Nominet proposed the option of auctions in 2020 as one of a small number of possible changes to the way expired .uk domain names could be released. A presumption of the auction proposal was that every domain name would initially be put to auction, permitting interested parties to bid on the domain names they were interested in acquiring. Domain Names that attracted no bids would be deleted by the registry in the usual way.
In my opinion, and with the benefit of an understanding of a greater range of auction options such as the system used by the .br registry, Nominet could have proposed a better solution in the consultation.
How the .br registry releases its expired domain names
The .br registry has approximately 4.8m Domain Names Under Management ("DUM") and rising. Brazil is a developing country. Unlike the .uk registry, the .br registry does not delete expired domain name each day. Instead, the .br registry has a once monthly Release Process which operates over a period of several days. The .br release process operates as follows:
Two days before the beginning of the monthly release process a list of all expired .br domain names is published in an alphabetically sorted .txt file. Numerals come first.
Two days after the publication of the .txt file, interested persons and Brazilian legal entities may submit expressions of interest for one or more .br domain names that have been published on the list. At the end of the monthly release process period the following occurs:
- Domain names without any expressions of interested are made available for normal registration.
- Domain names with a single expression of interest are registered to the applicant on payment of the base registration fee.
- Domain names with two or more expressions of interest are not released and are retained by the registry. The following month these domain names will feature on the release process list to again potentially receive one or more expressions of interest.
- Domain names that have received two or more expressions of interest each month during the release process for multiple consecutive months eventually enter a Competitive Release Process.
Competitive Release Process
Domain Names that have received two or more expressions of interest during the release process of multiple consecutive months eventually enter a competitive release process.
Once a domain name enters a competitive release process it is possible for interested parties to apply for the domain name, making one or more financial offers during a six day time period. The final day of a competitive release process is always a business day and at 15:00 in the afternoon, so no holidays or weekends.
After the deadline to make applications for a domain name in a competitive release process has passed, existing applicants may continue to submit new offers for the domain name for a further 24 hours if their previous highest offer had been exceeded.
A competitive release process is timed to end at 15:00 on a business day but the end time is extended by 10 minutes if a higher offer is submitted within the previous 10 minutes. This extension prevents last minute sniping. At the end of a competitive release process the applicant who has made the highest offer receives the domain name on receipt of payment.
A competitive release process is not the same as an auction. Candidates are invited to submit one or more offers for a domain name. A competitive release process is not an auction because:
- No notification of higher offers is sent to participants. Participants are encouraged to check the web site 10 minutes before the end of the process and monitor for higher offers that may have been made by others.
- No maximum bid or proxy bid feature exists. The offer a participant makes is what they will be expected to pay for the domain name at the end of the competitive release process unless another participant makes a higher offer.
Some other rules
- There is a limit to the number of expressions of interest for domain names that an individual or Brazilian legal entity may submit during a Release Process. Given the size of a monthly release process list it is not possible for any one individual or legal entity to submit expressions of interest for every domain name on the list from the same account.
- The number of expressions of interest an individual or Brazilian legal entity may submit ranges from 3 to 200 depending on the number of ordinary domain names registered to their account.
- Non-payment of a winning offer will result in the banning of the account for 6 months. Furthermore, the registry will monitor for any bulk movement of domain names from one account to another that may occur to try to circumvent a banned account.
- The end of daily domain name release cycle with success equated to luck and the technical competency of those able to submit a domain name registration request as close to receiving an available notice from a Domain Availability Checker ("DAC") tool or to a published drop time.
- Anyone who is the only applicant for a domain name during a Release Process receives the domain name for the base registration price. The theory is that professional domain name speculators are far less likely to submit applications for many niche domain names that may only be of value to one or a handful of potential registrants if all domain names within the Release Process are published together in a single large monthly list. In theory, potential users of these types of domain names are therefore far less likely to be "held to ransom" by a domain name speculator who might currently chose to "scatter gun register" many domain names faster than anyone else and then try to immediately sell them on for a large profit to the one or handful of likely interested end users while asking for an amount of money low enough to make bothering to file a dispute resolution ("DRS") unviable.
- Domain Name Investors can plan up well in advance for the release of coveted domain names that will almost always receive two or more expressions of interest in every month of their release processes, eventually moving to a competitive release process. Investors can plan their financing in the knowledge that they will be able to submit offers for the domain names they are interested in several months later. This permits them to take time to rationalise the value of a forthcoming domain name competitive release and to raise capital to finance their intended offer.
- Competitive Release domain names may have some halo effect on the registry. High value sales demonstrate the true value of some premium domain names.
- The registry can ringfence the money received from competitive release processes for specific projects.
- Anyone can easily participate in this without any requirement for technical ability.
Some ways Nominet might be able to implement it
- Nominet already has an existing Registrants Online system of accounts that could be extended to function with a Release Process.
- A breakout web site for the .uk name space, separate from the Nominet corporate site but with crosslinking between both. The breakout web site could very quickly be publicised in key press and using organic search so would become widely known about before long due to word of mouth and requiring minimal publicity.
Please let me know your thoughts or feel free to ask me further questions about this.