Columns Domain Name Pre-Registration Process Exposed

  1. If you haven't noticed, ICANN has recently approved dozens of new generic top level domains for registration with hundreds more on the way. These new extensions range from the legal (.ESQ for lawyers), to the identifiable (.XXX), to the geographic (.NYC and .VEGAS) and the utterly useless (.WTF). Virtually every domain name registrar is heavily promoting "pre-registration" during this new land rush. But there is no uniformity about what pre-registration means across domain registries and registrars - and there are no guarantees of registration or specific regulation either. Unless you use the utmost care in understanding the pre-registration process for a new top level domain extension, you may end up with no domain name and the loss of most of your investment.

    What is the Difference Between a Registry and a Registrar?


    ICANN (the "Internet Corporation for Assigned Names and Numbers") was founded in 1988. It is a non-profit corporation whose key functions include the management of the domain name system and the approval of new "top level domains" (with the abbreviation "TLD" commonly used.) A domain registry is an entity which maintains a centralized registry database for a top level domain. For example, Network Solutions, Inc. ("NSI") manages the .com, .net and .org. registry. Google Registry manages the registry for the upcoming .ADS. .RSVP, .ZIP and other domain name extensions. A domain registrar is a company accredited by ICANN and authorized to sell and provide registration services for top level domains. Just a few popular domain name registrars include GoDaddy, NameCheap, DynaDot and most recently Google Domains, to name just a few. When you buy a domain name, the registrar collects the revenue, registers the name with the registry and provides the end user with domain name management services. The appropriate registry takes its portion and ICANN exacts a fee for every domain name registered (currently $0.18 per domain registration and transfer.)

    Registry Domain Name Registration Policy


    Each domain registry may impose its own restrictions and limitations on the top level domains it manages. Similar to the .US registry which requires a physical address in the United States, the .NYC registry requires a physical address in New York City or within its proximity. Some domains have local restrictions and contain country codes ("ccTLD") such as .co.uk. Others are generic ("gTLD") and have no restrictions, such as .com, .net, .org and .biz.

    There are certain reserved domain names across all top level domains. But unknown to most is that a registry can choose to withhold certain desirable names and hold a private sale or auction to exact a premium price. An attempt to register one of these vanity domain names at some registrars may result in a vague "unable to register" error message. For example, if you try to register "christian.singles" at GoDaddy, you'll see a "christian.singles is not available" message. If I do a "WHOIS lookup" to see who owns the domain name, the message returned is "This name is reserved by the Registry in accordance with ICANN Policy."

    Some registrars may put a pre-registration through even though the relatively small fee will almost certainly never be accepted by the registry. So what happens to this fee? It's not entirely clear and you will want to investigate this issue thoroughly each time you pre-register a domain name.

    Standard Pre-Registration


    Pre-registration is similar to an "early bird" offer but at a premium price. Each registrar sets its own price to "pre-register" a domain name, which includes the mandatory fees paid to the domain registry. So a $40 fee for a domain at GoDaddy and a $38 fee at NameCheap will usually just equate to a higher markup over the cost of paying the registry and ICANN their required fees. This can get complicated and there are a number of variations in practice. I'll try to simplify using dates, fictional companies and domains.

    Let us assume that the registry managing the .FRAUD top level domain - the Bad Business Registry or "BBR" - is going to open registration to the general public on October 6. A private party seeks to register the domain name "consumer.fraud" with registrar Criminal Solutions Inc. or "CSI". You can think of GoDaddy or NameCheap as "CSI" in this example. Standard pre-registration takes place beginning on August 1 and will cost $30 at CSI, and will include the fees paid to BBR and to ICANN. In general, the domain name may be able to be pre-purchased through the registrar (CSI) just prior to the public launch date of October 6. But in some instances, the registrar (CSI) will try to register the domain name automatically with the registry on behalf of the customer the moment the .FRAUD gTLD becomes available for public registration on October 6. Make sure you know what type of "pre-registration" service you are purchasing.

    Some registrars will only accept one pre-registration per domain. And if you are the only person on the planet to pre-register the consumer.fraud domain name, then you'll be the happy owner come October 6. But what happens if other parties pre-register the same domain name at the same registrar or at another registrar? In the event that multiple parties have registered the same domain on the same tier (such as standard pre-registration), an auction will usually determine who will have the right to pre-register the domain name. It is extremely important to determine how the auction process works, which is covered briefly later in this article.

    Early and Priority Pre-Registration


    Paying an additional early bird fee for "priority pre-registration" will preempt those who pay for standard pre-registration, which we just discussed. You can call this a "pre-pre-registration." Larry pre-registers consumer.fraud for $30 with CSI in the first week in August and Ernie pays $100 to priority pre-register the same domain during the second week in August. Ernie will have priority over Larry to register consumer.fraud with his registrar, CSI, when registration comes available from the registry, BBR.

    In many instances the premium fee for the priority pre-registration includes (i) a fee paid to the registrar (CSI) to register and manage the domain name for you, and (ii) an "application fee" paid to the domain registry (BBR) that is usually non-refundable. This is not always made clear.

