What ICANNâ€™s Domain Name Expansion Really Means
Last week, ICANN, the regulatory body for Internet names, announced a massive of expansion of gTLDs (generic Top Level Domains) from the current 22 to a virtually unlimited range of possibilities. No longer bound by such familiar extensions as .com, .gov, .net, and .org, the new gTLDs can include virtually any name imaginable â€“ a product, a city, a company, a person, whatever.
In its announcement, ICANN said, â€œWe have provided a platform for the next generation of creativity and inspiration.â€ Below the surface, however, there may be more practical reasons for the sweeping change. For one thing, by April 2011, there were close to 95 million .com addresses alone. These addresses are obtainable simply by purchasing them from a designated registry source for no more than ten bucks or so per year. That makes .com names accessible to just about anyone, including those who buy up scores of them with the intent of reselling them at a profit. Clearly, that doesnâ€™t sit well with ICANN.
Another problem is fraud. Over the years, legitimate marketers have been increasingly concerned with the unauthorized use of brand names in domain names, or domain names which seem like they might be legitimate but really arenâ€™t. This has encouraged counterfeiters to have a field day on the Internet.
Finally (and we always knew it would come down to money), the new Internet names provide huge revenue potential. ICANN will start accepting applications for new names in January 2012 â€“ but if anyone wants one, a name will cost a cool $185,000 just for starters. That doesnâ€™t include a projected $25,000 or so each year to maintain the name â€“ plus maybe another $50,000 annually for technical support. ICANN also intends to screen applicants so carefully that they will spawn a whole new cottage industry by outsourcing claims for adjudication. Names wonâ€™t even be approved until the end of 2012 or later.
What the expansion really means is that only the biggest players with a really big stake in their brands will have the financial resources to buy one of these pricey new domain names. But some of them are already figuring out how to make money off of ICANNâ€™s decision. New York City, for example, wasted no time announcing that â€œ.NYCâ€ would be purchased. But hereâ€™s the catch, according to the cityâ€™s official statement:
â€œOnce approved, this will allow for the addition of a dot New York City suffix that will be operated by a private vendor and be made available to New York City businesses and residents.
This is a fantastic opportunity for the New York City establishments that will now be able to secure their online presence with a top-level domain name, and for the City of New York, which will benefit from the millions of dollars in revenue dot NYC will generate.â€
What do you know â€“ at least in this case, it looks like ICANN (intentionally or unintentionally) is facilitating a new form of municipal tax!
The debate about the new names is already raging, and it wonâ€™t cool down anytime soon. On the negative side, Shiv Singh of PepsiCo told the Wall Street Journal,Â â€œI am keen to see how other brands adopt it, because this will only succeed if it has critical mass adoption among companies.â€ Josh Bourne of FairWinds Partners, a firm that advises clients on domain name purchases, asked the question, â€œWhat can you do with .coke that you canâ€™t do with coke.com?â€
On the positive side, Jeff Ernst, a Forrester Research analyst, said,Â â€œFor brand presence, why be subservient to dotcom? Starbucks might want to create a community of coffee lovers at .coffee. Itâ€™s going to enable a lot more customer intimacy for companies.â€
One has to wonder what ICANN really expected would happen, given the outrageous price tag of a new gTLD. At the end of the day, it sure seems that this decision is more about cash than it is about creativity.