAQ: YHOO) announced that the rankings of pay-per-click search ads on its network will change February 5. Prior to that date, ads are ranked according to the maximum bid per click selected by the advertiser. Beginning February 5, ads will be ranked by a combination of click bid and ad quality (read: click-through rate and relevance). The graphic below illustrates this change.

The change is part of Yahoo! Search Marketing’s Panama advertising platform update. Ad rankings will now be calculated in a fashion more similar to Google (NASDAQ: GOOG) Adwords and MSN (NASDAQ: MSFT) Adcenter. As part of the changes, the famed “Overture Score” used by domainers to predict domain name type-in traffic will likely be discontinued.

Domain name owners can look for an effect on their paid domain parking results. Results displayed on parked pages may take the new rankings into consideration. Although per-click prices for the top ads may be lower, click-through rates should be higher. ParkingDots is an example of a domain name parking company that uses a Yahoo ad feed. Parking services such as DomainSponsor and Sedo, which use Google ad feeds, will not be affected by this change.

Yahoo’s new pay-per-click platform is receiving great reviews, although the release was postponed many times. Wired magazine has an article in its most recent issue about how Yahoo dropped the ball, especially with paid search. Yahoo acquired Overture, which pioneered the pay-per-click market. Although Overture was first to market, its system was bogged down by a legacy architecture which limited scale and flexibility.