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ICANN has issued this advisory to make the community aware of certain changes in the marketplace concerning the rights to expired gTLD domain registrations. In the past two weeks, two registrars have announced plans to begin directly selling or auctioning expired domain registrations.
On 20 September 2004, Network Solutions announced the introduction of a "New, Enhanced Backorder Service that Provides Preferred Access to Expired Domain Names," < http://www.networksolutions-customerfeedback.com/pressreleases.html#20040920>.
This followed Tucows' announcement on 7 September 2004 of a similar, new "Auction Service for Expiring Domain Names," <http://resellers.tucows.com/about/press/abc_viewPressReleasesPy?ID=press74&year=2004&ACTION=View>.
In broad outline, both registrars have announced that they intend to auction the rights to domain names in the event that registrants fail to renew them at the conclusion of a grace period following expiration. Instead of names "dropping" back into a "pool" of names available for re-registration on a first-come, first-served basis, names would instead remain at the current registrar and would be re-assigned to the control of the highest bidder.
These registrars have modified their agreements with registrants to secure the registrants' consent to auction the names. Under both the Tucows and Network Solutions proposals, the prior registrant would receive a share of the proceeds of the auction. (In Tucows' case, approximately 80% of the auction price is returned to the prior registrant; NSI proposes to distribute 20% or less to the prior registrant.) Tucows has also proposed a variation of this auction model that would operate at the registry level and would allow all registrars to participate as auction "brokers" for their customers.