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This page responds to one of the ten recommended laws proposed by C-Net to regulate the Internet.

  The problem:  The number of "domain names"--the words between http:// and the next slash--may be vast, but there are obvious names which would be desirable to have, and which are being purchased by individuals and companies who do not wish to use them, but only to sell them at a profit, as one sells commodities contracts or corporate stock.  This makes it more expensive to get the name you might want when you decide to create your web presence, and takes useful and valuable names out of circulation quickly.

The proposal:  "No owner of a Web address should be allowed to sell or give that address to another party, unless it's transferred as part of the sale of a business."


The survey:  At the time of my visit, 15,394 "netizens" had voted, with 62% supporting the proposal, against 38% opposing it.
That's our view.  We welcome yours.
  It should be clear from the survey alone that this proposal is not so obvious as C-Net would like you to think.  Their reasoning looks sound enough, but over a third of those who voted disagreed, despite the intrinsic bias of the survey methodology.

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  Let me agree that they have identified a problem--a real problem--which should be addressed.  If someone were to have grabbed www.att.com, AT&T would have spent quite a bit of money to secure that URL for themselves.  I suspect first that AT&T could have afforded to do so; and second that they were sharp enough to grab the domain name before someone else thought of it.  It would be more difficult for companies coming to the web late in the game.  If a small company were to have its name grabbed by a speculator, it might be forced to choose between spending money it can't afford to secure its own (often trademarked) name, and allowing a competitor to siphon customers by using the trade name of the company as a web address.

  But I am not at all convinced that C-Net's proposal would have a significant impact on the matter; and furthermore, I think that they have revealed an underlying bias which leads them to suggest this ineffective approach in lieu of a response which would have real teeth to it, because they are involved in domain name speculation of a different sort, and want to protect their type of speculating while preventing the other.  First let me address the reason why C-Net's proposal won't really work.  Then I will explain why C-Net is guilty of the crime it seeks to prevent.  Finally, I have some suggestions which would curb the domain name crunch directly and effectively, without overly impinging on anyone's right to have a suitable domain name.

  C-Net points out that the legislation they propose is already applied to telephone numbers.  If I request a number which is already in use, I am not allowed to buy the number from the company presently holding it.  This limits speculation in toll free numbers.  I tend to believe that speculation in toll free numbers is limited by other things, not the least of which are the cost of owning them and the inconvenience of having a phone number which has been published as for another business.  However, if I decided to start my own service, and wanted the number 1-800-ASK-MARK, it's likely someone already has that number.  But it's easy enough for me to find out who has it, and although I can't buy it from them, I can pay them to release it--once it's released, the phone company can issue it to me.  You could make it illegal for me to do that, but if I really want the number badly enough, I can find a way to buy it--even if I have to buy the business myself, and sell it with all of the original assets except the phone number back to the original owner.  The complexity of a law which would make it unprofitable to speculate in domain names by preventing their transfer between independent parties would be at the very least awkward.

  At a certain level, it's also unfair.  If I owned the domain name www.askmark.com, but after I paid for it I changed my mind, or my circumstance changed, or for some other reason I decided not to develop it, that URL is out of circulation; but I might hang on to it, just because I'd already paid for it, and might find a way to use it eventually.  If another Mark has the same idea for a URL as I did, and finds out that I own the domain but am not using it--or even if he finds out that I own the domain, but once having set up a couple pages I abandoned it--why shouldn't he be able to convince me to part with something to which I'm not very attached, at a price we both agree is reasonable?  I'm not forcing him to buy the domain from me; there are plenty of others out there.

  One other point on this:  if it were illegal for Mark to buy the domain name from me, it would not be illegal for me to host his web pages--or his entire site--on my domain, or to charge him an ongoing rental fee for the use of the domain name.  C-Net's law would actually increase the profitability of domain speculation, because now if I own the URL you want, you can't buy it, you can only lease it.  And I can't imagine that anyone will suggest that we should make it illegal for a commercial entity or private individual to allow another to pay for and use space under its domain name.  This entire web site was originally hosted by Jaguar Systems, my ISP, because I paid them a fair price for Internet services.  (And no one will imagine that you could win an argument in court which said that they gave me the space free--it was part of the incentive to select them as my provider, and therefore part of my bill.)  You don't have to transfer domain names to speculate in them.  It's just a better deal for the one who wants to use the name, because he can pay for it all up front, and doesn't have to worry about the deal or the situation changing in the future.

