The insane domain landgrab

The applications for new domain names are out, and despite the risk of having their gTLD pitch shot down, companies are stocking up on them.

After over 6 years of international consultation Internet Corporation for Assigned Names and Numbers (ICANN) has finally revealed 1930 applications for new generic Top Level Domains (TLD’s). At the moment there are relatively few TLD’s, 22 in total including the commonly known .com, .org and .net.

In a sense it is as if ICANN was a property developer releasing a large amount of land to be leased, however because the internet is a virtual place this new land was created out of thin air.

This inevitably raises the question, are these new generic  TLD’s worth the very large prices being charged to register them? As with land purchases in physical reality, there is no guarantee that profits will be made from sub-letting this virtual land.

Indeed following through on basic economic logic, the release of new supplies of land with similar characteristics to existing land means this older land could lose value. As an example if new TLD’s such as .CREDIT and .CREDITCARD are approved it could mean that the value of existing domains like creditcard.com will be diminished.

This current round of generic TLD applications has been a long process, starting in January this year and made longer by errors such as the recent data breach.

Of the 1930 gTLD applications 41 had the AU code for Australia including Banking organisations .AMP .ANZ .CBA .COMMBANK .NETBANK .NAB .UBANK, Media .SBS .SEVEN and Cities .SYDNEY .MELBOURNE. 84 were designated as community-based including Tennis Australia’s bid for .TENNIS.

Uncontested TLD’s that survive comment and objection stages are likely to be delegated in Q1 of 2013.

In comparison the 230 TLD’s that were contested by a total of 751 applicants may take years to go through the process which will decide the successful applicant. These contended TLD’s include .APP (13 applicants) .HOME (11) .INC (11) .ART (10) .BLOG (9) .BOOK (9) .LLC (9) .SHOP (9) .DESIGN (8) .CLOUD (7) .HOTEL (7) .LOVE (7) .LTD (7) .MAIL (7) .NEWS (7) .STORE (7) and .WEB (7).

A start-up company called Donuts whose sole purpose appears to be monetising these new TLD’s is notable for making a land grab by applying for the most TLD’s of any organisation at 307 in total. It will be worth keeping an eye on them because their initial cost of applications is almost $57 million, on top of which there will be recurring yearly fees to ICANN for the TLD’s it successfully applies for and operational costs for its activities as a registrar.

Internet giants Google applied for 101 including .ANDROID .CLOUD .DOCS and .SEARCH while Amazon applied for 76 such as .BOOK .BUY and .SHOP.

ICANN representatives  answered many questions during a several hour long press conference held overnight Australian time. Questions included whether this round of generic TLD’s is “expensive and largely a defensive process” and whether “.SUCKS was a useful addition to the Internet or is it corporate blackmail?”.

Rod Beckstrom, President and CEO proclaimed June 13th 2012 as a “a historic day for the internet” while cautioning that these are just applications.  He explained that all applications will undergo a rigorous evaluation process before the decision is made as to which are approved. The initial period to send application comments to evaluation panels for consideration will be open for 60 days.

Beckstrom said that the application process had netted ICANN roughly $350 million in round numbers, which is the estimated total cost for processing all the applications.

Asked by The Guardian whether “sheer cost has been a barrier, for example Africa is very poorly represented in the application numbers”, Beckstrom replied that the application process was a “level playing field”. He emphasised that the $185,000 application & $25,000 per annum fees for each TLD are breakeven numbers and the comment and objection process will allow for anyone to argue against any particular TLD application.

It remains to be seen whether these new TLD’s encourage innovation on the internet as repeatedly stated by Beckstrom or lead to a "profusion of domain names" that will only serve to confuse internet users, as predicted last year by Esther Dyson, a former ICANN chairman, who told a hearing of the US Senate Commerce Committee that the expansion of gTLDs was unnecessary. 

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