On July 27th 2016, the purchasing rights of the generic top-level domain, .web, went to Nu Dot Co. The US company bagged the domain for $135 million at the auction and is now allowed to sell .webdomains. The TLD is the successor of the popular top-level domain, .com, which has been in use for many years. This means that many .com domains have already been snapped up and not as many are available.

For the issuing agency, ICANN, the winning bid set a remarkable record in more ways than one; it’s more than triple the highest bid to date and over seven times the average price of a top-level domain. The single sale of the .web suffix also exceeded the total amount of all previous sales put together. The previous record was held by the .shop extension, which the Japanese domain company, GMO Registry, snapped up for $41.5 million in January 2016.

A short BBC documentary explains how domain traders, also referred to as “domainers”, can make hundreds, thousands, or even millions of dollars from buying and selling domains. In this video, find out how some of these entrepreneurs got involved in this big moneymaking business.

Nu Dot Co didn’t agree to a private auction. A private auction would have meant proceeds be divided equally among the losing bidders. Due to failure to agree, the domain was awarded in the form of an ICANN auction. Here, the entire sales proceeds go to the non-profit organization.

Fellow bidders, Radix and Donuts, lodged a complaint with ICANN, in the hope of postponing the auction to a later date. They suspected there had been a change in shareholders behind Nu Dot Co and wanted to unmask their competitors as a shell company of big players in the domain business in order to exclude them from the bidding process. ICANN rejected the complaint after just four days, which seemed unusually fast as the committee had required more than a month to make such a decision in the past.

Donuts, the owner of new top-level domains .business and .company. tried to obtain an injunction against ICANN. Donuts accused ICANN of having violated their business policy and established guidelines. The claim also demanded millions in compensation for lost and future profits of at least 10 million US dollars due to a breach of contract and unfair competition. However, the US court wasn’t convinced, and the auction still took place.

The US company, Verisign, officially confirmed that it was behind Nu Dot Co’s bid and had funds set aside for this purpose. The domain provider already holds the rights to sell the TLDs .com and .net. By acquiring the .web suffix, Verisign is expanding its market power even further. In the report from the third quarter of 2016, Verisign discloses that it has an output totaling ‘approximately $130 million for the future assignment of contractual rights’. The auction price also has to be paid to ICANN in this quarter.