Risk
of Portfolio Approach to Cybersquatting
Alex Tajirian
September 26, 2009
A secret weapon is falling into dangerous hands.
Organized cybercriminals are building up portfolios of cybersquatting
domain names. A smart operator with such a portfolio can go beyond
simple stealing and competing full out for traffic and revenues.
Rightful brand owners, feeling the squeeze, will find out too late
that the bandits have the money to fight legal action. The time
to act is now, before pieces of the playing field have been bought
up by the enemy.
Portfolios are a ticket to the domain-name big
time. They drop per-site operating cost, make possible portfolio
risk diversification, and give the name owner more muscle in
negotiating a share of parking revenue. If the owner links related
key words across domain names, portfolios allow easy consumer travel
from site to site. And if the owner is especially intelligent, portfolios
yield one key final advantage. Operating a constellation of sites
and products allows the owner to sift consumer information from
a variety of sources, and multi-sourced information can yield a
fine-tuned picture of consumer preferences. With such a picture
to lock on to, the owner can escalate his or her traffic and revenues.
The opportunity is there for anyone who owns a portfolio—and
no one believes that criminals ignore opportunities.
For legitimate brand owners there will be a string
of bad news. Higher monitoring costs, wider brand dilution, increased
potential product liability from defective imitations. Costs for
acquiring domain names will go up because the criminals may not
need immediate liquidity.
When brand owners try legal action, the criminals
will have the money to resist. When brand owners shut down a criminal
site, the pirate operator will be able to shift the cross-linking
to another set of domain names.
If brand owners try to do business with the portfolio
pirates, the wrong side will have the upper hand. Convincing them
to join your branding network will become more costly because of
their market power. If a pirate sells a portfolio, the cost per
name will be higher because of the advantages that come from a complete
set. And of course the criminals will operate untaxed.
The only good news for brand owners will be the
lower cost of negotiating with one party instead of a dozen.
The decision to take action is strategic,
not legal. The different approaches to tackling cybersquatting are
outlined in "Reducing
Cybersquatting, Phishing."
Topic tags: cybersquatting
Connect & Share
   
|
