Hello All,
I meant to be a lurker on this list, but have been compelled to comment.
I'll start with an introduction and a few qualifications (qualifications in
the pejorative sense). I am a law/arts student at Melbourne University. I
have no IT qualifications, nor do I work in a field related to IT. I am
currently working on a thesis for Cultural Studies honors focusing on the
architecture of Napster and its effect on cultural consumption. I was once
called "idealistic" on a Marxist mailing list. I never studied commerce or
any related subjects; I have no money.

BUT, it seems to me that the problem with an auction lies in more than just
the devil's details. Obviously such an auction would have to be run by a
private concern who, as mentioned by Mark, would understandably do all that
could be done to inflate prices. Can you imagine what might result? The
value of beef.com.au could be estimated through the roof, a consortium of
people might genuinely believe it to be a good investment, place the highest
bid, and then sit on it until they find a buyer to make their investment
worthwhile. Inflated DNS pricing is the last thing that Australian
e-commerce needs, as inflation leads to collapse and such volatility in the
keystone of the IT industry would not be constructive. I noticed that when
eh-you.com released its prospectus prior to its IPO one of its main assets
was considered to be the Mp3.com domain name. These assets are important,
yet horribly susceptible to hype and notoriously unstable. Auctions are
inherently liable to such hype-er inflation, and as internet hype seems to
have broken records set by the South-Sea Bubble such a process may not be
the best option. Such hype at this stage would be easily fed to the media,
but could be disastrous to the industry. Tinkering with the process could
help, but there's a reason why auctions are most popular with well
established commodities (such as land and livestock). Charles Plott, an
economist and auction theory expert at Caltech was quoted as saying the
problem with auctions is "a mechanical problem, not an emotional one. In any
auction, the person who's unlucky enough to place the highest value on an
item is the person who's going to win. No one's being irrational. It's just
that the winner is likely to be wrong."

I know it's easy to play devil's advocate and pick holes in another's idea,
and I apologise if I come across that way, but I believe these to be genuine
concerns to discuss. Offering the generic names at a fixed price may run
counter to free market ideals, but it would foster an environment where
those ideals could genuinely flourish. That way, individuals can use it for
their own businesses or on-sell at a profit to people who can accurately and
calmly estimate value. These people are more likely to put it to use than
consider it an idle investment.
Obviously the process must be advertised, but the hype would only affect the
number of people stampeding to get the best names, a stampede that should
have been allowed long ago.

James