In the DAWN 4 release notes, it is mentioned that account names shorter than 12 characters (the max) will be disabled until a proper pricing mechanism is added. Will there be a bidding process for short, premium names? What will the pricing formula look like if it isn't an auction but rather first come, first serve?
The full text of Name Squatting section in the Dawn 4 release notes is as follows:
Due to the limited development time between now and the release of version 1.0 of the EOSIO software, we are going to recommend that all account names be forced to 12 characters and not contain any ‘.’ characters. The community can then upgrade the system contract (without hard fork) once a viable pricing and anti-name-squatting policy is identified. We will likely provide a model similar to BitShares where account names are priced by length and character content.
The text makes it clear that Dan will be leaving it up to the community to decide how to handle name pricing due to the limited amount of time before the mainnet launch in < 30days.
His last sentence gives you an idea what a solution might look like by modelling it after BitShares. This is also similar to how domain registrars put a premium on .com domains with few characters.