Background information on warehousing of .eu domain names
Traditionally, the term 'domain warehousing' is applied to registrars rather than end users. It relates to the process of registrars registering large numbers of domains for their own use rather than as the result of an order from a client or customer. In effect, the registrar is both the registrar and the client. This kind of activity is specificially forbidden by Article 4 (last bullet point) of the EURid registrar agreement.
Such a restriction was extremely simple to bypass. Many non-EU firms that are active on a large scale in .eu ccTLD have used a two part system to circumvent this simplistic restriction. They have set up accredited .eu registrars using US limited liability companies (LLCs) and then use a front company based in the EU for the nexus requirement (having an office or place of business within the EU). The EU front company becomes the registrant for the domains and the registrar company, often based in the USA or Canada registers the domains. Even though the two businesses may be controlled by the same people, they are legally two separate entities. The cost of becoming a .eu registrar was simply a prepayment of 10,000 Euros. This gave each registrar the option to register 1000 .eu domains at 10 Euros per domain.
In the past few years, other terms such as domain aggregation and direct navigation networks have been used to describe the activity of a single business registering large numbers of domain names. The aim, in both cases, is the same - the monetisation of the domains by creating websites with pay per click advertising. The direct navigation aspect is based on the concept of type-in traffic. This means that a person may type a website URL based on word with into the browser address bar expecting it to be there. Thus if they were looking for creditcard information they would type "www.creditcard.tld" expecting that there is such a website. This is why domains such as sex.com, business.com and vodka.com can command such high prices.
Words that appear to be generic are extremely valuable to such advertising networks. These words are often terms that people use as queries in search engines. Due to the generic and commonplace nature of these words, it is difficult to trademark them. However that did not stop various companies from registering fast track Benelux trademarks to avail of the .eu ccTLD's Sunrise period. Some of these companies succeeded in obtaining the .eu domain names they applied for with these Benelux trademarks only to be stripped of them by subsequent ADRs - BARCELONA.EU, FRANKFURT.EU being good examples.
Sunrise and Landrush Registration Activities
The cost of obtaining a Benelux trademark and setting up an EU front company, coupled with the risk of not obtaining the domain name limited the activities of some speculators in the Sunrise period to the high profile generic domains such as city names, sex, poker, banks, football, creditcards etc.
The real exploitation of .eu ccTLD started with the landrush. On the 7th of April 2006, the first day of the .eu landrush, EURid's domain registration system nearly ground to a halt as genuine registrars and phantom registrars tried to register domains. While genuine registrars were limited to one connection, the phantom registrars potentially had hundreds of connections. The result was that many EU citizens and businesses who had waited until the landrush to register their .eu domain found out that it was already registered - often to some EU front company.
According to EURid's year in review report for 2006 (page 20), there are relatively few registrants who own very large numbers of .eu domain names:
|Number of registrants with more than 10 000 domain names||6|
|Number of registrants with 5 000 - 9 999 domain names||18|
|Number of registrants with 1 000 - 4 999 domain names||64|
|Number of registrants with 100 - 999 domain names||1257|
It can be difficult to distinguish between the speculator who is simply trying to register as many generic terms as domain names as possible and the cybersquatter who is registering domains with the intent to sell them back to the rights holder. EURid will not provide access to the zonefile for .eu (essentially the list of registered .eu domain names) and as such it is difficult to see the true extent of the problem. However some clear patterns in registration activity have emerged. The table below shows the top ten hosters, the number of com/net/org/biz/info (CNOBI) domains on their nameservers and the number of detected .eu domains on their nameservers as of 01/March/2007:
As is to be expected, German hosters top the list with the number of identified .eu domains. But then things change - SEDOPARKING.COM features high up in the list. This is where domains are parked with pay per click advertising and traded. Directly below it is Ovidio Limited - a Cypriot company that uses generic domain names as part of a direct navigation network. XSS.RO is essentially another direct navigation network but it has many .eu variants of well known European websites. FABULOUS.COM is another domain parking hoster that provides Pay Per Click advertising services.
Some hosters such as the Cyprus based Ovidio Limited (OVIDIOLIMITED.COM) are primarily .eu hosters with little representation in CNOBI domains. BLIXEM.NL and XSS.RO also show a similar pattern of .eu concentration.
What is sometimes referred to as the Ovidio Syndicate is really three Cypriot companies: Ovidio Limited, Gabino Limited and Fausto Limited. Their domains are spread over three hosters or nameservers: OVIDIOLIMITED.COM (which deals mainly with generic domains); GABINOLIMITED.COM (which deals with gambling orientated domains) and FAUSTOLIMITED.COM (which deals with adult domains). It seems to be specifically targeting generic terms.
Another hoster, the Chinese Buycool.com is also exceptional in that it has a massive difference between the number of .eu domains detected on its nameservers and the number of CNOBI domains:
Buycool.com has been connected to the domain registrant Zheng Qingying, who was involved in quite a number of ADR proceedings and also in a mayor dispute with EURid (details here).