ICANN Issues Domain Tasting Report
"Domain tasting is a monetization practice employed by registrants to use the add-grace period to register domain names in order to test their profitability," stated ICANN's domain tasting report. "During this period, registrants conduct a cost-benefit analysis to determine if the tested domain names return enough traffic to offset the registration fee paid to the registry over the course of the registration period."
The Add Grace Period (AGP) is a set number of days after a registry operation in which that operation may be reversed and a credit issued to the registrar. Think of it as a return policy on domain names, good for five days after that name is registered.
Domain tasters take advantage of that time to measure existing traffic to the domain (if any) in an effort to only invest in immediately profitable properties.
According to ICANN, the original intent of the AGP was to allow registrars to recover fees to registries if domain names were mistyped during registration, but critics of the process cite a number of issues, including a potential destabilization of the domain name system through excessive operational load on registry systems; the creation of consumer confusion as names quickly appear and disappear, or as users are redirected to advertising or otherwise confusing sites; increased criminal activity such as phishing; and the facilitation of trademark abuse, where existing dispute resolution mechanisms may not be sufficiently timely or cost-effective for trademark holders to use against short-term infringement.
The full report can be read here.