Domain names are hostnames that provide more easily memorable names to stand in for numeric IP addresses. They allow for any service to move to a different location in the topology of the Internet, which would then have a different IP address.
Each string of letters, digits and hyphens between the dots is called a label in the parlance of the domain name system (DNS). Valid labels are subject to certain rules, which have relaxed over the course of time. Originally labels must start with a letter, and end with a letter or digit; any intervening characters may be letters, digits, or hyphens. Labels must be between 1 and 63 characters long (inclusive). Later it became permissible for labels to commence with a digit (but not for domain names to be entirely numeric), and for labels to contain internal underscores, but support for such domain names is uneven. These are the rules imposed by the way names are looked up ("resolved") by DNS. Some top level domains (see below) impose more rules, such as a longer minimum length, on some labels. Fully qualified domain names are sometimes written with a final dot.
Translating numeric addresses to alphabetical ones, domain names allow Internet users to localize and visit web sites. Additionally since more than one IP address can be assigned to a domain name, and more than one domain name assigned to an IP address, one server can have multiple roles, and one role can be spread among multiple servers. One IP address can even be assigned to several servers, such as with hijacked IP space.
Internet Corporation for Assigned Names and Numbers has overall responsibility for managing the DNS. It controls the root domain, delegating control over each top-level domain to a domain name registry. For ccTLDs, the domain registry is typically controlled by the government of that country. ICANN has a consultation role in these domain registries but is in no position to regulate the terms and conditions of how a domain name is allocated or who allocates it in each of these country level domain registries. On the other hand, generic top-level domains (gTLDs) are governed directly under ICANN which means all terms and conditions are defined by ICANN with the cooperation of the gTLD registries.
Domain names which are theoretically leased can be considered in the same way as real estate, due to a significant impact on online brand building, advertising, search engine optimization, etc.
A few companies have offered low-cost, below-cost or even free domain registrations, with a variety of models adopted to recoup the costs to the provider. These usually require that domains are hosted on their site in a framework or portal, with advertising wrapped around the user's content, revenue from which allows the provider to recoup the costs. When the DNS was new, domain registrations were free. A domain owner can generally give away or sell infinite
sub domains of their domain, e.g. the owner of example.edu could provide domains that are
sub domains, such as foo.example.edu and foo.bar.example.edu.
As domain names became attractive to marketers, rather than just the technical audience for which they were originally intended, they began to be used in manners that in many cases did not fit in their intended structure. As originally planned, the structure of domain names followed a strict hierarchy in which the top level domain indicated the type of organization (commercial, governmental, etc.), and addresses would be nested down to third, fourth, or further levels to express complex structures, where, for instance, branches, departments, and subsidiaries of a parent organization would have addresses which were sub domains of the parent domain. Also, hostnames were intended to correspond to actual physical machines on the network, generally with only one name per machine. However, once the World Wide Web became popular, site operators frequently wished to have memorable addresses, regardless of whether they fit properly in the structure; thus, since the .com domain was the most popular and memorable, even noncommercial sites would often get addresses under it, and sites of all sorts wished to have second-level domain registrations even if they were parts of a larger entity where a logical sub domain would have made sense (e.g., abcnews.com instead of news.abc.com). A Web site found at http://www.example.org will often be advertised without the "http://", and in most cases can be reached by just entering "example.org" into a web browser. In the case of a .com, the web site can sometimes be reached by just entering "example" (depending on browser versions and configuration settings, which vary in how they interpret incomplete addresses).
An internationalized domain name (IDN) is an Internet domain name that (potentially) contains non-ASCII characters. Such domain names could contain letters with diacritics, as required by many European languages, or characters from non-Latin scripts such as Arabic or Chinese. However, the standard for domain names does not allow such characters, and much work has gone into finding a way around this, either by changing the standard, or by agreeing on a way to convert internationalized domain names into standard ASCII domain names while preserving the stability of the domain name system.
IDN has, by the standards of the Internet, a long history; it was originally proposed prior to (by M. Duerst) and implemented in 1998 (by T.W.Tan et al). After much debate and many competing proposals, a system called Internationalizing Domain Names in Applications (IDNA) was adopted as the chosen standard, and is currently, as of 2005, in the process of being rolled out.
In IDNA, the term internationalized domain name means specifically any domain name consisting only of labels to which the IDNA ToASCII algorithm can be successfully applied.
An economic effect of the widespread usage of domain names has been the resale market for generic domain names that has sprung up in the last decade. Certain domains, especially those related to business, gambling, pornography, and other commercially lucrative fields have become very much in demand to corporations and entrepreneurs due to their intrinsic value in attracting clients. In fact, the most expensive Internet domain name to date, according to Guinness World Records, is business.com which was resold in 1999 for $7.5 million. Another high value domain name, sex.com, was stolen from its rightful owner by means of a forged transfer instruction via fax. During the height of the dot-com era, the domain was earning millions of dollars per month in advertising revenue from the large influx of visitors that arrived daily. Two long-running U.S. lawsuits resulted, one against the thief and one against the domain registrar VeriSign. In one of the cases, Kremen v. Network Solutions, the court found in favor of the plaintiff, leading to an
unprecedented ruling that classified domain names as property, granting them the same legal protections. In 1999, Microsoft traded the valuable name Bob.com for the name Windows2000.com which was the name of their new operating system.
One of the reasons for the value of domain names is that even without advertising or marketing, they attract clients seeking services and products who simply type in the generic name. Furthermore, generic domain names such as Rent.com or Books.com are extremely easy for potential customers to remember, increasing the probability that they become repeat customers or regular clients.
Although the current domain market is nowhere as strong as it was during the dot-com heyday, it remains strong and is currently experiencing solid growth again. Annually tens of millions of dollars change hands due to the resale of domains. Large numbers of registered domain names lapse and are deleted each year. On average 25,000 domain names drop (are deleted) every day.