Domain tasting explained

Domain tasting is the practice of a domain name registrant using the five-day "grace period" (the Add Grace Period or AGP) at the beginning of the registration of an ICANN-regulated second-level domain to test the marketability of the domain. During this period, when a registration must be fully refunded by the domain name registry, a cost-benefit analysis is conducted by the registrant on the viability of deriving income from advertisements being placed on the domain's website.

Domains that are deemed "successes" and retained in registrant's portfolio often represent domains that were previously used and have since expired, misspellings of other popular sites, or generic terms that may receive type-in traffic. These domains are usually still active in search engine and other hyperlinks and therefore receive enough traffic such that advertising revenue exceeds the cost of the registration. The registrant may also derive revenue from eventual sale of the domain, at a premium, to a third party.

In January 2008, ICANN proposed several possible solutions, including that the exemption on transaction costs (US$ 0.20) during the five-day grace period be abandoned, which would effectively make the practice of domain tasting not viable. The ICANN operating plan and budget for Fiscal Year 2009 included a section intended to deal with the problem of Domain Tasting. The transaction fee of $0.20 will be applied to domains deleted in the Add Grace Period where the number of such domains exceeds 10% of the net new registrations or 50 domains, whichever is greater. The "net new registrations" is defined as the number of new registrations less the number of domains deleted in the Add Grace Period. The ICANN operating plan and budget was approved at the ICANN board meeting in Paris, France on 26 June 2008.

Domain tasting should not be confused with domain kiting, which is the process of deleting a domain name during the five-day grace period and immediately re-registering it for another five-day period. This process is repeated any number of times with the end result of having the domain registered without ever actually paying for it.

Controversy

The practice is controversial as practitioners typically register and delete many hundreds of thousands of domain names under this practice, with these temporary registrations far exceeding the number of domain names actually purchased.

In April 2006, out of 35 million registrations, only a little more than 2 million were permanent or actually purchased. By February 2007, the CEO of Go Daddy reported that of 55.1 million domain names registered, 51.5 million were canceled and refunded just before the 5 day grace period expired and only 3.6 million domain names were actually kept.

Some claim domain name registries such as VeriSign and the Public Interest Registry have turned a blind eye to the practice as it has dramatically increased the number of registrations secured and renewed. However, there are proposals by registries to introduce measures that would reduce or eliminate the practice.

In January 2008, Network Solutions was publicly accused of this practice when the company began reserving all domain names searched on their website for five days, a practice known as domain name front running.

Google has recently said that their AdSense program will now look for domain names that are repeatedly registered and dropped. They say they will drop these domains (but they don't mention banning the users) from the AdSense program.