Master of Their Domains

With 1,900 TLDs being snapped up, the marketplace is bracing for either a bonanza or a bust

Get ready for Reveal Day. On June 13, the international organization in charge of Internet domain names and addresses will reveal the companies and organizations around the world that have applied for more than 1,900 top-level domains (like dot-com, or dot-net) at $185,000 a pop. Currently, there are only 22 generic TLDs approved by the International Corporation for Assigned Names and Numbers.

While the application process for new Internet top-level domain names was messy and contentious, just wait. The worldwide implementation of new TLDs by Icann could be far worse, creating a migraine for marketers and a bonanza for lawyers.

Reveal Day will either be a new opportunity for brands or an opening for cybersquatters and counterfeiters to erode brand equity. It’s all up to Icann. Following its review of the applications, the first batch of new top-level domains could hit the Internet in a year.

“We’re talking about a 100-fold increase of domain names,” said Josh Bourne, a managing partner with Internet consultant FairWinds Partners, which applied for about 100 TLDs on behalf of brand clients. “Icann has to get this right.”

Bourne estimates that about one-third of the applicants will be brands (dot-Canon, dot-Hitachi, dot-Google are known examples). But as president of the Coalition Against Domain Name Abuse, Bourne is worried about the other two-thirds exacerbating cybersquatting.

Prior to Reveal Day, a number of companies announced applications for hundreds of generic TLDs that will likely operate as open registries. For example, Go Daddy applied for dot-home. Domain registrar Radix spent $30 million to apply for 31 names such as dot-baby, dot-doctor, dot-bank, dot-movie and dot-store, and a new registry startup named Donuts paid $56.8 million for 307 generic names.

Brands will need to be on the alert and decide if they want to be aligned with cities or names like dot-bank or dot-food. “If I were eBay, I would be looking for dot-auction. If I were General Motors, I would look for dot-autos,” said Alexa Raad, CEO of Architelos, a TLD and registry consultancy. “The value will be the business model behind it and what market the generics are going after that will determine if it’s an opportunity or competition.”

Brands and organizations will have 60 days to shape the opinions of the Icann reviewers or launch objections if they think a TLD infringes on their brand or intellectual property.

“The comment period is significantly important,” said Theo Hnarakis, the managing director of Melbourne IT, which filed 146 applications for brand owners. “There hasn’t been enough done to protect brand holders. Some of these generics are made to be monetized by brand holders registering second-level names.”

Brands that applied for TLDs are hoping the changed business model, yet to be tested, will pay off. It’s easy to imagine major sports franchises (think Major League Baseball or the National Football League) using TLDs to create a closed neighborhood for all the league teams and their licensed products; auto companies looking to create a closed network of their dealers and partners; retailers grouping their outlets; or banks wishing to create a more secure environment. It’s a no-brainer to figure out that Google will create channels under dot-YouTube.

Icann’s reputation is on the line. “If things go wrong, it will scare businesses and hurt legitimate TLDs,” predicted Dan Jaffe, the evp of the Association of National Advertisers, which advocated that Icann put in more protections for brand owners and to scale down its plans. He added, “In enormous uncertainty, caution is called for.” And a lot of lawyers.

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