Domain name growth slows considerably in 2001 as speculators drop addresses

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Posted 9:30AM on Friday, January 25, 2002

NEW YORK - Growth in Internet domain names slowed considerably last year as speculators who once hoped to make a fortune off easy-to-remember addresses dropped properties they couldn't unload. In addition, total registrations declined in the last half of 2001 as new registrations of ".com," ".net" and ".org" names failed to keep pace with expirations, according to figures released Thursday. VeriSign Inc., the master-keeper of the three suffixes, reported a 2 percent increase last year in the cumulative name total. By contrast, total registrations more than tripled in 2000 and more than doubled in 1999. The totals peaked at 32.4 million on June 30, before dropping to 32 million on Sept. 30 and 28.8 million on Dec. 31. At the end of 2000, the total was 28.2 million. "The speculative aspect is being squeezed out and deflated, and much of the hysteria surrounding domain names has much to do with the inflated notion of their value," said Milton Mueller, a Syracuse University professor involved with domain name policy. The second-half drop came as the Internet saw the arrival of new suffixes, including ".info" and ".biz." But registrations in the new suffixes could not account for all the drop in ".com," ".net" and ".org." After registering sought-after names for about $30 a year, scores of speculators were able to resell them for hundreds or thousands of dollars. A few names commanded seven figures, including $7.5 million for business.com in late 1999 and $3 million for loans.com in January 2000. But countless others sat unclaimed. Other names were snatched, without compensation, under new dispute-resolution procedures aimed at discouraging speculative cybersquatting. Ellen Rony, co-author of "The Domain Name Handbook," said the procedures also reduced the need for companies to grab names simply to keep them from speculators: The companies know they could simply file challenges later. Michael Pollack, vice president of strategy at registration company Register.com, said that while speculation has dropped, legitimate demand for names continues to increase. VeriSign reported 10.8 million new registrations in 2001. Stratton Sclavos, VeriSign's chief executive, said the removal of unused and speculative names leaves "high-quality paying customers." "We are entering 2002 with a solid base," he added, projecting growth would return by the second or third quarter. In a separate development, the Internet Corporation for Assigned Names and Numbers, which oversees Internet addresses, appears headed toward keeping the ".org" suffix open to all individuals, groups and corporations. VeriSign is to give up control of ".org" to a yet-to-be-named nonprofit organization next year, and some ".org" users have raised concerns they would be evicted. Under a proposal approved last week by the Names Council of ICANN, ".org" would be marketed to noncommercial interests, but would be open to anyone. Trying to police and enforce restrictions would be costly and difficult, said Mueller, who headed a ".org" task force under ICANN. VeriSign would continue running the ".com" and ".net" databases.