A few weeks ago we wrote about how domain speculators have been registering hundreds of the new gTLD domain names. Initially we talked about how squatters are taking names that belong to established brands and the problem this presents for them, but the effects may also be felt by other businesses in the long run.
Domain speculators register addresses they expect to be in high demand so that they can re-sell the rights to them at well above the standard registration fee. A great example of this practice is the sex.com domain – normal .com registrations cost £25 for two years, but in 2010 sex.com was sold for $13 million.
The problem with domain squatting is that these investors reduce the amount of desirable domain names available for businesses and individuals, driving up prices in the process. The idea behind the new gTLD system was to create plenty of new addresses for all web users – the actions of domain speculators and cybersquatters may yet threaten that goal.
Many of these domain squatting gambles will fail to pay off for the speculators, but others will undoubtedly raise plenty of cash for the registrants. Unfortunately, it is the small business owners and individual web users who will miss run into problems, because they are unable to register the address of their choice or pay the exorbitant sums demanded by speculators.
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