Domain Value Fees: CyberSquatters Be Damned

As anyone involved with the internet / startups knows, one of the plagues of the internet is cybersquatting - holding a domain without using it for legitimate purpose. The obvious effect of this is that a lot of great names go underutilized and are basically internet spam. 

People have been begging for ICANN to do something, and there are even laws like the ACPA that aim to reduce this squatting. Of course though, such laws are written so that Verizon doesn't have to deal with Verzon.com. In addition, it's basically expanding the trademark law to domains - which really doesn't always favor society's interests. 

This is really an issue of a "tragedy of the commons" - where a public good (i.e. a grazing  field) can be used without restraint by anyone (i.e. sheep). In the end, this resource will be depleted and unusable. The internet is just a really big field. Only the internet's size prevents us from having a larger problem. 

In the real estate world, this problem is very common. In some up and coming neighborhoods, people want to speculate while spending as little as possible. What they do is buy a useless building and demolish it so they don't have to pay for maintenance, but more importantly as much property tax liability. In most cities, the building, not the land, is the majority of the tax, so by just owning a lot, the speculator can get the highest return.

To solve this problem, you can impose a land value tax, which taxes only the land - not the building. What this does is makes speculating to expensive, and hence the land must be used productively. Ideally, the most valuable land (say downtown) is used for the highest value projects (skyscrapers, stadiums, etc.) and land is subdivided to increase urban density - and hence profitability and production per area.

I'm calling for the same principle to be used for domain names. It would work like an auction with the highest bidder winning the domain name. Owners would place a maximum bid they're willing to pay, and anyone could bid against it at any time. 

You're probably thinking, "What if I own X domain name, and I can't afford the fee?" For this, I would also propose a pretty low cap at a rate the keeps most squatters away- so that owners wouldn't be taxed out of the market. If we believe this guy, at most $500/yr would be sufficient. This will certainly make a lot of casual squatters think twice about hoarding good names, but it will also open up a lot of great domain names that are sitting idle as well.

There would probably still be squatters like Verzon.com, that might pay up for the off chance they get Verizon to pay. However, the auction system could be adapted to allow offers to be placed and must be responded too within X time period. This would encourage having the right contact info for sure. 

In the least, this would be a massive improvement for the internet. I'd really like to hear everyone's opinion on this though, because it's been something I've been thinking about for a while.

Comments

[ben lipkowitz]

domain squatting is actually a tragedy of undeserved private ownership

[ben lipkowitz]

if we are going to enforce the consequences of "intellectual property" law on the entire world, it makes some sense to also levy an "intellectual property tax" to prevent patent trolls, etc.

[Nick Pinkston]

Hey Ben - thanks for the comment! So I'm not sure "undeserved private ownership" is a good argument. I can't think of a way that such domains would not be finite and useable by only one website. If a good is ownable by only one party, then the best management of it is as some type of property. )Maybe I'm missing something - so please correct me if so.)

The real question is how is that property managed for the benefit of the web. The current style is landrush and a very illiquid market with no good pricing indicators. I'm trying to figure out how we can take a thing that must be owned privately and make a market for it - my solutions are definitely lacking, but I do think they're towards the proper end.

For IP tax - I think it's an interesting idea, but I have two problems with it: 1.) I don't like IP at all, so that'd eliminate the need, but 2.) I don't think that domains are "IP". Sure, a brand name could be a type of trademark, but the domain is a different animal. Yes, it's intangible, but it's not infinite like copying an eBook is. Domains would be useless without this mutual exclusivity.

I'd be interested to hear what you think!

- Nick