Tasting exacerbated another problem too: Ham’s software grabbed all kinds of typographical variations of trademarked names. Called typo-squatting, it’s a practice now coming under the same intense scrutiny long faced by cybersquatters. Microsoft and Neiman Marcus are just two companies whose lawyers have brought anti-cybersquatting lawsuits, charging domainers with intentionally profiting from variations of their trademarks.
"Tasting changed everything," says Ham, who has since abandoned the practice, though he concedes that Hitfarm still holds some problematic names. "I said, forget it," he says. "Generic names are already too hard to come by. And the legal risks are too great."
The legal risks should diminish, however, if you don’t own the domain names at all — and that’s the secret behind the Cameroon play.
The domain confab in Vegas is like any other trade conference: The real intrigue happens at cocktail hour. One subject in the air is Cameroon. Late last summer, domainers began noticing that something odd happens to .cm traffic: It all winds up at a site called Agoga.com. Domainers know, of course, that .cm belongs to Cameroon. And they know that whoever controls Agoga.com has created a potential gold mine.
What they don’t know is who’s behind it all.
At one of the meet-and-greets, Ham is standing drinkless, as usual, sporting a polo shirt, chatting with a few people he knows and some he’s just met. In this crowd, it seems, everyone wants to know Ham. Finally, he is alone.
Ham looks surprised by the reporter’s question, then flashes a big smile and says, "I had help."
Over a series of conversations a few weeks later in Vancouver, Ham shares some details about a deal that, despite his innate reticence, he’s clearly proud of. About a year ago, he says, he worked his contacts to gain connections to government officials in Cameroon. Then he flew several confidantes to Yaoundé, the capital, to make their pitch. His key programmer went along to handle the technical details.
"Hey," Ham says, flagging his techie down near the office elevator. "Didn’t you meet with the president of Cameroon?"
"Nah," the programmer says. "We met with the prime minister. But we did see the president’s compound."
It’s an odd scene to picture: a domainer’s reps in a sit-down with Ephraim Inoni, the prime minister of Cameroon, to discuss the power of type-in typo traffic and pay-per-click ads. And yet, as with most of the angles Ham has played, the Cameroon scheme is ingeniously straightforward.
Ham’s people installed a line of software, called a "wildcard," that reroutes traffic addressed to any .cm domain name that isn’t registered. In the case of Cameroon, a country of 18 million with just 167,000 computers connected to the Internet, that means hundreds of millions of names. Type in "paper.cm" and servers owned by Camtel, the state-owned company that runs Cameroon’s domain registry, redirect the query to Ham’s Agoga.com servers in Vancouver.
The servers fill the page with ads for paper and office-supply merchants. (Officials at Yahoo confirm that the company serves ads for Ham’s .cm play.) It all happens in a flash, and since Ham doesn’t own or register the names, he’s not technically typo-squatting, according to several lawyers who handle Internet issues.
The method is spelled out in a patent application filed by a Vancouver businessman named Robert Seeman, who Ham says is his partner in the venture and who also serves as chief adviser at Reinvent Technology. (Seeman declined to be interviewed for this story.)
Ham won’t reveal specifics but says Agoga receives "in the ballpark" of 8 million unique visitors per month. Fellow domainers, naturally, are envious.
"As soon as it started happening, there was a huge sense of ‘Why didn’t I think of that?’" says attorney Berryhill, who represents Schilling and other domainers.
Still, several companies have already tracked down Ham’s attorneys, claiming trademark infringement. Ham argues that his system is legally in the clear because it treats every.cm typo equally and doesn’t filter out trademarked names.
Berryhill concurs. "You can’t really say that [wildcarding] is targeting trade-marks," he says. "It captures all the traffic, not just trademark traffic." Moreover, the anti-cybersquatting statute applies only to people who register a trademarked domain; using a wildcard doesn’t require registering names.
Clever though it may be, .cm is "a very small part of our operations," Ham says. He won’t disclose how much he pays to the government of Cameroon, whose officials could not be reached for comment.
