28% of one- & two-letter .DE domains grabbed by one company

DENIC eGLast Sunday I commented on DENIC releasing one- and two-letter domains as well as pure number domains, which were previously impossible to register. This Sunday I will have to comment on the actual results of the allocation process.

As it stands now, 28% of all one- or two-letter domains that were claimed and registered during the initial registration phase were acquired by one company only, Tec-Media-Service. The company successfully registered 193 of the short domain names. Realtime.at came in second with 48 domains and Key-Systems secured 19 domains at least. Most other DENIC members, however, were not successful. Even United Domains, which belongs to United Internet AG, was only able to register three short domains, two of which I wouldn't denote as premium domains. The newly released pure number domains, most of which are longer than two letters, were more uniformly distributed.

Why is it that most of the valuable domains ended up in the hands of a few selected domain registrars only? One answer is that those companies have been experienced in dropped domain catching, a task that requires a similar infrastructure as the registration of domains during an initial registration phase. More importantly, however, the lucky registrars knew how to play the system. Especially Tec-Media-Service had a good strategy in place: It worked together with 1API GmbH, a domain registrar located in Germany. 1API GmbH is accredited for all major gTLDs as well as the 80 largest ccTLDs (country-code top-level domains) and offering its domain registration services to other companies through its entities HEXONET GmbH (Germany) and HEXONET Services Inc. (Canada). Tec-Media-Services and 1API then cooperated with an estimated 20 to 30 DENIC accredited registrars by acquiring and pooling their domain registration queries. In order to ensure a fair domain registration process, DENIC only allowed a maximum of four domain registration queries per minute per registrar. By pooling the resources of up to 30 different registrars Tec-Media-Service and 1API have been able to indirectly send as much as 120 queries per minute. It is not known how much Tec-Media-Service paid for the other registrars' domain registration rights, but I have already heard rumors of registration rights having changed hands at prices around €10,000. Apparently, many smaller DENIC accredited registrars thought that selling their queries would result in more cash than establishing an expensive infrastructure of their own. In retrospective, this reasoning might have been correct. The numbers make it clear that only companies with the most advanced technological and organizational solutions have had a realistic chance of successfully registering the extremely sought-after one- and two-letter .DE domain names.

Domain marketplace Sedo took a similar approach by pooling the registration queries of an unknown number of registrars. But of the 3000 domains Sedo put up for auction on its website, it could only secure between 300 and 600. Most of those have been number domains of lower quality. Domains Sedo auctioned off include TV.de (€279,499), PC.de (€158,700) and DE.de (€144,277). None of these was later registered by Sedo, though.

Looking at the results of the initial registration phase, one can understand why many domain investors believe the allocation process was unfair and that insider trading was taking place. But according to DENIC, the pooling of registration rights is not illegal. Personally, I have to agree. It was foreseeable that most companies or investors would not be able to actually get the domains they wanted. As is always the case with valuable commodities, the buyers with the largest amount of cash on hand prevailed.

9 thoughts on “28% of one- & two-letter .DE domains grabbed by one company”

  1. I have to agree with this article, even though I doubt that the buyers with the largest amount of cash prevailed (see SEDO). More decisive was the right strategy and networking, and it remains unclear how to evaluate the ROI for TecMediaService.

    However, the pooling of registration rights seems unrightful to me. It makes the 4 registration per minute rule meaningless and leads to an completely intransparent and unfair registration process. Denic should have made every effort to let every particpant get something from the pie.
    Hence, I wouldn't be surprised if the last word hasn't been spoken yet.

  2. Thanks for your comment, Eray.

    You're certainly right about the last word not having been spoken. In many cases there will be attempts from trademark holders to gain ownership of domains they didn't get in the registration process, there will be resales on the secondary market and there will be registrars and investors looking into legal actions against DENIC.

  3. Its like the .eu release all over again, those that manipulate & bend the rules are the ones that win most the best names...the results don't surprise me.

    I also think there will be alot of trademark holders going after them in the coming months.

  4. I think the process of this domain release was ridiculous.

    To start with we have to decide who these domains really belong to, which is their purpose. Certainly it is not to be grabbed by one company that is just going to hold on to them to sell them. Secondly the practice of auctioning these domains by sedo and some other companies which tried to sell these domains, that normally cost around 4 to 8 euro a year to maintain, for a much higher price is more than greedy.

    I think the government has to step in and check the system how domains get distributed by the DENIC. In the first place it is very suspicious that the DENIC is not affiliated to the government in any way and does not disclose its business practice. They even signed a "code of ethics" which does not allow members to disclose any information about their business.

    As they make millions of Euro each year by suppyling a rather simple task, linking the domain names to the actual servers, this shows they have something to hide. The main thing is they get money for something that really does not belong to them. The .de domains should be the property of the German State and not some company. In some sort this would be the same then having the power to decide the naming of streets and cities in Germany without having to discuss this with anyone else and taking money for it.

    The DENIC should get exactly as much money as they need to pay their servers and people who work for them but nothing more and it should be at least observed by the government and excess profits from the domain sales should also be directed to the goverment.

  5. This just proves yet again that to be successful in the domain world you need to use near criminal like approaches. I hope they lose the best domains to udrp. might as well of not released these names at all....

  6. I think DENIC made a major mistake by forcing a separate registration channel and only giving 7? days notice.

    This severely limited the number of Registrars that took part directly, as they would have had to allocate tech staff to make the required changes. DENIC partners like Opensrs Enom and Godaddy didn't even bother to try to take part.

    This left it wide open for a registrar to do backroom deals for connection pooling.

    Why didn't they just use the normal channel, throttle it to 4 per registrar per minute and close the system down to normal registrations for the 30 or so minutes it took to allocate the new names?

    Crazy.

  7. I think it's an interesting concept. That companies can use these kinds of approaches and still get away with it. Surely there are some regulatory measures that can prevent this?

  8. Hello Dominik,

    It pays to have deep pockets for any web based transaction in the drop business. Better yet to go through normal channels such as auctions for valuable secondary offerings.

    By the way please shoot me your best e-mail destnation for an industry wide annoncement I am seding Industry leaders such as yourself.Thank You.

    Gratefully,

    Jeff

  9. I agree with John though, it's nice to know these people's strategy in getting dominant in this business. However there should be a regulating body for the benefit of those who can afford less.

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