Now here’s where things get a little dicey.  These expired domain cartels have agreements with numerous certified registrars to attempt to snatch up EVERY SINGLE deleted domain name every single day.  Now, each day there are about 25,000 .com and .net domains that expire, and a registrar pays something in the neighborhood of $5 per domain name to Verisign.  So, with a $125,000 bankroll, a registrar can attempt to register every single expired domain name.   However, since so many registrars are on the cartels’ kickback lists, any one registrar probably won’t pick up more than 2000 or so domains.

The offending registrars then put the deleted domains that they scooped up in the cartel’s name, and the cartel places advertising on them.  They sit and watch the traffic and advertising income stats for 4 days.  Any domains that don’t perform traffic-wise, the registrar who grabbed them de-registers them, and gets a refund from Verisign for the $5 that they spent to register the domain in the first place (every certified registrar can get a refund for any domain registrations they make within 5 days.)

These de-registered domains become publicly available again, and a different cartel will scoop them up for a few days to check the traffic.  This goes on until all the cartels are satisfied that there is no traffic or profits to be had from these domains, and the name becomes available once again to the general public.  It is at this point that rubes like you and me find that they are still available, and they were only deleted, like, 20 days ago.  Wow!  What a find!  If you do your due diligence, you may see that there is still PR for the domain at Google.  And back links.  And pages indexed.

However, you can almost guarantee that if you get a domain that recently expired, at least one of the cartels has already tested it for traffic, found it to be unprofitable, and ditched it (at no cost to them, mind you - they got their $5 back from Verisign when they de-registered it.)

So here comes Joe-Bob Marketer, grabbing the expired domain, and putting a site up on it, fully expecting to get at least a little traffic.  And he most likely will, due to existing back links… but that traffic will be coming through a back link on another site, and those people will already have a certain expectation of what they are going to find on Joe-Bob’s site.  When the site turns out to be something else, they leave (remember - if the traffic was good, the cartel that originally snatched it up would have kept it…)
So, Joe-Bob is out 8 bucks. No big deal.  The real problem that hits “the little guy” in this expired domain frenzy comes from the backorder places.  Places like eNom’s Club Drop, Pool.com, and Snapnames.  Because of the existing situation, getting a decent expired domain is extremely hard, and they know it.  So these backorder houses have set up system where you request a domain to be backordered for a fee of $30-$60, and you only pay if they are able to get the domain for you.

Thirty to sixty bucks won’t break the bank, and these places do have a decent chance of grabbing a domain for you, because they are usually working with multiple registrars themselves (Pool.com has a purported 60+ registrars all working to get your domain name for you).  All of these registrars working for the backorder houses means that they actually stand a chance against the expired domain cartels.

The good news is that if your chosen backorder house gets the domain for you, and you’re the only one who backordered that domain, it’s yours for the up front fee you paid.  However, if someone else also backordered the same domain name (yes - they accept multiple backorders for the same domain name), then the domain goes to auction, where you and the other people who backordered that domain name try to outbid one another.  The highest bidder ends up with the domain name… and had paid well more than the original $30-$60… sometimes more than $300.

(continued…)