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    Auerbach Weighs in for gTLD Lotteries | Log in/Create an Account | Top | 49 comments | Search Discussion
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    Not Quite the End of Pyramid Scheme Discussion :)
    by fnord (reversethis-{moc.oohay} {ta} {k2yorg}) on Thursday April 10 2003, @11:40AM (#11485)
    User #2810 Info
    To your first point, large numbers of sLDs are not in fact used for websites. There are at least two reasons for this. One is that a domain name has a myriad of other uses than just for a website. Domain names were in use long before Tim Berners-Lee et al came up with the HyperText Transfer Protocol. The second is for a number of somewhat related reasons, speculators, defensive registrations, the dotbomb implosion. For examples of domain (mis as well as un)use one could check out some of the work [harvard.edu] of Ben Edelman. Additionally, we are not talking about the same item in an inventory. ICANN controls the root zone, registries control the TLD zone, registrars control the sLD zone, speculators and others control the resale zone.

    To your second point, I submit, and have said so here, on the DNSO GA list, and elsewhere for more than a year now that the pyramid would be, and for some time now has been, collapsing. One need look no further than the tepid response to ICANN's last rollout of TLDs (at the sLD level), or the renewal numbers for existing domains, if one wishes proof of an implosion.

    Finally, you are responding to my, until then, only post regarding Pyramids on this thread, I am not (normailly) Anonymous, so if this is tedious (and I don't find it so), I can only cop to a minority of the tedium. -g

    [ Reply to This | Parent ]
    Not Quite the End of Pyramid Scheme Discussion :) by fnord
    Apologies to Fnord & More on Pyramids
    by lsolum on Thursday April 10 2003, @05:10PM (#11489)
    User #3416 Info | http://lsolum.blogspot.com/
    Fnord's points are all well taken. Of course, many SLDs are used for non-web purposes. Of course, there are defensive registrations. By "inventory" I meant to refer to speculative inventories--and I am happy to adopt Fnord's more precise usage of this term. Further, I apologize for confusing Fnord with the Anonymous poster whose messages I had been responding to up until this point on this issue.

    On the question whether there was a pyramid scheme, it still seems clear that at best there is a loose analogy between the economics of domain name sales and the economics of a pyramid scheme. Here is what Fnord wrote:
      At every step down this pyramid the price goes up, not normally because there is any value added but simply because the seller has control of what has at least the perception of being a scarce resource. In addition at most levels in this chain there are claims made by the sellers about the supposed scarcity, and supposed value, that are at odds with reality (compare this, for example, with pyramid schemes selling snake oil purported to be the cure for cancer or other illnesses). False claims, false scarcity, upping the price at each level without actually adding value, this all smells, or rather stinks, of a pyramid scheme for all practical purposes.

    I want to concede that there are undoubtedly cases of misrepresentation, but this is economically a quite different phenomenon from a pyramid scheme--where each new recruit is told that they must bring in some number N of new recruits in order to recieve the promised payoffs. No one on this thread has given any argument that this feature (exponential growth at each layer of the pyramid) has ever been characteristic of the market in domain names. Perhaps, somewhere, someone was running a true pyramid scheme involving domain names, but none of the phenomena identified by Fnord or the anonymous poster correspond to the characteristics that are criterial for a true pyramid scheme.

    The phenomena that Fnord identifies are charcteristic of a quite different economic phenomenon--a speculative bubble. Speculative bubbles involve inflated claims of value, a lack of correspondence between market price and underlying economic realities, and resale of the same commodity good for higher and higer prices. If Fnord's point is that domain name sales have involved a speculative bubble and that speculative bubbles like pyramid schemes are undesirable, I absolutely agree.Lawrence Solum
    [ Reply to This | Parent ]

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