The return of domain name tasting?
Demand Media, parent company of eNom, has been awarded United States Patent 7539774 for “Method for domain name registration and a corresponding apparatus”.
The patent application was filed in 2005 and appears to be targeted toward domain monetization of low traffic domains. The idea would be for the registry, such as VeriSign (NSDQ: VRSN), to offer domain registrations at different prices but with different rights. For example, there could be three tiers:
Tier 1 – a standard domain registration as it exists today. You have full control of the domain and full rights until expiration. This would be charged full price by the registry, say $7.00.
Tier 2 – you’d have rights to the domain name unless someone comes along and offers to register it under tier 1. You may have full rights to control the domain, or you may be limited to making certain changes such as DNS. You would pay a lower amount to the registry, such as $4.00.
Tier 3 – similar to tier 2, but with fewer rights. For example, someone may come along and register the domain at tier 2 or tier 1 and you would no longer have rights to the domain. This tier would cost less, perhaps $2.00 per year.
Each tier may also have different “add grace period” limits that give you longer to taste the domain. (Keep in mind the patent was filed prior to ICANN effectively eliminating domain tasting.) Now that ICANN has quashed domain tasting, Demand Media’s system could be used to create a new type of tasting. For example, VeriSign could offer a registration option for 1 cent per domain, with additional fees if a registrant decides to fully control the domain.
The underlying idea of the patent is that some domains may not earn $7.00 per year in pay-per-click income, but may earn $3.00. In this case the domain probably goes unused, but under the proposed system someone could register it at tier 3. The registrant and registry would make money. If someone later decided they wanted to the domain for a web site, they could register it under tier 1. Or, if earnings on the domain suddenly increased the tier 3 registrant could upgrade to tier 1. And, as I pointed out previously, this idea could now be used to bring back a form of domain tasting. It will also be interesting to see if Demand Media tries to apply this scheme to the new top level domains it plans to launch.
You can read the patent here.