Under a recently announced proposed agreement with the Internet Corp for Assigned Names and Numbers (ICANN), VeriSign would get the right to commercially mine domain name traffic data. This would represent a potentially highly lucrative business, assuming that the growing opposition to the proposal can be successfully overcome.
If the draft .com registry agreement is finalized, VeriSign would be able to sell valuable data to search engines, advertisers and domain name speculators, among others, without first seeking ICANN approval for the service.
The proposed .com registry contract says that ICANN would not be able to stop VeriSign making commercial use of, or collecting, traffic data regarding domain names or non-existent domain names in the .com namespace.
The deal, which also would allow VeriSign to raise its wholesale .com registration prices by a total of up to 50% over the next five years, came as part of a legal settlement between VeriSign and ICANN, the organization that oversees the domain name system (DNS).
The company’s DNS infrastructure answers over 15 billion lookups in .com and .net every day. VeriSign says that number has been doubling every 18 months. The .com namespace represents a little under half of all registered domains in the world.
The potential value that could be mined from this data is already becoming the source of some speculation among bloggers, though a VeriSign spokesperson told Computer Business Review that the company has no plans, concrete or otherwise, for any such services at this time.
Karl Auerbach, a former ICANN director, blogged: VeriSign, for example, can develop marketing data about the effectiveness of URLs in TV advertisements during sports games while the game is still in progress. This kind of data would probably be more useful to a broader marketing audience than the specific advertiser in question, which would have empirical web server data, but could probably find a buyer or two.
Another use for this data could come be to increase search engines’ accuracy. In a blog entry, ICANN expert Bret Fausett said search firms like Google and Yahoo could improve relevancy by knowing which domains are being visited most often, and would gladly pay VeriSign for that data.
It seems possible that data regarding non-existent domain names could also prove to be lucrative. With that data, VeriSign could feed the domain speculation and pay-per-click advertising markets, growing the overall .com namespace.
Due to the way that the domain name system is set up, VeriSign does not get to see every .com lookup for domains that do exist, but it does get to see virtually every lookup of a non-existent domain.
When you type a URL into your browser, your computer first tries to resolve the domain to an IP address using a nearby DNS server, at your ISP or on the local network. Frequently requested domains are temporarily cached there. It is only when that local server does not have an answer that VeriSign’s infrastructure is asked. So, while aggregate data about successful lookups could be a statistically relevant sample, it would always have an unknowable margin of error.
But because attempts to resolve non-existent domains are relatively rare, almost every unresolvable lookup will hit VeriSign’s servers.
VeriSign has tried to monetize error traffic before. With Site Finder, launched into controversy in September 2003, the company redirected web users to a search-advertising page when they typed a non-existent .com or .net domain into their browser.
At that time, the company said it was seeing about 20 million requests for non-existent domains per day. If that number has grown in lockstep with the overall number of lookups, it will have more than doubled since then, using the 18-month rule.
For the past couple of years, since the popularity of pay-per-click advertising from Google and Yahoo has exploded, a lot of VeriSign’s domain name business has come from speculative registrations.
Speculators reason that if they can buy a domain for about $7 a year, they only need to make $8 a year with advertising clicks to see profit. Enough clicks and enough domains, and you can make a nice income.
In July, VeriSign’s chief executive even pointed out to analysts that the growing number of speculative registrations was significant enough to skew some of the business metrics the company reports each quarter.
So a list of the most commonly requested unregistered .com domains, with statistics on how often they are requested, would be like gold dust to speculators. Throw in some software to pinpoint the geographical source of the requests for added value.
The data could be sold, or VeriSign could even give it away for free, confident that names on the list would be snapped up, and it would see its $6 (or up to $9 by 2012) annual registry fee for each one.
And, for a slightly more over-board side-business in unregistered names, VeriSign could sell a list of commonly requested misspelled domain names to enterprises or brand management companies.
While VeriSign has not said what, if anything, it would do to exploit this part of the proposed .com contract, it is being characterized by some who follow ICANN affairs as further evidence of why the deal would be a great big unearned windfall for the company.
Opposition to the overall .com proposal is mounting, however, particularly among the domain name registrars that VeriSign uses as a channel to market, so it remains to be seen exactly how big this windfall could be.