On Monday, June 20, 2011, the Internet’s governing body approved a plan to
greatly expand the number of generic top-level domains (gTLDs), opening up the
naming process to the general public through a newly developed application
system. Generic TLDs are the Internet extension found to the right of the last
dot in a web address, such as .com, .gov., or .edu. After more than five years
of debate, the Internet Corporation for Assigned Names and Numbers (ICANN),
agreed on Monday to a plan that will allow public or private organizations to
create and apply for any domain name they choose. Currently, the vast majority
of web addresses retain the familiar .com as their gTLD. ICANN’s new proposal
could change all this, making .com domain names a thing of the past for large
ICANN’s newly approved plan to grow the number of gTLDs opens up a number of
opportunities and considerations for brand owners, as it is designed to promote
competition in the domain name market while fostering creativity among
corporations and Internet entrepreneurs. The new gTLD plan gives companies
greater flexibility in how they build their brands and market online. Companies
with multiple websites dedicated to different products or services could
consolidate the addresses under one company-owned gTLD. For example, a company
called Acme Corp. could register .acme as their gTLD, and create multiple web
addresses all ending in .acme. An exclusive brand gTLD could be more memorable
for consumers, and would offer companies the assurance that cybersquatters could
not infringe on the names of future products.
There are additional security benefits as well, particularly for companies
who handle sensitive client information. Customers of online banking services,
for example, would be assured that they were operating on official, secure
websites owned by their financial services company. Beyond banks, exclusive
brand gTLDs can help ensure authenticity, as companies could guarantee that
genuine products are only available from websites in their brand gTLD.
These benefits, though, come at a not-insubstantial cost. Application fees
alone for new gTLDs are $185,000. Beyond that initial outlay, however, there are
additional ongoing costs that come with the responsibility of owning, operating,
and maintaining a discrete portion of the Internet: an annual fee of $25,000, as
well as the cost of maintaining the computer systems required to support the
domain. And if multiple organizations apply for the same domain, the matter will
move to auction, with the high bidder winning the rights to the gTLD name.
ICANN has capped the first round of applications at 1,000. The first
three-month application period begins January 12, 2012, which means that brand
owners still have time to assess the costs and benefits of purchasing their own
gTLD. The group hopes to offer a second round of applications within the year,
but the exact dates have not yet been set. Nonetheless, a number of large
companies have already said they plan to take advantage of the opportunities
presented by the new gTLD application process.
For brand owners who find the cost of purchasing their own gTLD to be too
high, ICANN has built brand protection mechanisms into the application process.
Within two weeks of the close of the application period, ICANN will post the
public portion of the submitted applications. At this point, interested parties
can file formal objections to the request for specific domain names. Objections
must be filed directly with dispute resolution service providers, not with ICANN,
and objectors will be forced to foot the bill for these services.
Nonetheless, the cost of sitting on the sidelines could still be substantial
for brand owners. While brand protection mechanisms exist in the proposed
application process, companies might not want to run the risk of others buying
up gTLDs with similar names and capitalizing on their popularity. There is also
a ban on registering “confusingly similar” names, so a company that waits to
protect its brand might be out of luck if a like-named company makes an
immediate purchase. Wrapping up your company’s name could also reduce future
legal costs associated with fighting cybersquatters.
Brand owners who have not already started planning for life on the Internet
with the new gTLD rules should start thinking about whether or not buying a gTLD
makes sense. Whether or not an owner purchases a gTLD, every owner of a valuable
trademark should calendar the date to check the posted applications (April 12,
2012), to preserve their right to object to third party gTLD registrations which
may tread on their trademark rights. Each brand owner must consider its own
Internet marketing strategy to determine how to best capitalize on this new
opportunity, and to decide whether it can afford to cede online real estate to
those who take immediate advantage of the change.