Cybersquatting Costs Companies $1 Billion–Is Godaddy.com’s CashParking Scam Partly To Blame?
In Online Brand Protection | 22 comments | permalink
A recent Chicago Tribune article cites a coalition of major companies lobbying Congress for tougher laws targeting online scammers who profit from their brand names:
“Calling themselves the Coalition Against Domain Name Abuse, ten companies have hired the law firm Alston & Bird LLP to persuade federal lawmakers of the need to crack down on those who claim Web addresses, or domain names, that include or resemble a legitimate company’s trademark.
The coalition estimates that so-called cybersquatting costs companies worldwide more than $1 billion annually in diverted customer sales and enforcement expenses.”
The list of companies includes Coca-Cola, Dell, Yahoo, AIG, Eli Lilly, HSBC, Hilton, Wyndham Worldwide, Verizon, and Marriott.
What initially caught my attention was this admonition on the coalition’s home page:
“Since brand-rooted domains attract Internet traffic, the majority of domain names kept by cybersquatters are then used to post pay-per-click (PPC) advertisement links in order to easily monetize visitor traffic.
Internet users who visit these sites find posted lists of “sponsored links” to sites that may be relevant to the industries of the brands infringed. If users click the links that correspond to the intended brands, those brand owners may be charged click fees by search engines that share the proceeds with the domain name registrants.“
So let’s take a look at the example, Blackberryconnection.com. As you can imagine, the Blackberry trademark is a frequently searched keyword.
This example illustrates “the world’s #1 domain registrar,” Godaddy.com, displaying contextual Google advertisements on this “parked” domain. In this case, “the brand owner may be charged click fees by search engines that share the proceeds with Godaddy.com.”
But wait… there’s more. Godaddy.com actually has a program that promotes “Cybersquatting For Dollars” called CashParking.
The program details: “Make money from your domains’ parked pages! It’s easy with CashParking. Whether you have one domain or a growing portfolio, CashParking can turn those domains into a cash generator! Now includes parked page customization options!
Simply pick the CashParking plan that’s right for you, add your domains to the CashParking portfolio and get ready to share in parked domain revenue.”
Basic Plan - $3.99/month
- Earn 60% of the advertising revenue on your parked domains!
Premium Plan - $9.99/month
- Earn 80% of the advertising revenue on your parked domains!
Believe it or not they suck thousands of naive victims into this racket. While the individuals who sign up generally lose money every single month (even after clicking on the ads displayed on their domain), Godaddy.com generates revenue two ways.
1) Their ad revenue share adds up when you consider all of the CashParkers participating
2) Godaddy.com levies a monthly fee on participants to throw up a one page ad (for Godaddy.com) and insert Google Adwords code
The final point to make is that Godaddy.com is covered–they share the illegal profits but are not vulnerable to the civil liability of statutory damages in the amount of not less than $1,000, and not more than $100,000, per domain name (per the Anticybersquatting Consumer Protection Act of 1999) that the domain name owner is.
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Cybersquatting Costs Companies $1 Billion–Is Godaddy.com’s CashParking Scam Partly To Blame?
Whoooooooa Nelly! Observations of the “wild, wild west” landscape of the internet.
I’ve been trying to explain the benefits of Online Brand protection to some of our clients but non of them really understand. I’ll be sure to show them this post.
Boydie,
Thanks for your comment. Online brand protection converges nicely with search engine marketing and is growing by leaps and bounds as an primary business concern.
Things are sure to get even more interesting as universal search emphasizes other media.
By the way, I enjoyed your post on the search engine optimization process.
Man, I remember seeing this at Godaddy but didn’t think anyone would be dumb enough to PAY to park their domains. True, I may be getting less than 80% or even 60% from my domains that are parked, but how would I know?
People need to be told that if they want to park domains and make money from them there a LOTS of places to do so, but the clicking on the ads on your site is a sure way to get dropped.
Not sure what parking has to do with brand protection, but from what I’ve seen brands have to go up aginst competitors all the time in search and this is not much different. All the smart brands ask Google to stop competitors from including their brands in ads, but you can STILL bid on the brand names as keywords and get your ad shown. Hey, if you can’t compete, you’ve already lost…
Chris,
Thanks for your comment. Let me clearly state that I have nothing against domain parking in general–as long as the domains are composed of generic terms.
Brand protection, in this instance, is to monitor and acquire trademarked domains from unauthorized individuals.
Cybersquatters are annoying. They make trying to search for anything other than links of links very difficult. They are also taking up domain names that could be used to put REAL content online. If you want to make money from your domain name then get a real life so you will have REAL content to add instead of leeching off the work of others!
