The Internet is based on the domain name system, which functions as a user-friendly guide to navigate the Internet. Each host computer attached to the Internet has a unique 32-bit Internet Protocol ('IP') address that is separated into a series of four 8-bit groups. Each unique IP address enables users to link with that particular host Web site. Because the average Internet user would find memorizing and identifying numerous strings of numbers a daunting task, however, a more user-friendly system has emerged. Domain names are the now well-known easy-to-remember words, numbers, or phrases that correspond to the hard-to-remember numerical IP addresses.

The domain name system is made up of two domain levels: a top-level and a second-level domain. Top-level domains ('TLDs') include the generic TLDs: .com, .net, and .org. They also include the "country code" TLDs such as ".fr" (France) and ".mx" (Mexico), as well as the newly approved TLDs such as ".biz" and ".info." ( click here for more information about .biz and .info)

Second-level domains ('SLDs') are the words or phrases that appear before the TLDs. For example, in the domain name "submerged-ideas.com," ".com" is the TLD, and "submerged-ideas" is the SLD.

Because each address is unique, two Web sites cannot have the same SLD if they also have the same TLD. In the real world of bricks and mortar, more than one company or person can share a name, but in the cyberspace if the Internet, only one entity can use a name for a .com site. This essential feature of the domain name world drives up the value of a domain name as Internet traffic increases and the "good" domain names are taken.

Domain name registration has had a very busy existence in its relatively short history. The first entity responsible for domain name registration was SRI International, a nonprofit research institute affiliated with Stanford University in California. SRI International took on the responsibility of registering domain names for the newly-born Internet from the U.S. Department of Defense in 1985. Commercial domain name registration began in 1992, when Network Solutions, Inc. ("NSI") signed an agreement with the U.S. government to oversee domain name registration. Over time, concerns about NSI's huge profits from domain name registration and a lack of competition in the field led to the call for a new nonprofit entity to centralize domain name system management and provide a more competitive environment compared to the monopoly position that NSI had enjoyed since 1992. In response to these concerns, ICANN was formed in 1998.

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