You might think that the typical cybersquatter is a lonely teenager working from his bedroom. Actually, some cybersquatters are large, profitable, and savvy businesses with massive domain name holdings.

Cybersquatters frequently own thousands—or even hundreds of thousands or millions—of domain names, which are typically misspellings or variations of others’ trademarks. Cybersquatters don’t acquire these domain names out of spite or for amusement. Rather, they acquire these domain names to make money. It’s all about the income stream, and if the income isn’t there, the cybersquatter will drop the domain name.

This is how it works: The cybersquatter registers a domain name containing another’s trademark and sets up a website. The cybersquatter displays advertisements on the website on behalf of advertisers willing to pay the cybersquatter anywhere from a few pennies to a few dollars each time somebody clicks on one of the ads. The cybersquatter then counts on the fact that Internet users will type in the cybersquatted domain name into their web browser and click on the ads. Multiply this by a hundred clicks per day, and multiply that by a thousand domain names, and suddenly we’re talking about a lot of money.

Cybersquatters recognize that a single domain name can bring in hundreds of dollars a day, and they capitalize on this by acquiring domain names that will yield substantial user traffic. Often, these are domain names that incorporate misspellings or variations of the best known trademarks. As an example, cybersquatters register more than 2000 domain names every day containing the trademark Microsoft. As another example, over 10,000 domain names exist containing variations of the trademark Coke/Coca-Cola.

While some of these businesses have re-branded themselves as “domainers” in an effort to legitimize their operations, the line between lawful domain name ownership and cybersquatting is not always so clear. And for every supposedly legitimate domainer, there are several outright cybersquatters operating from safe havens in the former Soviet Union or parts of Asia, who register domain names that overtly infringe upon others’ trademarks. Regardless of whether a cybersquatter owns one domain name or 100,000 domains names, its motive is the same: to generate money by trading off the goodwill of others’ trademarks.