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CPSR Newsletter Vol 18, Number 3
Volume 18, Number 3 The CPSR Newsletter Summer 2000

Understanding a Domain Name Policy Gone Wrong by Christian Sandvig

Few ever stop to think about the powerful incentives that can be unleashed by the creation of a property right. This is a story about computers and property rights, and a plea to start thinking about them. [1]

Twenty years ago, when the Internet consisted of about 20 interconnected research networks, of which ARPANet was the oldest (Leiner et al, 1998) it became painfully clear that for each computer to have a unique name was impractical as the words left available for new nodes became scarce. In 1981, a system of "name domains" was proposed (Mills, 1981). [2]

Two years later, the engineers under government contract to develop the network proposed the establishment of six top-level domains (TLDs). [3] "The motivation," explained a memorandum, "is to provide an organization[al] name that is free of undesirable semantics." (Postel & Reynolds, 1984 p. 1). If an organization had over fifty computers, and could demonstrate that it possessed the technical ability to manage its own network address table, it could register with the publicly-funded Network Information Center at no charge (p. 5). The organization would choose one of the six TLDs, and pick a unique word within that domain to identify itself (e.g., "stanford" within the TLD "edu").

Provision was also made at this time for the use of two-letter TLDs based on the International Standards Organization Codes for the Representation of Names and Countries: United States = us, France = fr, Japan = jp, etc. (p. 7). This second system tied to physical places would prove slow to develop, and comparatively unpopular.

As this process developed, it seemed to be a clear-cut technical matter. The network continued to grow over the next decade, and after the advent of the World Wide Web in 1992, its existence began to creep into the public’s awareness. Over time, two additional TLDs were added: "net" for computers of network service providers, and "int" for organizations "established by international treaty" (Postel, 1994 p. 2). The DNS architects perceived that everything had been resolved, permanently. In 1994, an engineering document proclaimed boldly, "It is extremely unlikely that any other TLDs will be created" (p. 1).

In January of 1993, NSF privatized the domain name system by granting little-known Network Solutions, Inc. a five-year contract to provide registration and other DNS-related services (Network Solutions, 1993). Network Solutions was to administer domains under the "generic" (or non-geographic) TLDs "gov", "edu," "com," "net," and "org." Procedures to transfer the domain names between parties had been in place for some time, cementing the nature of the names as commodities--if something can be exchanged, it can be bought and sold. At the time, no one predicted that this somewhat arcane technical addressing system, government contract, and its related fees would soon become so important.

A New Real Estate Born

The popularity of the Internet rose dramatically in the mid-nineties. Commercial enterprises began to pour onto the network, and every business wanted a name for itself. By 1997, one million unique words (or combinations of words, like "americascheeseexperts") were registered as second-level domains under by Network Solutions. Three years later, ten million domains have been registered (Network Solutions, 2000). [4]

Industry began to realize the value of these domain name "properties," in a marketplace that was termed "cyberspace real estate" (Aguilar, 1996). Corporate interests with deep pockets began to buy not only a domain name for every product line they carried, but also any word they might conceivably have need of in the future. In one example, consumer-product giant Proctor & Gamble "...launched a flurry of domain name registration[s]...that included not only many of its prized brand names, including and, but also a host of generic names, like and" (Dunn, 1996). The company collected over 100 names in all (including "diarrhea" and "pimples") in a manner that the press termed a "land grab" (Aguilar, 1996).

Scarcity has drastically inflated prices above the $50 fee initially charged by Network Solutions. Brokers often set "minimum bids" of $500, while at the upper end of the spectrum, several agreements have been reached for amounts over $1 million. Table 1 lists a sample of domain name sales reported by the press that were considered noteworthy at the time reported.

Table 1. Sample domain name sale prices considered noteworthy by domain brokers at the time of offering.






















* Price offered, not taken.
Note. Figures from Hakala & Rickard, 1996; ".com," 1996; Wingfield, 1996; Lee, 1999; Pollack, 1999; Associated Press, 2000.

