Regardless of whether a domain name is legitimate, the economics of registering it are the same.
The registrar makes money. The registry that manages the top-level domain under which the name is registered is also paid. The Internet Corporation for Assigned Names and Numbers — the organisation that oversees the Domain Name System — gets a cut of the registration fee as well.
And for illegitimate domains, the moneymaking doesn’t stop there.
Many registered domains are “parked” at advertising services or intermediary portal sites that automatically populate pages with links to ads. For instance, microsotf.com takes you to such a page. Click on a link, and another page will appear with ad links to specific vendors, including Microsoft itself.
The amount of money that a cybersquatter can make using a misspelling like microsotf.com “would vary widely depending on the name,” says Ron Jackson, editor and publisher of Domain Name Journal. “With a well-known trademark like a Microsoft, where so many people are trying to get on a given day, a good typo — meaning one that a lot of people would make the error of typing in — could generate thousands of dollars a month.”
A cybersquatting site based on the name of a lesser-known brand might make only $10 per month, according to Jackson. “But some of these guys might hold tens of thousands of domains,” he says. “If it costs them $10 a year to register a domain, and if they make $5 or $10 a month multiplied across thousands of domains, it becomes a significant amount of money.”
Even though the only way to monetise such domains is by getting payments from upstream advertising services, that doesn’t necessarily mean the services and the advertisers they represent are complicit with the domain owners.
Ad-streaming services “will make an attempt to try to police [cybersquatters], but they have so many millions of domains in their system that it can be difficult,” Jackson says. He adds that many cybersquatters go through intermediaries, such as the companies that park domain names on their portals.