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.