Duly noted, Jaq.
[…] August 28th, 2007 by Todd Mintz submit_url = “http://www.semportland.com/domain/the-domaining-revolution-lessons-from-the-domain-roundtable/”; I (along with fellow SEO´s John Andrews, Dustin Woodard, Aaron Wall, Chuck Price & Dave Bascom) attended the 2007 Domain Roundtable in Seattle . There has been a lot written about domaining recently by SEO´s…some of it complimentary, and some of it misinformed. I find domaining to be fascinating because I view it as an online extension of old-school business that just so also happens to reasonably immune from the shifting search engine algorithms. Even more compelling, the amount of money that successful domainers earn from their investments is downright scary. […]
This makes no sense. Domains are the new real estate. As someone who hasn’t worked in over 5 years can tell you, cybersquatting is a lucrative business.
I purchase a domain name for $5.99… forward it to one of my other sites (why pay for parking, right?) and wait for someone to come along and offer money for the domain. I have sold celebrity domains, and corporate domains (the iphone domain name game was quite lucrative this year just from a PPC standpoint).
Those who complain about it… usually work 9 to 5.
Congratulations Nicholas!
Believe me, I recognized the potential for cybersquatting over a decade ago but my morals got the best of me. You know it’s illegal, right? See Anti-Cybersquatting Consumer Protection Act. It’s kind of like stealing candy bars from the drugstore when you’re five.
Currently the civil penalty for cybersquatting is the following: statutory damages in the amount of not less than $1,000, and not more than $100,000, per domain name.
CADNA is pushing legislation to increase the penalties.
9 to 5 is for wimps (just ask Gordon Gekko), I’m more of a 9 to 7 man…
Hello Tom,
First, let me apologize publicly for characterizing your article as “misinformed”. “Misinformed” has connotations that are not consistent with my belief that you wrote an posting of high quality that was slanted in a way in which I did not agree…in fact, the quality of the posting was probably why I remembered it as I was writing my article (which can be read here for those that are interested: http://www.searchengineguide.com/mintz/010541.html).
Now, let me state the points where I agree with you:
1) Paying for Domain Parking is a ripoff. GoDaddy’s program is likely ripping off a whole bunch of newbies who don’t know that Domain Parking is a service offered by many other companies without a fee.
2) Cybersquatting is bad practice.
Here is where I don’t agree with you:
1) Domain parking services promote Cybersquatting. True, cybersquatters can make money from domain parking. However, rogue domainers are a large administrative burden to parking services and the money that might be earned from them isn’t worth the administrative hassle caused by having to deal with the trademark lawyers who are making contact with the parking company as part of the legal process.
2) Blackberryconnection.com isn’t necessarily a cybersquatting site (which you don’t explicitly say but do imply). Looking at the Internet Wayback Machine, this website apparently was a buy.com affiliate site that sold blackberry devices…and at some point, the site was abandoned in favor of domain parking. Now, I’ve never used the GoDaddy parking service, but if it is like the other services I have used, the domain owner can choose what type of ads can be served on their page. Want the “cybersquatting” to go away? Easy. Make the parked ad content focus on the type of blackberries that people eat. The Blackberry trademark doesn’t include food:.)
Also, it might be in Blackberry’s best interest to follow a “Don’t Ask, Don’t Tell” policy towards certain instances of infringement…after all, while the cybersquatter might be breaking trademark law, they might also be generating sales of the product and the administrative costs of enforcement might not be worth chasing every possibly infringing parked domain.
The trademark rules that govern this area aren’t clear and aren’t well known…until this changes, this problem won’t go away.
A large number of “cybersquatting” instances (likely including blackberryconnection.com) are due to consumer ignorance. I really doubt that the woman who owns this domain (who appears to be a Southern California family therapist) would have purchased it had she known the possible legal and financial repercussions of her action. Similarly, the person who bought the Simpsons Movie domain name and attempted to sell it back to Fox might have had bad motives, but was far more stupid than evil.
Many “grieving” corporations are themselves to blame for their own trademark issues (see the Rimoslim example in my Search Engine Land article: http://searchengineland.com/070711-083600.php). Through early registration of their domains + defensive registrations of obvious cybersquatting / typosquatting variants of it, they can cheaply mitigate many problems. In addition, corporations are using trademark suits in ways that were not intended…weapons of offense instead of defense (Lulu.com vs. Hulu.com).
