Normally when a users enters an invalid domain name they will receive a 4o4 page not found error, however by applying a method called wildcard DNS, users will instead be shown a landing page containing mostly ads.
Yahoo is powering the sponsored listings and the advertising arrangement should provide sizable revenue for the Time Warners ISP. Yahoo has several similar arrangements with domain aggregators which similarly allow advertising on unused domain URLs; this deal will considerably extend Yahoo's much needed advertising reach in the U.S.
You may remember that VeriSign did this in 2003, redirecting all bad .com and .net URLs. A move which affected nearly every internet user and enraged many online communities eventually pushing VeriSign to reverse the change. Since then the user acceptance of advertising-only websites has grown. Time Warner might skirt criticism because of its smaller footprint and cautious implementation. A key difference is that Time Warner allows a simple, non-intrusive way to opt-out of the wildcard DNS.
Although some customers are offended; it can be expected that other ISPs will eventually follow suit in the pursuit of top-end revenue. From my vantage point, this reinforces the value of the search engine, a place where the majority of users already start their daily internet routine.
David Rodecker is the President of RelevantAds, a search engine optimization company that delivers highly targeted search result placements and provides specific solutions in getting local businesses online.