With Property Comes Power

During the explosion of "cyberspace real estate," it was clear to some that there was little reason for the present scarcity of the ethereal domain names. A monopoly by Network Solutions on the basis of a U.S. Government contract seemed increasingly unreasonable. In the controversy that ensued at the end of the 1990s, the ending of Network Solutions monopoly and protection of the rights of property owners took center stage,[5] rather than the ending of scarcity by increasing the number of available TLDs (cf. Froomkin, 1999).

It is extremely illustrative that the debate surrounding this issue was phrased as a battle for "the control of cyberspace," although control over the handful of generic top-level domain names does not imply actual control over the network--only over the ability for data to reach hosts registered under those domains (Harmon, 1998).

The discursive framework surrounding property rights is so prevalent in our culture that this issue seems to be one of crucial control, even if it is of less technical or practical significance. In examining the case of the Internet’s DNS, we see an example of the largely unintended creation of property on a grand scale, and surprise then being expressed by many parties at the actions of actors in the system who are merely following incentives set up by the system. Reliance on property as a model is so natural to us that it permeates our lives and we immediately consider speculation in Internet address codes to be speculation in "real estate." These domain name registrations are merely agreements to direct data to specific computers upon receipt of a series of words and punctuation characters. They have no physical form, and are transferred among owners by asking the registering body that they be transferred. Yet the price of the registration fee (which, even at the lowest prices found today, some have described as arbitrarily high considering the actual work involved by the registrar) is multiplied many times because of the evocative, symbolic, or connotative meanings corporations hope these names will bring them. By instituting a structure for these names based on a property system of commodification, just as occurred in radio, non-profit, non-commercial users are relegated to second-class Internet addresses because first, they are priced out of the system of value and second, those who secure a domain name first can reap the monetary rewards as value accrues to the name due to scarcity.

Throughout history, regulators of communication technology have often assumed that full utilization of a scarce resource could only be realized by sufficiently capitalized and expert private entities. At the end of 1998, U.S. officials had reached the same conclusion about the Internet: the private sector would administer name registration, as envisioned by a Department of Commerce (1998) proposal (also see Clausing 1997a, 1997b, 1998c; U.S. House of Representatives, 1998 pp. 203-300). In 1998, the director of the American Intellectual Property Law Association testified approvingly before congress that:

any effort to design the Internet of the future should involve...a recognition that the private sector is best equipped to administer and maintain the domain name system...we are pleased that the [Department of Commerce] Green Paper is largely consonant with [this] principle...(U.S. House of Representatives, 1999a p. 236)

The creation of an impartial international body (The Internet Corporation for Assigned Names and Numbers, or ICANN) was advanced to organize the system that would evolve, but the primary goals of the system would be to protect two property interests: the property rights of current domain name holders, and the property rights of those who hold another type of property, the trademark.

The Dangerous Overlap of Trademark

Trademark law provides a form of property ownership that overlaps the ownership of domain names in the DNS. After the heady speculation of the early days, courts of many nations have begun to apply trademark rights to the DNS, ICANN implemented a dispute resolution policy to address claims by trademark owners, and in the U.S. a 1999 amendment to the Lanham Act provided statutory relief for "bad-faith" registration of trademarked names. Concerns of trademark holders are often cited to quash proposals to introduce additional TLDs to alleviate scarcity (U.S. House of Representatives, 1999a p. 216, 258; 1999b p. 213).

