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Username: RayF
Date/Time: Mon, March 4, 2002 at 3:24 AM GMT
Browser: AOL Browser V6.0 using Windows 98
Score: 5
Subject: Artificial Scarcity


The registrars had to refund dollars accepted during Round 1 to avoid the Round 1 lottery scheme lawsuit.  This left each registrar with 3 options (with the understanding that each had to sign a revised agreement with Neulevel holding them harmless if a lawsuit were to arise as a result of Round 2 - something Neulevel did not require as part of Round 1:

1) resubmit for free the Round 1 requests in a randomized fashion for Round 2
2) erase the slate and do it all over for Round 2
3) not participate at all with Round 2 (and not sign the agreement)

Many registrars from Round 1 chose number 1 above - in essance receiving no pre-registration fees for Round 1 or Round 2., for example, accepted only one request per name in Round 1 yet refunded all dollars and resubmitted the very same Round 1 requests.  From beginning to end, to me this was the proper way to do it.  If each registrar would have done it this way from the very beginning of Round 1 (i.e. no pre-registration fees and fcfs), all of this would have been old history and w/o any lawsuits.  Of course, it would have helped too if Neulevel did not charge their ridiculous $2 pre-reg fee to the registrars but I still do not understand why (most) of the registrars felt a need to turn around and charge $5 for this (60% profit margin for basically doing nothing).

Those registrars that chose number 2 above fell into two categories.  One category were those that accepted pre-reg's for Round 2 on a fcfs basis but did not charge any fees (the correct way).  The second category were those that found creative ways to again charge fees without calling them pre-registration fees.  Most (but not all) of the auction sites are the best example here where an upfront fee was charged just to participate in the auction.  Other registrars subjectively assigned a higher-than-retail value to each of the 39000+ names that had to be paid if registration was successful.  Some charged upfront the  2 year registration fees where a credit would be provided later (not a refund) if registration was unsuccessful.  There were probably a few other variations that fell into this category but none (to me) that appeared to violate the lottery aspect of the Round 1 lawsuit (directly a charging pre-registration fee per name and accepting multiple requests for the same name).

Now, if there were a 100 gTLD's out there (excluding ccTLD's), would anyone really have cared about the .biz Round 2?  Without question, some ICANN accredited registrars instead chose to prey on this.  You can make your own list who these are.


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