What are Parked Domains and Typosquatting?
Domain parking is the practice of registering a domain name and holding onto it without any intention of using it. Domain parking is usually for the purpose of selling the domain name to someone else who wants it and is willing to pay more than the basic registration fee. Domain names are the words and phrases used in website addresses, like bobology, in bobology.com, or google in google.com. A good domain name makes it easy for people to remember, which can help a business or website be successful.
Purchasing or registering a domain name
There aren't any special requirements necessary for any individual or organization to pay to register a domain name. Domain registrars like GoDaddy or Network Solutions (two of the largest domain registrars) and several hundred organizations are authorized to register a domain. While many people refer to purchasing a domain, domain is “registered” for use from one to several years, and is renewed by paying the annual registration fee. After a user or organization registers a domain, it becomes theirs to use as they see fit.
When a domain is “parked” and not in use, the domain registrar usually displays a web page with a website under construction message.
Buying and selling domain names
Domain registration isn't expensive, with typical one-year registration fees about $12-15 a year. Many registration services offer discounts on the first year of registration with prices advertised as low as 99 cents for the first year. Since the cost to register a domain name is pretty inexpensive, people quickly determined that if they registered a domain name with a useful word or phrase, such as furniture.com, when someone came along that wanted the domain name furniture.com, it could be sold for a profit, often for thousands of dollars.
In domain parking for profit, a person buys one or more domain names that they think will be of value in the future and hopes that whoever wants them will make them an offer to buy them. For example, if a new technology is emerging, like drones, someone could purchase domain names that include the word drone in anticipation of people or businesses setting up websites that wanted the word in the domain name. Here's an example of how this works, let's take a business called Drone Monster that's just starting out.
While the name “Drone Monster” might be available through government agencies necessary to register the business, when the business looks to claim a domain name they might find “dronemonsters.com” already registered but not in use, meaning it was “parked.” The company can contact the domain name owner to see if the domain is available for sale. Domain parking is such a common practice that third party brokers act as listing services to list domain names available for resale, much like real estate brokers list houses for sale.
Other reasons for domain parking
There are other reasons to use domain parking, one is for planning, and the other is for brand name protection. Let's look at planning first.
In planning a business launch, creating a name that's catchy and easy to remember can make a difference in the success of the firm. Many business owners take the precaution of registering a domain name at the same time they create the name of their business. So domain parking is valuable for anyone planning to use a domain name who wants to reserve the name. It can even be used by companies planning to launch a new brand and want to reserve a domain name for their product or service before the announcement. If the business or organization doesn't end up setting up a website with the domain, they can let the registration lapse, and the domain name will become available to anyone else after the registration period expires.
Another use for domain parking is to protect how a brand name is used on the Internet. Businesses and organizations with brand names or trademarks often register variations of their domain names to prevent the use of these different versions by others. Anyone who accidentally types in the incorrect domain name is sent to the correct website. Many website owners use this method to catch people who make a typo and would otherwise go the wrong site.
Here's a real example; if you type in google.com incorrectly, with three o's instead of two, you'll still end up at the correct google.com website. John Oliver of the show Last Week Tonight registered variations of the credit reporting services as equifacks.com, experience.com, and tramsonion.com. Organizations frequently register mistyped versions of their domain names and park them to prevent this type of activity; to prevent others from registering the name and doing what's called “typosquatting.”
What recourse do organizations have?
Trademark holders of a trademarked name have the ability to file a complaint with the World Intellectual Property Organization (WIPO). WIPO is a United Nations organization and is assigned responsibility by the Internet Corporation for Assigned Names and Numbers (ICANN) to resolve any disputes involving domain names. ICANN is the organization that manages domain registration and authorizes domain registration services.
The bad side of domain parking
You can see why people dislike domain parking: it essentially wastes domains for a long time. If no one makes an offer to purchase and use a parked domain name, the person who owns the domain will just keep holding it for a minimal cost and never put up a real website. Parked domains can be quite frustrating to anyone who wants them, especially if they represent nonprofits and other groups that might not have the money to pay for the domain they want.
Domain parking is not illegal, but many people consider it to be unethical because it uses some resources for a selfish motive. In some cases, they take the domain and fill the associated website with a bunch of ads and spam, and might even be accidentally spreading malware.
To my way of thinking
Almost everyone has heard the realtor's phrase “location, location, location” when it comes to the value of a piece of property and the same is true of the Internet. A domain name can be the difference between success or failure on the Internet. With the Internet a destination almost everyone uses, the best domain names are the premium locations and have a value all unto themselves.
Websites
WIPO http://www.wipo.int/portal/en/index.html
ICANN https://www.icann.org