In this manner, a major goal of domain name policy has been the protection of trademark property rights; yet this goal as it has been addressed is irrational when considered in a broader context. First, direct conflation of trademarks and domain names makes little sense: domain names have fallen into the role of a directory system, and this combined with scarcity drives much of the inflation in value noted earlier. In even a small local area, company and service names are not expected to be unique (Mitchell, Bradner, & Claffy, 1997 p. 264); this is why trademarks are justifiably limited to geographic areas and (ideally) particular product types. Generic TLDs, on the contrary, are not limited by product domain or by geographic area. More important, however, the Internet has more than one function. While it may be an emerging electronic marketplace, it is also a medium for a broad range of other forms of communication, and these different forms of communication imply different policy goals (Heiskanen, 1999 p. 34). Even if we acknowledge that the protection of intellectual property rights such as trademark is a legitimate goal of government regulation of the marketplace, the Internet can be more than a marketplace. Any given word or string that might be registered as a domain name might be conceptualized in a commercial context, but it might also be used in another way. In the U.S., when policy about domain names assigns trademark rights priority, the interests of non-commercial communicators are trampled. [6]

We can see, then, that the trademark property right in this instance only accelerates the force of the marketplace to consolidate control among those with capital--the capital and legal resources to register trademarks in many countries and enforce them through lawsuits. [7]

While we imagine that the Internet is not like the one-way media of the past, the dominant frame of policy debate to date places the user of the Internet as a consumer of commercial messages, exactly like television and radio. [8] As the President of the International Trademark Association testified before the U.S. congress:

The fundamental how to protect consumers’ interests in locating the brand or vendor of their choice on the Internet without being misled or confused, and how to protect companies from having their brand equity eroded or commandeered in an electronic environment. (U.S. House of Representatives, 1999a p. 243)

Alarmingly, even those on the opposite side of the debate from corporate interests use the language of consumerism (e.g., Ralph Nader’s objections to ICANN; see U.S. House of Representatives, 1999b p. 134). Broadly, many objections to a corporate agenda are more often phrased in terms of consumerism than as appeals to the interests of "citizens" or "the public."

This Result is not Inevitable

Property rights have been constructed in the domain name system of the Internet, with preference is being given to those that own another form of property: trademark. The grand hopes many have held out for the Internet’s future do not seem compatible with a network where participation devolves quickly into a question of what properties you own, and what purchases you intend to make.

The power of grand assumptions about the marketplace and property is great, particularly in the United States--it is an imperative that we now learn to step outside these assumptions. It is still possible to construct a communication system that excels where past media have fallen short, meeting our goals--whatever they may be. A communication system organized around the ownership of various forms of constructed property and dominated by the interests of the owners is not the best result, the inevitable result, or even a more rational result; it is instead the default that will persist if we do nothing. One can only hope that it is not too late to set our goals for the Internet independent of the property structure now in place.


[1] This material is excerpted from "Welcome to 1927: The Creation of Property Rights and Internet Domain Name Policy in Historical Perspective" presented to the CPSR Symposium on the Directions and Implications of Advanced Computing, May 2000. An earlier version of this paper was presented to the Union for Democratic Communications on June 13, 1998. I would like to thank Ted Glasser, François Bar, Elissa Lee, Hernan Galperin, Karin Wahl-Jorgensen, and Larry Bensky for their comments and inspiration.

[2] For a broader overview and background, see Mills (1981), Su & Postel (1982), Mockapetris (1983, 1987), Postel (1983, 1994), and Postel & Reynolds (1984). For a discussion of Internet histories, see Guice (1998).

[3] The six domains were: government (gov), education (edu), commercial (com), military (mil), organization (org), and older DARPA hosts (formerly "arpa").

[4] The domain "" was formerly registered by Kraft Foods, but has now lapsed ("Top," 1996).

[5] Note that although this is a discussion of the portion of the debate that has already occurred, this controversy is ongoing, and these issues remain at the center of it as of this writing.

[6] Even very well-reasoned proposals to reconcile the DNS with trademark interests assume the Internet is a marketplace, and only a marketplace-subject to no other goals (e.g., cf. Burk, 1995; Gigante, 1997; Nathenson, 1997; Shaw, 1997)

[7] This is not to say that courts always side with trademark-holders, but rather that any resort to court proceedings tends to advantage those with financial resources.


