Domain Name Front Running

(Insider Domain Name Snatching)

by

Moe Buchner

Imaging yourself a baseball card collector.  You are shopping with a friend who has NO interest in baseball cards at all.  You spot a baseball card, the only one (1) of it's kind,  that will complete your collection.  Your friend watches your excitement as you run to the bank machine to get the cash that you will need to buy because you left your credit card home. 

When you return to buy this 1-of-a-kind card, you see that it is gone!  Your friend has purchased your favorite card and now offers to sell it to you at 10 times the original price!  This is "Front Running" or "Insider...Snatching" by your friend.

The term "Domain Name Front Running" (analogous to "Front Running" in Stock and Commodities Markets) is given to the 'currently' unethical practice of an entity (i.e. a company or an individual) that buys a Domain Name ahead of another prospective buyer-Entity because the first Entity had pre-buying knowledge of the second Entity's interest to buy. 

Another alternate name for this practice is "Insider Domain Name Snatching".  This name is analogous to, "Insider Trading" and is illegal in the Securities and Exchange Markets as well.  The two (2) names are basically synonymous.

There are differences between the unethical "Domain Name Front Running" and the traditionally fair, 'First come - First served' concept, or even the legitimate business of buying Domain Names for the purpose of reselling at an expected profit.

Assume a "Domain Name Front Running" Bad-Entity bought the target Domain Name for the explicit purpose of selling it to a second Good-Entity only because the Good-Entity made an enquiry (e.g. WHOIS search) on the desired Domain Name.  Had the Good-Entity never enquired of the Domain Name, the Bad-Entity would never have bought the Domain. 

In addition, a business transaction, such as buying something is usually between the buyer and seller (sometimes includes legitimate brokers).  In this case, the unethical middle company (Bad-Entity) is basically 'black mailing' the potential buyer (Good-Entity).

Usually, an Entity or business searches for an available Domain Name, then proceeds to buy the Domain.  This is the traditional (and accepted) "1st come - 1st served" way of doing business. 

Also, there are business that merely buy Domain Names based on 'Key Words' popularity in the hopes that re-selling these Domain Names will turn a profit.

For example, GoodBiz Corp. buys Domain Name, "NiceName.COM".  Then, GoodBiz Corp.  offers to sell the name, "NiceName.com" for a profit amount of money whenever ANYONE wishes this particular name. 

In this example, buying NiceName.com was a legitimate business risk.  GoodBiz Corp. had no previous knowledge as to who, if anyone, was seeking this Domain Name.  Again, this is a traditional trade habit and accepted as good business.

Within the "Domain Name Front Running" concept, SneakyBiz Co. is alerted in someway that the GoodBiz Corp. did a WHOIS search for "NiceName.com" and discovered it was available.  SneakyBiz Co. immediately buys ownership of the Domain Name "NiceName.com" BEFORE GoodBiz Company returns to buy the Domain Name for themselves.  Now GoodBiz Corp. must buy the name from SneakyBiz Co. at a much higher price- maybe 200% OR 1000% higher than the original cost because of it's importance to GoodBiz Corp.

The SSAC (Security and Stability Advisory Committee) of ICANN (Internet Corporation for Assigned Names and Numbers) has been investigating this practice. 

You may download and view the October 2007, SSAC paper on this subject by clicking the "Domain Front Running Download" link.  You will need a "pdf" viewer like Nitro or Adobe.

Download the SSAC paper here sac022.pdf  Right click and choose download or double click and choose open.

Article AID_0711031633

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