Source: Monday, June 20th, 2011

ICANN Vanity Domains: A Caution for Midmarket Firms

The Internet Corporation for Assigned Names and Numbers (ICANN ) says it will drastically expand the number of domain name suffixes with the addition of generic top-level domains (gTLDs).

The move ends a 27-year reign for "dotcom," which has stood alone as the premier domain extension since the inception of the domain name system in 1985.

TLDs are the Internet addresses of Websites, which include 22 of such familiar domains as .com, .org, and .net. There are also 250 country domains that include suffixes such as .uk or .de.

The upcoming availability of generic domains could include words (.money, .movie); acronyms (.AARP, .GOP); or even brand names (.pepsi, .google). Applications will be accepted beginning on January 12, 2012, with the winning applications announced in mid to late 2012.

While this sounds like a great opportunity for midmarket companies, executives will have to think carefully before spending big bucks on a vanity domain.

First off, these gTLDs will not come cheap. It will cost $185,000 to apply for the suffixes; and interested companies need to show they have a legitimate reason for buying the rights to the gTLD.

But the fees don't stop there. ICANN requires a Registry Services Review Fee for $50,000 and a Dispute Resolution Filing Fee that may cost as much as $5,000. If your business fails, "holding costs" of around $75,000 a year will at least secure the rights to that gTLD.

Then there are expected to be bidding wars for popular names, which may take millions to secure and protect. Companies will also be expected to pay out domain maintenance costs to ICANN, not to mention their own internal infrastructure costs for Web servers.

Many midmarket companies will not see an immediate benefit or even a long-term advantage to these new gTLDs.

Search engine expert Danny Sullivan says the new gTLDs will require smaller firms to spend even more to fight cybersquatting.

"Smaller brands -- which are brands nonetheless -- won't be able to afford the names," Sullivan notes in his blog. "Who gets to have hot generic names like .money or .tickets will be decided, to my understanding, solely by ICANN."

As ThinkerNet contributor Chris Minnick predicted two years ago: "Very few Web users care whether this Website is at or www.internetevolution.future (except that the first one is a little easier to type)."

There are advantages to adopting gTLDs. Owning the rights to a "brand-safe" environment, could be an advantage for a midmarket firm.

But if a midmarket company were to jump at the chance of one of these vanity domains, great care would be needed to make sure competitors do not squelch its plans.

If the word .apples were registered by any other company than Apple Inc. (Nasdaq: AAPL), the Macintosh and iPhone maker "could not acquire the rights to own the .Apple extension," said Ben Crawford, CEO of domain name registry in an email exchange.

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