The technology media is beginning to buzz over the arrival of designer domain names from the Internet Corporation for Assigned Names and Numbers (“ICANN”), which oversees the development and administration of Internet domain names under your contract with the US Department of Commerce Since these changes may raise significant concerns for our business customers, we explain some of the relevant issues below.
For several years, ICANN has been promulgating rules and soliciting feedback on the use of custom top-level domains (“TLDs”) (read “brand-specific”).[brand] gold .[industry]) in order to expand internet real estate beyond .com and its lesser-used alternatives by December 2009. An applicants guide has approved its second draft. ICANN solicited comments from stakeholders in domain names, including the government, the technology community, current domain name registrars (the database operators that market and rent names), trademark owners (ie i.e. companies) and legal groups that represent them, such as the International Trademark Association. (“INTA”).
At the end of January 2009, ICANN received more than 1,000 comments, many of them highly critical of ICANN for moving too fast to bring this paradigm shift to market and for what some perceive as exorbitant cost. Custom domain names of this variety start at roughly $ 300,000 in ICANN charges and setup fees, compared to the $ 35 annual fee for the typical .com, assuming it’s available.
For example, these custom names would allow an airline to buy .delta or Smith & Wesson to buy .gun, but is there any business advantage to this? Will this scheme produce an additional crop of suffixes that companies must defensively register, as is often done with .net and .org? Simple counterfeits like .kom and .bizz are already prohibited by ICANN rules, but which process or authority will decide whether to assign .delta to the airline’s trademark owner or to its faucet manufacturer counterpart; .austin to the city or car manufacturer; .May to clinic, county, or condiment manufacturer? Can.[your religion] be registered in the name of a non-member or fall into the hands of a group with opposing opinions? Religious leaders have already started to comment. Do legitimate business applicants lose out to cyber speculators who then auction each other? Does the purchase of a custom domain name represent a “deal”, making marketing managers the first to purchase their domain.[brand] gold .[industry] as a back door to expand market share? Should risk-shy managers in this weak economy say “no deal” to an unproven change that depletes already limited funds?
Part of ICANN’s risk analysis should include the effect a change to unrestricted domain names will have on the current list of 14 simple ASCII gTLD suffixes (of which .com, .org and .net account for 91% of all gTLD registries) and approximately 230 two-letter country code ccTLDs. Trademark owners have criticized ICANN’s process so far for failing to provide safeguards or “rights protection mechanisms” to save marks from malicious or fraudulent registrations. In the past, for example, there have been periods of sunrise that allow trademark holders the first opportunity to obtain domain names incorporating their trademarks. Many also wonder if the considerable expense is justified, aside from helping ICANN recoup its $ 13 million in additional expenses for Internet administration. Questions also remain about the effect this myriad of unique domain names would have on search engines. Security experts say that controlling malware and phishing will be more difficult across multiple domains. There are conflicting studies available on the Internet that reach opposite conclusions about whether new domains will be more or less susceptible to being attacked. Most importantly, trademark owners will not only have to keep an eye on someone trying to register their trademark as a top-level domain, but also as a second-level domain linked to it, such as delta.airline or macys.shopping.
As with all things online, we are cautiously optimistic that the market will finally settle the debate over whether new domains are worth their risk and expense. Efficient market decisions depend on knowledge of the market to accurately assess risk. Based on most reviews, it seems too early for business leaders to decide whether custom domain names are a deal, where the benefits outweigh the costs, or there is no deal, where exorbitant start-up costs and Unanswered questions outweigh the potential benefits of the market.