Network Solutions Using Questionable Tactic to Sell More Domain Names

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Network Solutions used to be the only place you could go to buy a .com or other domain name. Years ago they lost their monopoly rights and a flood of low priced competitors entered the market. Today Network Solutions is a distant third in market share behind giants like GoDaddy and eNom. The main reason is price. Network Solutions continues to charge $35/year for a domain name, while others charge as little as $8 per year.

Network Solutions continues to make good money on renewals for all the domain names already registered to them (transferring to a new registrar is a pain), but few new customers come their way. Recently, though, they implemented a new “feature” that is designed to force some users to register domains with them.

As of Tuesday, if a user does a search on the site for a domain name, Network Solution immediately registers the domain in their own name. If the user then goes to a discount registrar to register the domain, it shows as unavailable. The user must then either not buy the domain, or go back to Network Solutions and pay their $35/year fee.

So far they’ve registered over 72,000 domain names based on user searches. They are all temporarily assigned a name server of “reserveddomainname” – the number of registrations pointing to this server is public data and can be seen here.

This isn’t costing the company anything, either. Registrars are permitted to register domains for five days without paying any fees to the domain name registry (in this case, Verisign). If they delete the domains after 5 days, which they will almost certainly do, they do not pay for the registration.

The five day grace period is designed to let registrars off the hook for credit card fraud, which is a big problem in the domain name industry. A lot of fraud is discovered very quickly – giving the grace period lets registrars reverse these transactions without getting hit with a fee. The fact that Network Solution is using the grace period to stop users from going to competitors is well outside of the original reasons for the rule. Users are already screaming (we’re getting emails). Expect competitors to scream next, and of course to copy the behavior.

We last covered Network Solutions in October 2007.

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