    What happens to the money paid for priority pre-registration if someone else wins the right to pre-register the consumer.fraud domain name? It depends upon the registrar and registry. If two or more parties priority pre-register the same domain name at different registrars, the "application fee" is nothing more than a non-refundable ticket to bid on a domain name, which you won't know until after you've paid the fee. So if Ernie paid $100 and found himself on the losing end of the auction for consumer.fraud, he will likely be out the $60 or $70 "application fee" that was paid to the registry, BBR. What happens to the $30-40 registration paid to the registrar, CSI, depends upon the registrar's pre-registration policy. Some registrars offer a full refund and others offer a credit to those who pre-register - so the use of money paid to a registrar may not be lost entirely. But even if a registrar ultimately refunds or redeems these credits, the registrar and registry will still enjoy the use of all of these pre-registration fees for several months, interest-free.

    Pre-Registration Land Rush Stages


    With some top level domains there may be a phased "land rush" pre-registration process managed in "stages." This land rush pre-registration may or may not coincide with the standard pre-registration and the priority pre-registration options we just talked about.

    The Donuts Inc. domain registry, which manages .SINGLES, .GURU and .CAMERA top level domain names, has a 5 day/stage pre-registration process that occurs just prior to the registry opening for general public domain name registration. A recent example earlier in the year included pricing and phases as follows, with dates adjusted for our example:
    • Phase 1 – Starting at $12,569.99 Ends: Thursday, October 1, 4:00 PM UTC
    • Phase 2 – Starting at $3,194.99 Ends: Friday, October 2, 4:00 PM UTC
    • Phase 3 – Starting at $1,269.99 Ends: Saturday, October 3, 4:00 PM UTC
    • Phase 4 – Starting at $719.99 Ends: Sunday, October 4, 4:00 PM UTC
    • Phase 5 – Starting at $219.99 Ends: Wednesday, October 5, 4:00 PM UTC
    Any purchase during these later land rush stages will preempt any pre-registration. If Donald pays $12,569.99 for the the consumer.fraud domain pre-registered by Ernie and Larry, Donald will be awarded the domain name. The pre-registration for the domain name will end after Phase 1 and awarded to the payor or the winning bidder. If others pay the phased pre-registration fee, the domain name will go to auction and won by the highest bidder. In general, auctions held for each phase or on the registry level, which means that you are bidding against every other party who registered the same domain name at an accredited registrar. Make sure to confirm both the auction process and what happens to your pre-registration fees in the event you lose the auction prior to pre-registering your domain name.

    Bait & Switch, Mailing Lists, Bidding Against Yourself


    I was notified by GoDaddy that .host is a new gTLD soon to be released. The .host registry has a form to "pre-register" a domain name. There is no visible information at all concerning the use of the information, no privacy policy, no disclosure of what they are doing with the information other than the words "PRE-REGISTER YOUR .HOST NAME TODAY!" So I obliged by filling in my name, company name, email address and whether I was a web hosting company (I am a partner in Cheap VPS LLC, providing cheap VPS webhosting.) Upon completion a message informed me "Your details have been submitted for pre-registration."

    In my opinion, this would appear to be an information grab to be used to gouge as much money from interested web hosting providers as possible. By obtaining information about how many potential registrations the registry may have for a particular domain name, the registry can choose to withhold popular domain names and sell them for a king's ransom. And to boot, the .host registry has a long mailing list of webhosting providers, which hypothetically could be used to sell access to this mailing list to vendors.

    At another registrar I was induced to pre-register a desirable domain name for a $19 pre-registration fee. But this price changed to a $119 "binding pre-registration" when I went to check out since it was suddenly classified as a "premium domain" by the registry and subject to additional fees. Such bait and switch tactics are rampant and it seems that there is no entity actively policing the shady behavior exhibited by an alarming number of registrars and registries.

    Another well known registrar is accepting pre-orders for $30-40 for several new gTLDs. Even the most basic disclosure requires clicking on one of the hyperlinks further down the pre-registration sales page. The inner page states that the registrar isn't responsible if a domain registry decides that a domain name is deemed a "premium" domain name and will be sold at a higher price by the registry than the pre-order price offered by the registrar. In the event such occurs, the customer will only receive a credit - not a refund - for the failure to register the domain name. But what's even more disturbing about this hidden disclosure is that the registrar should have disclosed that the domain names I tried to register was already being deemed a "premium" domain by the registry as disclosed by other registrars.

    Preorders may be cancelled if the preordered domain, initially quoted at normal pricing, is later determined to be a premium domain by the central registry. Premium domains are sold at a higher cost than normal domains.

    Caveat Emptor - Let the Domain Buyer Beware


    This article describes generally the complicated, convoluted process of domain name pre-registration. It doesn't cover whether your hosting company can or will be able to handle these new top level domains so that you can host a new website such as michael.nyc. It is designed to give readers a general understanding of how top level domain pre-registration works as a whole. The prices and processes may vary across domain name registrars and registries. Readers should still be able to identify the important questions to ask before handing over a credit card for domain name pre-registration. The information should also help with managing expectations and appreciating the chances that pre-registration of a domain name in demand will ultimately be successful.
    Legal Practice:
    Computers - Internet
    Jurisdiction:
    • Other

    Michael M. Wechsler

    Michael M. Wechsler
    Michael M. Wechsler is an experienced attorney, founder of TheLaw.com, A. Research Scholar at Columbia Business School and of-counsel to Kaplan, Williams & Graffeo, LLC. He was also an SVP and chief Internet strategist at Zedge.net and legal consultant at Kroll Ontrack, a leading service e-discovery and computer forensics service provider.

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