IQ News: Closeup - Masters of Their Domain

Domain registrar dotTV and the island of Tuvalu are counting on the dearth of dot-coms. What do Madonna, the White House and Brad Pitt have in common? Besides celebrity, none own the dot-com domain names that bear their famous monikers. In fact, if the house at 1600 Pennsylvania Avenue or the Material Mom ever wanted to claim their namesake URLs, they'd have to haggle with Dan Parisi, an Internet porn vendor who owns their Net "spaces." Meanwhile, the future Mr. Jennifer Aniston would have to place a long-distance call to Khalid Alzarooni, a United Arab Emirates citizen who had the foresight to register BradPitt.com as well as a tabloid worth of celebrity names before anyone got wise. While most VIPs caught in this predicament could probably sue under a U.S. law that prohibits cybersquatting, a cheaper option might include calling dotTV (DotTV.com is an Internet entertainment site). The Pasadena, Calif.-based domain registrar, which goes live today, is staking its future as well as the financial fortunes of Tuvalu (pronounced too-VAH-loo)--a 16-square-mile island group consisting of nine coral atolls and 10,600 inhabitants in the South Pacific, and the proud owner of the domain name "tv"--on the premise that every marketable second-level dot-com address has already been registered. Currently there are about 16 million domain names registered globally, according to the Internet Corporation for Assigned Names and Numbers (ICANN), a Los Angeles-based nonprofit entity granted authority by the U.S. Government to coordinate the technical management of the Internet's domain name system. That number is expected to explode to 150 million by 2003. Parties interested in registering a nongeneric dot-tv URL can log onto www.dot.tv, enter a desired address with the dot-tv suffix and a return e-mail address. DotTV registers nongeneric domain names on a first-come, first-served basis for $1,000. The registration fee increases 5 percent annually, according to Lou Kerner, CEO of dotTV. Generic second-level domains, which use common words, are auctioned off on the site, with opening bids ranging from $4,000 to $1 million, depending on interest. The winning bid represents the first year's registration fee, which increases 5 percent annually as well. While dot-coms have become a household term, Kerner believes that saturation in the space is keeping many entrepreneurs and businesses from maximizing the true value of the Internet. "We're cleaning the [Internet] slate," said Kerner. "DotTV registrars not only get the most recognizable two-letter symbol in the world, it is also meaningful in regards to what the future of the Net is going to be." To Chris Clough, vice president of corporate communications for Network Solutions, a Herndon, Va.-based Internet domain registrar, the notion of a saturated dot-com playing field is a cyber myth. "There's a dot-com registered every five seconds," said Clough. "The only [dot-com] limitation involves the creativity of the registrants." Clough said that more than 30 percent of all dot-coms in existence were registered during the first quarter of this year. While Kerner believes the average dot-tv site name will sell for about $10,000, current top bids on the site include $100,000 each for Free.tv, China.tv and Net.tv. By contrast, Philipps.tv and Italia.tv sold for $4,000 and $5,000, respectively. A typical dot-com registration fee can run as low as $35. When the Internet "land" grab began in the early '90s, the focus was on five generic top-level domains (TLDs), including dot-net, dot-gov, dot-edu, dot-org and dot-com. In addition, each country was granted a two-letter TLD in accordance with their United Nations symbol. This suddenly made Tuvalu a prime target for entrepreneurs looking to establish a monopoly in cyberspace. With an economy based largely on the production of stamps and fishing licenses, the Tuvalu government was open to new revenue streams. Enter Jason Chapnik, a Toronto-based computer entrepreneur who, after making more than one trip to the capital of Funafuti, secured the rights after promising the Tuvalu government that he had a significant financial backer. When Chapnik's primary backing failed, he approached idealab!, a Pasadena, Calif.-based Internet incubator, which quickly became a majority shareholder in the newly formed corporation. Tuvalu, which was represented by Wilson Sonsini Goodrich & Rosati, a Palo Alto, Calif.-based law firm, would receive payments of $1 million each quarter for the next 10 years. "They were quite sophisticated in how they went about crafting the transaction," said Kerner. The deal is capped at $50 million, or seven times the country's GDP, according to Kerner. What new owners of dotTV real estate do with their property is as varied as personal interests, said Kerner. Some look to launch businesses, while others see a head start on a level playing field. Others see an investment in rich media. "Since every good site on the Internet is going to feature streaming video, [having a dot-tv address] represents a compelling way to communicate that capability to the world," said Kerner. "It doesn't matter if you're a real estate company or a mining company." Network Solutions' Clough applauds dotTV's attempt to increase market demand for Internet space, calling it "a good thing," though he wonders whether the TV symbol will limit the domain's reach. "It would seem pretty restricted to broadcast and TV productions," he said. "I don't know how that helps other businesses." While Tuvalu wasn't the first country to sell its UN ticker to businessmen waving fistfuls of cash, few of those deals have ever produced their promised riches. "What people have gotten used to saying, hearing and typing is 'dot-com,'" James Korris, executive director of University of Southern California's Entertainment Technology Center, told The Los Angeles Times. "For most people, dot-com means a Web address. With all due respect to the people of Tuvalu, I'm not sure [dot-tv is] an idea that's going to take." But Kerner disagrees. He says ICANN hasn't issued new TLDs for some time, despite industry scuttlebutt regarding possible authorization of "dot-shop" and "dot-law" at ICANN's next meeting in Yokohama, Japan, July 14-17. "They won't have much of a global impact," he said. An ICANN spokesperson said the agency had no comment on dotTV.

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IQ News: Closeup - Masters of Their Domain

Erik Gruenwedel

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Erik Gruenwedel