Domain Tasting also perpetrates infringing domains since this automatic process has no ability to identify and remove cybersquatters / typosquatters. Many in the domaining industry are calling for the abolishment of this process.
So, in conclusion, I think that the slant of your story gave far too much weight to the role of Parking Companies in cybersquatting when in fact, they are likely less responsible than just about all other involved parties.
Todd,
Thanks for explaining your comments. Let me jump to the points where you don’t agree with me.
1) Domain parking services promote Cybersquatting.
You are putting words in my mouth (keyboard). I never wrote that domain parking services promote cybersquatting, you chose to perceive this. Here’s what I did write:
“Godaddy.com actually has a program that promotes “Cybersquatting For Dollars” called CashParking.”
Godaddy is in my backyard and I have a handful of Godaddy sales and management contacts who I am friends with and have working relationships with. The majority of trademarked domains are accepted for CashParking, less than 3% of CashParking clients generate positive cash flow, and the client attrition rate is off the charts.
Do you know one big name domainer that utilizes Godaddy CashParking for the majority of their business operation?
2) Blackberryconnection.com isn’t necessarily a cybersquatting site
Yes it is. To satisfy the definition in this case, there must be two realities present. 1- That the trademark is used within the domain name (USPTO registration number 77141621), and 2- the “sponsored results” served on the page include advertisements by the trademark holder–I refer you back to the screenshot.
Your point that the cybersquatter might be generating sales for the trademark holder is 1998 thinking. Best practices for most frequently searched brands today is to dominate brand real estate and do not allow affiliates or any other third parties to advertise on branded keyword sets. It is important for the brand to engage the prospect directly, convert a sale or inquiry, and build a brand relationship.
Whether or not instances of cybersquatting are due to consumer ignorance is irrelavent and immaterial to our discussion.
In summation, my article did not give far too much weight to the role of Parking Companies in cybersquatting because that simply wasn’t the premise. The premise was that a new coalition of big brands is building a lobby to go after cybersquatters and I questioned whether Godaddy’s CashParking program was partly to blame. The scam is that Godaddy shares in the revenue but is not vulnerable to criminal penalties imposed on the unauthorized owners of trademarked domains. I believe the article is clear about that. I further substantiated my point by displaying a real-life example.
Tom,
I did take your post as a bit of an “indictment” of parking companies in general since all the ones that I’ve had experience with work pretty much the same (except only GoDaddy charges for the services). I’ll accept that you are limiting the scope of your comments to GoDaddy.
As the page stands now, blackberryconnection.com is cybersquatting. However, the domain can be parked with ads in a manner that doesn’t violate the trademark. People eat blackberries. If the ads displayed were food-oriented instead of mobile-device oriented, no trademark is violated.
Therefore, the act of accepting this particular domain into the program isn’t contributing to cybersquatting…the lack of monitoring the “ad choice” is where the problem lies.
Todd,
You’re right. This domain can be parked with ads in a manner that doesn’t violate RIM’s Blackberry trademark.
Before publishing the article I knew a more convincing example would be that of a trademark that has no generic meaning, for example, a domain like “Verizonconnection.com.”
I purposely chose the registered trademark “Blackberry” to spark debate on this issue, because it is one of thousands like “American Airlines” and “Discount Tire” that are composed of generic terms.
As the page stands now, blackberryconnection.com is cybersquatting. However, the domain can be parked with ads in a manner that doesn’t violate the trademark. People eat blackberries. If the ads displayed were food-oriented instead of mobile-device oriented, no trademark is violated.
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[…] When I wrote a post on the 2007 Domain Roundtable, in the first paragraph, I linked to an article I did not agree with using the term “misinformed”. I intended absolutely no malice to the author…I actually forgot I even did this until receiving an email from Tom Crandall letting me know that he felt slighted and upset by my action. While I didn’t quite view the situation as Tom did, I did understand his point of view and realized that I could have chosen a word/phrase for link text that expressed my disagreement with his post without casting an aspersion on his professionalism. […]
Yeah I was thinking of trying them last year myself. And I also tried Google Adsense for Domains. Anyways, both are not worth it because you lose control of the domain and content. Plus they get a percentage of your earnings.
Goddady cashparking is $4 a month and you only earn 60% of revenue. That’s crazy.. and that’s PER domain.
I think a better way is using http://www.instantadsensemachine.com and you earn all the revenue, it takes less than 5 minutes to set up and you dont have to touch it again, and plus you keep all the revenue. You can use it with adsense, affiliates, etc. Easy as heck.
Go check out the free demo at the site or download the free trial.
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