A friend directed SC to this article in Business 2.0 about a man named Kevin Ham, who built a fortune on trading in Internet domain names. Mr. Ham engages in many of the usual practices employed by people who buy domain names by the ton -- ads go up on any page he's got parked until he receives an offer to buy the domain name -- but this is a gentleman who is far smarter than the typical search engine spammer. Indeed, the article opens with a retelling of an auction he attended, where the reporter put himself inside Ham's head to ask the question, "If it's a typo, is it a mistake a lot of people would make?". The fact that Kevin Ham (and his partner Robert Seeman, whose name is on the patent application to be discussed) came up with an answer to that question that nobody else did makes him a very smart man indeed.
The traditional way of making money on other people's typos has been to register domain names which are a letter or two off of sites that people want to visit. The idea is that you'll grab all the "direct navigators" who just idly type in a name and hope something sensible pops up (sort of like putting your car in drive and hoping there's a road ahead of you, and that it goes in the same direction you had in mind -- which is not to say that there's anything wrong with typing an address if you actually know it). For example, newyorktime.com takes you to a site which has nothing to do with the New York Times except that the owner has thoughtfully placed a subscription link for the newspaper near the top of the page (and the rest of it is pretty much a conventional ad farm). "Typo-squatting", as the practice is known, has attracted the hostility of legitimate business for both diluting their trademarks and damaging their reputations by hosting malware (interesting how Google is on both sides of this one). The latter article mentions some interesting research done by Microsoft to systematically trace typo-squatting, and you can read the technical report from Microsoft Research here.
What Kevin Ham and his partners have done is not to focus on typos in the names themselves, but to focus on the domain codes that end every Internet address. The trick isn't to buy up domain names, but to get the domain administrator to redirect traffic for unregistered names to a site you own. And there might not be a richer prize for this typo than the country code for Cameroon -- .cm. The story actually broke almost a year ago, but until the Business 2.0 article, nobody knew who was behind it. As the story notes, this is a nifty legal gimmick that gets around the question of violating trademarks, because you never purchase any misspellings which are arguably the property of someone else (although it should be pointed out that the property rights aren't in the misspelling itself, but in the clearing of a certain edit distance around strings like your own). It's working so well, Ham is working on adding .co (Colombia) and .et (Ethiopia).
It's hard for SC to imagine being the sort of person who mistypes an address, gets a link-farm instead of what he was expecting, and says, "Oh, gee, this looks just as good. Let's click through random ads instead of trying again." Clearly, though, enough people must do this to make it worth Mr. Ham's while, which is not to say that this is the sort of business your host would want to build if he was running a company, especially if he had training in something like medicine. We can get at least one useful piece of information out of the article, though; we're told that he pulls in about $70 million a year , that he gets about 30 million unique visitors a month, and that he has about 300,000 domain names (we'll count .cm as a typo-domain for our purposes, since it doesn't matter what came before that). While the $70M figure includes unspecified "other ventures", we'll assume they're all typo-related, which at least gives us an upper bound on the value of each typo-derived hit. That $70M/year works out to $5.83M/month, and so with 30M visitors each month, that means he's looking at about 19 cents per unique visitor. If you spend a little time playing with the Google AdWord price estimator, you'll find that will buy you first-page Google search placement for an awful lot of words -- like, say, "wedding shoe" (actually, only 18 cents to appear in the 4th-6th positions for that phrase -- such a deal!). According to the article, Kevin Ham is paying about $7/year in overhead to maintain these sites.That suggests that the average Kevin Ham "typo tax" pays off after just 35-40 hits. It's not obvious to SC quite how you would fix this problem from the advertiser's perspective, since the initial error and subsequent judgments are made by the customer, but if you're paying 19 cents for every visitor who would have happily come to your site at no cost to you if only they could type straight, that's got to be worth money to someone.