Expanded Top-Level Domains Could Spur Internet Real Estate Boom
The organization that oversees the Internet addressing system is pursuing a plan that would significantly increase the number of generic top-level domains (gTLD). There are currently 20 gTLDs, including .com, .mil, and .gov. Plans call for adding as many as 500 new gTLDs per year.
The idea of adding new gTLDs has been discussed for many years, but few have been approved. Now the process is being changed to make it easier to add new names, said Karla Valente, product/services director at the Internet Corporation for Assigned Names and Numbers (ICANN), which manages the Internet's naming system. This change will let larger industrial organizations buy gTLDs for brand and marketing reasons — for example, Canon can buy the .canon domain name. Other organizations that provide email or social media services might use a new gTLD to simplify their user's Web addresses. "The combined marketing benefit and security will be a compelling case for a number of corporations to register their name," said Roland LaPlante, chief marketing officer at Afilias, an Internet infrastructure provider.
The move is expected to significantly grow the size of Internet naming real-estate space. It's also expected to start a rush for new names that could lead to bidding wars and domain-name bubbles as prices rise and collapse.
Don't expect .com to lose its thunder, despite the rush of new names. At least in the foreseeable future, most industry experts believe that .com will continue to lead. "The king is still .com, and I don't see this new rush of names impinging on that franchise," said Warren Adelman, president and chief operating officer at Go Daddy, a domain-name registrar.
New gTLD Guidelines
Initially, the Domain Name System gTLDs included .com, .org, .gov, .mil, and .net. As the Internet took off in the late 1990s, companies scrambled to buy their own .com address, which became the most valuable address space on the Internet. In 1998, the US Department of Commerce sponsored the establishment of ICANN as a private corporation to oversee the Internet address system. ICANN approved the first wave of seven new gTLDs in 2001–2002. It approved five more in 2004.
At the same time, ICANN worked with authorized registries in each country to establish country code TLDs (ccTLD). There are currently 252 ccTLDs compared with 20 gTLDs.
After the first two rounds of gTLD rollouts, ICANN's supporting groups and advisory committees got together to discuss the lessons learned, said Valente. This led to a new policy with 19 recommendations and draft guidelines for submitting a gTLD application. The first applications are expected in 2011, and new gTLD registries could begin operating as early as 2012.
US$500k per Bid
The guidelines let organizations apply for a gTLD in exchange for an $185,000 application fee and a promise to pay a $25,000 annual licensing fee to operate a registry. Other fees involved in preparing the application increase the cost to about $500,000 for the entire gTLD applications process, said LaPlante.
If more than one organization wants the same domain, then the parties have to go through a dispute-resolution process. Brand owners are protected from others registering their trademarks. Other organizations seeking more generic commercial domains, such as .cars, will engage in bidding wars to determine the owner. "One thing this will do," Adelman said, "is make some lawyers wealthy."
Noncommercial organizations would have to make a case for why they should receive a particular domain. If an organization comes in with the endorsement of a community, the gTLD will be assigned through a process of comparative evaluations, said Valente.
Many of the new gTLDs are expected to fit within the existing domain-name industry food chain. TLD registries pay a DNS operator, such as Afilias, to maintain the technical backbone and then work with resellers, such as Go Daddy, to register names with business and consumers. For example, the country of Montenegro worked with Afilias to provide its DNS backbone, then with resellers like Go Daddy to sell individual .me domain names on the open market.
The Value in a Name
Organizations are eyeing new gTLDs for categories relating to movies, radio, and sports as well as causes such as eco and green, said LaPlante. Some cities — for example, Berlin, New York, and Moscow — are also exploring gTLD applications.
Companies that provide URL-shortening services, such as Bit.ly, might choose to acquire their own gTLD rather than relying on a country’s ccTLD. Libya recently booted a sexually oriented URL shortener off .ly. Ownership of a gTLD would give the shortening services more control over their core infrastructure.
New registries won’t necessarily have to become particularly large to meet their goals. "The .cat domain has 45,000 registrations, which is relatively small compared to others," said Pat Kane, vice president of naming services at VeriSign, "But their metric of success is about preserving the Catalan culture online. They've generated more content online since they launched .cat, than in the previous 20 years."
New registries might find differentiating themselves more difficult as more options become available. They'll have to demonstrate unique value to attract Web site developers, said Lance Wolak, director at the Public Interest Registry, which manages .org. For example, PIR is planning to launch internationalized TLDs for representing Cyrillic and Chinese.
Securing the .bank
The addition of new gTLDs could have mixed security implications. McAfee Labs recently studied the relative occurrence of malware across different TLDs. Paula Greve, the lab's director of Web security research, said the new rules might introduce industry-controlled TLDs — for example, .bank — that would be more secure than a .com. Right now, sponsored domains, such as .travel and .edu, are among the safest.
As registrars begin to compete with each other to attract business, they risk attracting malware. But they can improve their reputation through better management policies. For example, .sg went from the number 10 riskiest to number 81 between 2008 and 2009. "A lot of that has to do with how they managed the domain," said Greve.
Ready or Not: Rollout in 2011
Plans call for a smooth, continuous gTLD registration process beginning next year. But this could break down if the initial volume is too high, noted LaPlante. "While ICANN said they will have a rolling processing going forward, there's no guarantee of that," he said. "If they get 1,500 applications in 2011, it will take them a long time to go through that."
In the worse case, ICANN might stumble on unexpected problems that require changing the criteria for future rounds. "That could kick off another 4-5 year review process," LaPlante said. "And there is no guarantee a new round opens or that it will be done quickly."
George Lawton is a freelance writer based in Guerneville, CA. You can reach him via his website at http://glawton.com.