How Big a Problem is Cybersquatting? How often do Domain Owners win UDRP proceedings?
How big a problem is cybersquatting?
We hear from groups like CADNA that it is a billion dollar problem.
And we learn from Andrew Allemann how CADNA inflates their numbers.
To get a sense of the scope of the problem, and to answer the other question about what is the success rate for domain owners in UDRPs, I looked at all the WIPO UDRP decisions from August. WIPO, based in Geneva, along with the NAF, handles most of the UDRP cases. Each business day they send out an email with a summary of the decisions decided that day.
This sample of UDRP cases reveals some valuable information.
First, let’s take a look at the numbers.
WIPO issued 207 UDRP decisions in August. Of these, 135 were for a dot-com domain, or included a dot-com domain among the disputed domains. The other 72 were for country-code extensions that WIPO handles or for gTLDs like .net, .org, .info, .biz etc.
To ensure a consistent sample, and because most of the commercial value is in dot-com domains, I’ll restrict my analysis to the decisions involving dot-com domains. All the discussion that follows is limited to only dot-com domains.
Of the dot-com decisions, 119 resulted in a Transfer and in 16 cases the Complaint was Denied.
Zeroing in further, of the 119 decisions, in only 28 cases was a formal Response filed, for a response rate of 24%. Of these, as best I can tell, 14 were prepared by an attorney and in the other 14 cases the Respondent represented himself/herself.
Of the 14 responses prepared by an attorney, the Respondent prevailed in 11 and lost 3. Of the other 14 decisions where the Respondent represented himself/herself, the results were a mirror image: the Respondent won 3 and lost 11. There were also a couple of decisions where the Panelist denied the complaint even though no response was filed.
Therefore in half the cases where a Response was filed the Complaint was Denied. In 79% of the cases where the Response was prepared by an attorney, the Complaint was Denied.
This could mean that my friends who are domain attorneys are brilliant, a conclusion with which they would certainly agree. But it probably more likely means that a domain owner is only likely to hire an attorney to file a response if the domain owner believes he or she has a winning case.
I don’t expect that the new gTLDs will have a widespread impact. But they could be successful even if they aren’t widely adopted.
There are different ways to measure success for the new gTLDs. Even if a new gTLD develops a niche following of no more than 50,000 registrations, this could still be highly profitable for the sponsoring registry. Let’s assume the start-up costs for a new gTLD are $1 million, and the annual profit margin on the 50,000 registrations is $10. Then even a gTLDs that only has 50,000 registrations would generate $500k in profit a year, for a recurring 50% return on investment for the gTLD sponsors. This would be counted as a big success for the gTLD sponsor even though the extension never has more than a small number of registrations.
As a domain investor, I don’t see the need to jump into the new gTLD space. The key to success is marketing and partnerships, and those aren’t my strengths. So I’ll leave the new gTLDs to more talented people.
I don’t see a great demand for new gTLDs so my guess is that most new gTLDs will flame out quickly.
There are 26 valuable domains in the .co extension – the single letter domains.
These are the only domains in .co for which there is not a corresponding .com domain.* It is no surprise that there is where most of the action is in .co.
For any other domain, I see the .co extension as being the absolutely worst extension – worse than .net, .info, .biz, etc. – because it has no separate identity from .com and is just a pale shadow of it. Any site built on a .co domain for which a .com domain exists will bleed huge amounts of traffic and ‘mindshare’ to the .com.
I don’t get the .co domain interest. The .CO registry has done a brilliant job marketing the extension. But people who think this is the second coming of the .com goldrush are probably going to realize that they’ve been buying fools gold instead.
Time will tell…
* There are a couple of single-letter dot-com domains registered – X.com and Z.com. It’s possible that Spanish language domains would have local value in Colombia in the .co extension.
There are many wonderful blogs about the domain industry. I’m looking forward to joining the conversation through this blog. I hope you find these posts useful and that you care to leave comments and feedback.