IQ News: Domain Name Shell Game

The Feds, Not Squatters, Likely To Create Next URL Hell. Earlier this month Bill Markel, a partner at Interactive8 in New York, received an all-too-familiar phone call. The unnamed caller, thinking himself pretty sly, had purchased $30,000 worth of generic-sounding Web addresses that he explained pertained to hosiery and "other common material items," Markel recalls. Not surprisingly, the caller wanted to pedal them off for a premium to a late-to-the-Web brand marketer, hoping that he could begin his bidding with Markel. Markel dismissed the caller. The story is an old one in Web lore, even by offline standards. Looking for a quick buck, a so-called "cyber squatter" stockpiles domain names, buying them from the government-designated distributor, Network Solutions Inc., Herndon, Va. for only $100 a pop. Then the domain-name owner turns to a company for which he owns the cyber-address--say, MTV--and uses the address as a ransom, demanding a fee many multiples higher than what he paid. Despite a policy overhaul last year by NSI (now registrants have to prove that their intention behind obtaining a particular Web domain is for a purely wholesome business purpose; also, registrants are no longer permitted to stockpile domain names) stories still abound from agency account directors and brand marketers alike that piracy continues. And many industry pundits believe it will only get worse if, as proposed, the Clinton administration expands the roster of generic top level domain name suffixes, or GTLDs as they're called, to include designations such as ".store" or ".firm." As is often the case for policies of government intervention, the current proposal calls for more layers of bureaucracy, says Linda Goldstein, an attorney who chairs the advertising, marketing and promotion department at New York firm Hall Dickler Kent Friedman and Wood. If the plan by presidential Internet policy consultant Ira Magaziner is approved, come this January companies would have to go to an assortment of independent registration agencies in order to obtain a new GTLD that applies to their business. The government's goal of deregulating domain name distribution could have a seismic impact on digital marketing. "It gives squatters more places to go to hold up brand names," Goldstein believes. "The more GTLDs, the more difficult it is for a marketer to manage [its] brand." Protecting company trademarks gets thornier still when you consider the global implications of the medium and the fact that the World Intellectual Property Organization has proposed a similar plan calling for seven new GTLDs to be recognized here and abroad. In the past, companies looking to protect their trademarks have either negotiated directly with a cyber pirate, as in an early case with McDonald's, or through the courts, as with Hasbro and its classic board game Candyland. Since the passage of the Federal Trademark Dilution Act in 1996, companies have had a great deal more success in the courts securing domain names that reflect their trademarks. In fact, McDonald's was unsuccessful in its court bid to gain control of mcdonalds.com because the case was heard prior to the Act's passage and therefore, say experts, no legal precedent existed. The law isn't foolproof though, especially in cases where both sides can make a legal claim to a trademark. After protracted legal wrangling, Compaq Computers this month purchased the altavista.com address from the owner of Alta Vista Technology Inc. (ATI), a San Jose, Calif. software company, for a whopping $3.35 million--widely believed to be a record for domain name price tags. The search service has been operating under the cumbersome digital.altavista.com domain since its 1995 launch when it was a division of Digital Equipment Corp. For now, the Digital brand lives on as the search service won't open up shop at its new address until mid-September, says Kathleen Greenler, director of marketing for the Littleton, Mass.-based AltaVista. The move is timely as AltaVista continues its strategy to beef up its service to compete against fellow portal players Yahoo, Excite and Lycos. "A simple, recognizable, memorable" domain is crucial to the strategy, especially if it wants to attract Web newcomers, Greenler says. "From a branding standpoint, I think any company that's trying to establish itself as a strong brand has to have an easily understandable domain name." Simply put, a distinct domain for AltaVista should translate into more unaided Web surfers reaching the search service, Greenler adds. Keds, the Lexington, Mass.-based footwear brand, had to settle for kedsfeelgood.com for its Web site debut in March. Keds.com had already been claimed by a software company, Knowledge Express Data Systems of Berwyn, Pa. Without elaborating on the issue, Mary Obana, vice president of marketing for the shoe marketer, says the software company is no longer permitted to use the keds.com Web address (Network Solutions states the domain is "on hold"). She adds that the shoe company is optimistic it will be able to obtain keds.com in the future. "The key thing is obviously making it as easy as possible for consumers to find you," she says, adding that the company is mulling over a common practice among marketers: registering for a variety of related Web addresses and linking them to a common site. Nonetheless, Obana says the kedsfeelgood.com site has been an effective means of establishing the brand position online. The address has been tagged in its ongoing advertising campaign since March, which includes the brand's biggest television buy ever. Other marketers, such as AT&T, M&M/Mars and Barnes & Noble, will never get a Web address that matches their brand name. When the Web computer language, HTML, was being written the ubiquitous ampersand was never recognized, forcing such companies to devise new online nameplates. The candy maker went with m-ms.com. The bookseller opted for the 14-letter barnesandnoble.com. Interactive8's Markel jokes his agency specializes in the "ampersand companies." His clients include AT&T, M&M/Mars and A&E Television. And he counsels them to think of their brands in terms of .com. "We believe the dot-com brand awareness is where it's at," Markel declares. After all, if it's difficult to ascertain a brand's domain name, it ceases to exist in the wired consumer's mind. To avoid this complication, M&M plasters its Web address on all its packaging, in-store displays and offline ads in an effort to make m-ms.com as memorable as the traditional M&M. It's doubtful the candy maker would emblazon the m-ms.com moniker on the hard-shelled candy itself. But one thing is for certain: the innocuous suffix is becoming crucial to a brand's identity online and off. "Brand marketers are now including dot-com in all their trademark protection policies," Goldstein says.

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IQ News: Domain Name Shell Game

Bernhard Warner

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Bernhard Warner