  But C-Net would stop the kind of speculation which is done directly for profit by resale--individuals buying up long lists of likely domain names to resell at a later time to others who would like to have that URL.  A noble idea it is.  But they also are speculators, and strictly for profit, albeit with a different modus operandi.  They admit that they have purchased a number of domain names which they are not presently planning to develop.  They say this is because they see that these names might be valuable to develop in the future--which is exactly what the domain name speculator sees.  They perceive it as different, because they might develop these domains themselves--but they might not, and who is to say?  Clearly, part of their motivation is to prevent this valuable commercial property from falling into the hands of their competitors; and part of the motivation is to ensure that they won't have to pay someone else for the name if they do choose to do something with it.  But the effect is the same:  the domain name is not in use, and not available.  If someone else wants it, they have to discuss the matter with C-Net.  Of course, C-Net might not sell.  However, there are many ways in which C-Net might profit from the real estate without selling.  We've mentioned that they could rent the space.  They also have a history of entering into joint ventures with other companies.  So let us suppose that they have a wonderful domain name, and someone takes an interest in it.  Without selling it or leasing it, C-Net could enter into a joint venture agreement with this other party, through which the other party would have complete control of the site within the agreed parameters and objectives, and would do all of the site maintenance, and even pay the costs associated with running the site; and C-Net would collect certain benefits, such as the right to advertise or sell advertising space on the site, the right to use name and contact information collected through the site, and the right to have visible links installed from the site back to their other properties.  C-Net is speculating for profit.  The fact that they don't intend to sell the domain name does not alter that.

  So what can be done?  Allow me to make a few suggestions.

  First, trademark law should protect businesses:  no one should be able to obtain a domain name which is or contains a recognized trademark except someone authorized to use that trademark by the holder thereof--not as a domain name.  Web page names are different.  If I use C-Net's name in the title of a web page--as indeed I have on this one--that is a reasonable fair use of the name; it identifies them.  But if I use it as part of a domain name, I am infringing on their rights, and they should have recourse against me.  (Although trademarks are not my strong suit, I suspect that they do.)

  Second, a limit could be placed on the number of domain names which any individual, partnership, corporation, or other legal entity can own directly.  I suspect that limit could be as low as two, although I tend to think that five would be reasonable, and could imagine the number being stretched to ten.  C-Net might be upset by this suggestion--I'm not sure how many names they have acquired--but it won't cripple them.  Corporations are always setting up sub-corporations, wholly-owned subsidiaries, to carry on portions of their business in a conveniently isolated structure.  You might think that the major film studios, such as Paramount and Warner and Fox, have long lists of domain names representing each movie title they release--but that's not necessary, and probably not true:  it is standard procedure in the film industry that each movie is produced by a corporation created solely for the production and release of that movie (it protects the parent company from taxes on international earnings), and if those subsidiaries don't already own the web sites (which would surprise me greatly), it would be a small change to do it that way in the future.  The way the film industry works, the domain name probably belongs to the subsidiary, and the parent company bills the subsidiary directly for the services of its web site construction and maintenance staff.  (These subsidiary corporations are almost always bankrupt.  Although they rake in millions in gross receipts from around the world, they pay almost all of it to the studio for services rendered in the United States.  Thus their books demonstrate that they have a net loss for the corporation which is in business around the world, and the income of the parent company is all earned within the U. S.  The parent company bills the subsidiary far more than the film ever grosses, and writes off the difference between what the film grosses and what they billed the subsidiary as a loss, an uncollectable debt.  Neat, huh?)  Back on point, if C-Net is seriously considering developing more domain names than it would be allowed to own, let it pay the costs of creating and maintaining a sub-corporation, and allow that entity to own the URL and investigate the question of developing it.  This would reduce speculation of all types, but still allow companies to have URL's which would be of value to them.

  Third, set a limit on the time allowed for a domain name to be registered but not active.  This is a small matter--let's face it, if you gave me a web site, I could have something on it in a couple of hours, especially if you told me what it should be about.  And nobody said it had to be quality material.  It just has to exist.  Make the time period a year--by the time the Internic fees come due again, either there must be an existing presence on the Internet under that name, or the ownership of the name reverts to Internic.  This also creates costs for the speculators:  they have to have a contract in place with a server somewhere for each domain name they own, and they have to have some kind of content (even if it's only a "watch for this site to be created in the future" page) created and loaded.  I'm sure C-Net and other speculators won't like this proposal; but it's the best way to curb domain name speculation of all kinds.  If the ownership of a domain name isn't worth the cost of having it, the owner will be forced to let it go at no charge.  Real estate law has several nuances which tend to prevent land from being owned and unused; applying the same principle to cyberspace real estate in this way only makes good sense.

  Fourth, there is a very simple way to reduce web speculation:  create inflation in the Internet currency.  The complaint is that the names with the valuable .com ending are running short; but why should that be the only ending for commercial ventures?  Create .bus, .cor, .fin, .mon--there are 17,576 three-letter combinations (and if the ten numerical digits were included, that number would rise to 46,656)--very few of which would be offensive.  The more top-level domains are created, the more domain names are possible, and the less value any one of them will have.  Speculation can be further avoided--and paperwork controlled--if Internic creates these top-level domains one at a time, and provides a right of first refusal to anyone who either holds a similar existing domain name in another top level domain, or previously applied for a similar domain name, provided that an application is filed during a preliminary period requesting consideration for the previously requested domain name in the new top-level domain.  By doing this, Internic will assure that no domain name will ever be excessively valuable again, and that most people will have access to the name they desire eventually, as long as it does not violate Internic's other policies or infringe upon the trademarks of someone else.

  Thus the proposed law does nothing that needs to be done; it merely creates more law, and I voted against it, in favor of an approach which really would curb speculation of all types, without harshly restricting the rights of anyone on the Web.


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