How Domain Hoarding is Killing Innovation

Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.

By Nathan Parcells

Domain hoarding is probably my least favorite residual industry to come out of the tech sector — worse than the whole social gaming scam ecosystem,  worse than black hat SEO companies, and worse than time sink games like Farmville. While those other industries scam and trick people out of a lot of money, domain hoarding has created an entire industry out of bleeding value from other people’s good ideas, and putting a completely new and arbitrary cost on innovation. 

At InternMatch we got away pretty cheap, fishing our url from a hoarder named John Jerman for the not too steep price tag of $2,000. But, with sites like Candy.com spending upwards of $3,000,000 to secure its name, it seems that for a country so in need of staying globally competitive that money could be much better spent on hiring employees or building technology that will truly grow the company and economy.

When startups have to spend a good portion of their seed capital and many months of burn to secure a relevant domain this is bad for innovation.

I bet if I search the Name Zaggle, I find a US tech startup:

So when I checked this arbitrary name on google I found a company in the UK called Zaggle, and the US domain which redirects to the similarly named Zazzle.

In marketing, the basic rules for choosing a name are to pick something that is short, easily identifiable, and internationally neutral. Modern tech companies are consistently breaking rule number two by adding extra letters to their name or misspelling words so that they claim the last crumbs of the free url space. 

While Google and many companies during the last 15 years capitalized on names that were unique – for Sergey and co. this was a conscious decision that allowed them to standout. Now the tide has shifted and companies are selecting awkward names because it is the only choice in a noisy market.  What is next ZZZZ.com?

A challenge for the future:

The movement towards opening a new domain is already taking shape as GoDaddy has been seen experimenting with introducing .co urls. While the excitement of working with a totally clean slate of available url names sounds appealing, I can only imagine the chaos that can and will ensue if this does happen. 

With the now well established market for domains, the ability to stop re-sellers and hoarders from snatching up all the top .co names seems impossible. Not to mention that domain sites like GoDaddy, have a large vested interest in supporting this community, which inflates the prices of domains, and keeps domains sold for much longer periods of time.

A business is a business:

Ultimately one can argue that this is basic free market forces at work. The value of owning domains has increased with the importance of SEO and being found on a crowded internet.

Regardless, of such an argument, these people are mosquitoes, not using urls to build a product or company that positively impacts the web and the world – and instead limiting who can innovate and succeed by treating entrepreneurs’ seed capital like their personal ATMs. Okay so there is a bit of residual frustration in this article from us losing some hard earned money to Jon Jerman at the outset of InternMatch — but come on let’s let the innovators innovate.  

Anyone else have any funny stories about choosing a name or buying a domain? 
  • Quaki

    and ICANN buries its head in the sand pretending nothing is wrong with it