According to Bob Parsons, 35 million domain names were registered in April. I trust him - GoDaddy’s one of the biggest registrars on the block, so they probably have their facts right.

Compared to a few years ago, this is a manifold increase. Surely, this is a good sign - a growing number of sites and so on.

Not so. The vast majority of these domains are NOT paid for and in reality are used by unscrupulous registrars to earn PPC (pay-per-click) traffic. This means that over 30 million are never paid for, yet none of them are available to the public, i.e. you and me.

Here’s how the scheme works: any registrar can leave a deposit at Verisign (more on Verisign here) which allows it to purchase domains up to that deposit’s limit. There’s a 5-day money-back period in which the registrar can cancel the domains it purchased. What happens is that registrars continually cancel domains on the 5th day just to register them again immediately after. The only limit is the size of the deposit, a $6,000,000 one takes care of a million domains being permanently “kited” by a registrar.

Case in point (provided by Bob):

Consider the case of a little-known registrar with a Miami, Florida address known as Domain Doorman LLC … [it] registered more than 11.5 million domain names in April 2006, but only permanently registered — or paid for — 68.4 thousand of those. This same discrepancy occurred in March as well. Doorman registered 4.8 million names, but only permanently registered — or paid for — 40.4 thousand.

Unfortunately, ICANN has had no comment. Until this practice stops, non-registrars (you and me) will have to settle for 25-letter-long domains. On top of that, we do need to pay to keep them. Not a level playing field by any standard.

Note: Originally posted at SmartApps