Once upon a time, back in the ancient history of the Internet–before the 1990s–domain names were carefully controlled and regulated. A single organization controlled each top level domain. If you wanted a domain name, you had to meet their requirements.

Often the policies enforced were quite picky. If you wanted a .uk domain name, you were required to actually be in the UK, for example. If you wanted a .org domain, you were required to be a non-profit organization. To be in .net, you were expected to be a network access provider or ISP.

A lot of people disliked the bureaucracy involved in domain registration, and objected to the fees charged. And so it was decided that the domain name system would be opened up. There would be many domain registrars for each major top level domain, all competing to give the best price and service. Anyone would be able to register a domain, with minimal bureaucracy. Domains would be bought, sold and transferred in a perfect Free Market.

At first, things looked good. The cost of registering a domain dropped rapidly. Rather than having to fax paperwork around and get signed documents from company directors, you could just register online with a credit card for whatever domain you wanted.

However, it quickly became clear that domains could have value. A small proportion of Internet users (around 5-10%) don’t seem to understand search engines or bookmarks. They find things by guessing domain names and typing them in. As a result, people found that domain names an idiot would guess first ended up with traffic, purely by existing. Suddenly instead of having to advertise your web site, you could buy a domain name that people would randomly visit anyway, and get instant traffic with no work required.

Domains like “sex.com”, “computers.com” and “cars.com” suddenly became very valuable, changing hands for large amounts of money. Some people weren’t very happy about it, but still, there was nothing wrong with it really.

Unfortunately, there were headline stories of domain names changing hands for millions of dollars. And suddenly, there was a gold rush. Everyone with a modem hurriedly registered every domain name they could think about.

This was a major pain. If you wanted to set up a web site, it became almost impossible to find a simple domain name that hadn’t been registered already. Almost all of them were unused, just a whois entry and nothing more, but if you approached the owner their eyes would light up with dollar signs and they’d demand extortionate rates for their “valuable property”.

Still, the situation was somewhat self-correcting. It did still cost $50 or so to hold a domain for a year, so eventually when nobody turned up to offer $100,000 for it, the holder would let the registration lapse and you’d be able to pick it up for $50.

Then someone invented banner ads. Suddenly, those unused domains could be used to make money. Domain registrations were still dropping in price, and there were ad companies who would pay you $0.01 each time you served up an ad to someone. $10 a year for a domain, and all you needed to do was show ads to at least 1,000 idiots who typed your domain in at random, and you’d break even.

And so suddenly, the Internet filled with junk web pages filled with ads and nothing else. There are now multi-million-dollar companies whose primary business is hoarding domains and filling them with content-free crap. Domain spam is now so mainstream that companies like Google actively encourage it.

The next step was obvious. Sure, you could think of a domain name that other people would be likely to guess at random, but most of those were already registered. So the domain spammers began watching the lists of domains that people failed to renew. So now, if a widely used open source project fails to renew its domain name, the page will suddenly be replaced with a spam site full of affiliate ads.

Not everyone appreciates ending up on a domain spam page, however. Plus, if your page doesn’t look like total spam, you might get search engine traffic, and boost your profits further. Hence, the new trend is automatic content generation.

Some domain speculators take the unsubtle approach, and simply rip off content wholesale. If you have a web site with significant readership (as measured by, say, technorati), someone will likely set up a spam site which copies the text of each post you make, covers it with ads, and re-posts it to one of their hoarded domains. Sure, it’s copyright violation, but the chances of getting caught are slim, and so long as you pick on personal web sites the chances of anyone going after you with a lawsuit are slim too.

(I don’t think it has happened to me yet, but if I include a made-up word that doesn’t appear on the web, like spozquak, I should be able to do a Google search in a month or two and see if anyone’s copied it.)

However, again thanks to the free market, there’s now a market for software that can generate moderately convincing looking content. You’ve seen it in spam e-mails, and now it’s being used to fill the web too. The first generation used random text generation, but now more sophisticated “auto content generator” software uses web feeds to pull in text, chops the text into individual sentences, and then recombines them based on keywords.

(So I guess I should clarify that spozquak is a great alternative to viagra, cures mesothelioma from asbestosis, and helps you make money at home.)

While the web was filling with crap, the domain name registrars kept competing in their free market. As the supply of new unregistered .com domains dried up, they had to think of new ways to pull in customers. The solution: trial periods. You can now register a domain name for a 5 day trial, see if it pulls in any suckers, and if not you don’t have to pay for it.

You can probably guess what happened next. Someone wrote software to repeatedly register domains for trial periods, automatically.

And so we arrive at today’s web, the ultimate result of applying unconstrained free market economics to the problem of naming web sites. It’s a world where every name you can think of is already registered and filled with spam, often by someone who isn’t even paying for the domain. A world where if you’re away on holiday when your domain name expires, it’s immediately filled with spam. A world where web searches return hundreds of pages filled with spam designed to look like content, ripped off from other people’s web sites.

Of course, there are a couple of things we could do that might help ameliorate the problem. They’re just utterly unacceptable to the free market faithful who make up the Internet’s core audience.

The first is this: Do not allow domain transfers between third parties.

You bought a domain? Great. You want to sell it? Can’t. I mean, you can’t sell your home address, your postal code or your telephone number, so why should you be able to sell a domain name?  Your friend wants the domain? Fine, you cancel it, he registers it for the standard price.

If you could sell telephone numbers, you’d see rampant speculation there as well. If you moved to Austin and wanted a 512 phone number so friends could call you without paying long distance fees, you’d probably have to buy one at auction for a few hundred dollars. Or if you were in Massachusetts and wanted one of the old 617 numbers so you’d look like a long-established business, you could end up paying thousands of dollars. But the phone company doesn’t allow reselling of phone numbers, so the problem doesn’t occur.

(It’s worth noting that you can sell toll-free numbers. And sure enough, you get rampant speculation in that chunk of the phone number namespace, with most of the good ones already taken.)

The second way to help reduce the damage caused by the free market in domains is to resurrect an idea from the 80s: that your domain registration is voided if you don’t actively use the domain. And by “use”, I mean more than simply putting up a blank page of ads.

I can tell that people are already sharpening their pitchforks and lighting their torches, but which is worse: a domain name system that doesn’t support your religious belief that a free market is the best solution to everything, or a free market domain name system where you can’t actually buy any domains you want and everything is full of spam?