The partnership has been a rocky one so far, and the system has sporadically shut down. But .cm is only one of several country domains where the typo play can work. According to Ham, he and his team are working with other governments. The dream typo play — .co — belongs to Colombia, to which Ham says Seeman paid several visits long before they began working on Cameroon. (Citing safety concerns, Ham hasn’t yet made the trip. "I would only go if the president requests to meet me," he says.)
As for other countries he might soon invade, Oman (.om) is an obvious target. Niger and Ethiopia are out there too, but since they would play off less lucrative .net typos, they might not be worth the trouble.
As for Colombia, Ham says, "we’re making progress."
The long view
Ham leans over his office PC to check on a domain auction. Steven Sacks, a domainer based in Indianapolis who works for Ham, is telling him about some names up for sale. Ham shoots back an instant message: "I like doctordegree.com … and rockquarry.com … sunblinds.com."
The days of figuring out the drop are long over. Everything’s open now. Lists are easy to obtain. You can preorder a name before it drops and hope to get it. Or, like Ham, you can shell out five or six figures in online auctions. The only great deals, at least for .com names, tend to happen privately, when a domainer manages to find an eager or naive seller.
Ham still buys 30 to 100 names a day, but he’s no longer getting them on the cheap. In fact, he and Schilling, who today maintains a $20 million-a-year portfolio from his home in the Cayman Islands, are often accused of driving up prices.
Take, for example, the $26,250 Ham paid for Fruitgiftbaskets.com, or the $171,250 for Hoteldeals.com. "The amount he will pay is crazy," says Bob Martin, president of Internet REIT, a domain investment firm that has raised more than $125 million from private investors, including Maveron, the venture firm backed by Starbucks founder Howard Schultz.
Nonsense, Ham says. The names are expensive only if you value them the way people like Martin do. The VCs and bankers, who were late to the domain gold rush, assess names by calculating the pay-per-click ad revenue and attaching a multiple based on how long it would take to pay off the investment.
Viewed that way, Ham’s personal portfolio alone is worth roughly $300 million. But some of Ham’s recent domain purchases would also look silly: They’d take 15 or 20 years just to justify the price, and that assumes continuation of the pay-per-click model.
But Ham is taking a longer view. The Web, he says, is becoming cluttered with parked pages. The model is amazingly efficient — lots of money for little work –but Ham argues that Internet users will soon grow weary of it all.
He also expects Google, Microsoft, and Yahoo to find ways to effectively combat typo-squatting. Some browsers can already fix typos; Internet Explorer catches unregistered domains and redirects visitors to a Microsoft page — in effect controlling traffic the same way that Ham is doing with .cm. "The heat is rising," Ham says.
When Ham buys a domain now, he’s not doing pay-per-click math but rather sizing it up as a potential business. Reinvent Technology aims to turn his most valuable names into mini media companies, based on hundreds of niche categories.
Among the first he’d like to launch, not surprisingly, is Religion.com. Ham recently leased the entire 27th floor in his Vancouver building and is now hiring more than 150 designers, engineers, salespeople, and editorial folks.
Much of that effort is going into developing search tools based more on meaning and less on keywords. "Google is only so useful," Ham says.
The aim is to apply a meaning-based, or "semantic," system across swaths of sites, luring customers from direct navigation and search engines alike. Religion.com would then become an anchor to which scores of other sites would be tied.
"It’s time to build out the virtual real estate," Ham says. "There’s so much more value in these names than pay-per-click." Seeman’s patent application even mentions the possibility of turning Web traffic from Cameroon and other future foreign partners into full-fledged portals.
It’s all part of the master plan, as Ham aims to become the first domainer to move from the ranks of at-home name hunter to Internet titan. Smaller players have been selling out to VC-backed groups, and Ham expects that the best names will eventually be owned by just a handful of companies.
If he bets right, he might very well be one of them. "If you control all the domains," he says, "then you control the Internet."