Aguilar, Rose. (1996, October 29) "Net Realty For Sale." [,4,4896,00.html ]. C|NET NEWS.COM, The Net.

Associated Press. (2000, January 31) " domain sells for $3 million." New York Times, Cybertimes.

Burk, Dan L. (1995) "Trademarks Along the Infobahn: A First Look at the Emerging Law of Cybermarks." Richmond Journal of Law and Technology 1(1). [ ].

Clausing, Jeri. (1997, August 15) "The Public Jumps Into the Domain-Name Dispute." New York Times, Cybertimes.

____. (1997, September 6) "Ad Hoc Group Takes Up Technical Issues of Domain Expansion." New York Times, Cybertimes.

____. (1998, January 30) "U.S. Releases Report on Governing Internet." New York Times, Cybertimes.

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Gigante, Alexander. (1997) "‘Domain-ia’: The Growing Tension Between the Domain Name System and Trademark Law." IN: Kahin, Brian & Keller, James H. eds. Coordinating the Internet. Cambridge: MIT Press, 136-153.

Guice, Jon. (1996, July/September) "Looking Backward and Forward at the Internet." The Information Society 14(3). 201-211.

Hakala, David & Rickard, Jack. (1996, October) "A Domain by Any Other Name." Boardwatch.

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Heiskanen, Veijo. (1999, May) "Commercial Concern vs. Public Interest: Reconciling the Internet Domain Name System and the Protection of Intellectual Property Rights." Helsinki, Finland: Institute of International Economic Law, University of Helsinki. Manuscript in preparation.

Lee, Jennifer. (1999, July 15) "For at Least Some Domains, There's Money in the Names." New York Times, Cybertimes.

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Mitchell, Don, Bradner, Scott, & Claffy K. (1997) "In Whose Domain? Name Service in Adolescence." IN: Kahin, Brian & Keller, James H. eds. Coordinating the Internet. Cambridge: MIT Press, 258-270.

Mockapetris, P. (1983, November) RFC 882: Domain Names--Concepts and Facilities. [ ]. Internet Engineering Task Force, Network Working Group.

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Postel, Jon. (1983, November) RFC 881: The Domain Names Plan and Schedule. [ 80/in-notes/rfc/files/rfc881.txt ]. Internet Engineering Task Force, Network Working Group.

____, and Reynolds, J. (1984, October) RFC 920: Domain Requirements. [ ]. Internet Engineering Task Force, Network Working Group.

____. (1994, March) RFC 1591: Domain Name System Structure and Delegation. [ ]. Internet Engineering Task Force, Network Working Group.

Shaw, Robert. (1997) "Internet Domain Names: Whose Domain is This?" IN: Kahin, Brian & Keller, James H. eds. Coordinating the Internet. Cambridge: MIT Press, 107-134.

Su, Zaw-Sing, and Postel, Jon. (1982. August) RFC 819: The Domain Naming Convention for Internet User Applications. [ ]. Internet Engineering Task Force, Network Working Group.

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United States Department of Commerce. (1998, January 30) A Proposal to Improve Technical Management of Internet Names and Addresses: Proposed Rulemaking Discussion Draft. [ ].

United States House of Representatives, Committee on Science, Subcommittee on Basic Research and Subcommittee on Technology. (1998) The Domain Name System, Parts I-II. 105th Congress, Serial no. 78. Washington, D.C.: GPO.

____, Subcommittee on Courts and Intellectual Property. (1999) Collections of Information Antipiracy Act; Vessel Hull Design Protection Act; and Internet Domain Name Trademark Protection. 105th Congress, Serial no. 115. Washington, D.C.: GPO.

____, Subcommittee on Oversight and Investigations. (1999) Domain Name System Privatization: Is ICANN Out of Control? 106th Congress, Serial no. 106-47. Washington, D.C.: GPO.

Wingfield, Nick. (1996, May 4) "What’s in a Name?" [,4,1257,00.html ]. C|NET NEWS.COM, The Net.

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