Domain name rule changes – protection racket or golden opportunity?

You may have heard recently that ICANN, the body in charge of running and regulating the net, has approved a major relaxation of the way top level domains are created. (BBC: Internet overhaul wins approval).

While the mainstream press reports proclaimed "The decision means that companies could turn brands into web addresses, while individuals could use their names." the reality is not nearly as rosy.

Currently, there is a very limited range of "top level domains" or TLDs - common ones include .com, .biz, and .net. In addition, every country in the world has it's own TLD, e.g. .uk

Each TLD is run by a "registry" who is responsible for registering and renewing domain names, and maintaining the technical infrastructure that make it's domains work.

For example all .uk domains are registered with Nominet, a not-for-profit company who maintain the registry and the name servers that make the whole .uk domain system work. This is who we pay domain registrations and renewals to. 

Under the new rules approved by ICANN yesterday, any company will be able to set themselves up as registries, and create their own TLD. However this is not a trivial task - it will require an application fee of up to $500,000, plus the technical infrastructure to run the TLD.

Who will benefit?

While no doubt major global companies will purchase new TLDs to protect their names (e.g. .google or .disney), other companies will register generic TLDs, and set up registries which sell domain names ending in their TLD to individual companies. It is easy to see how selling .hotel or .sex domain names is virtually a license to print money.

It appears ICANN will be opening up an auction process for allocating these TLDs - literally a second web goldrush.

The rationale for the decision is that it will make domains clearer for the public, but there are major concerns about the potential for security problems and deception, as it would be virtually impossible for a company to register all possible variations of their names.

In recent years ICANN introduced a limited set of new TLDs - .biz, .info and .name. However none of these has gained a particular amount of traction, other than companies registering them to protect the variations of their .com names - none had the prestige of .com. I can't remember the last time one of our clients asked to to register one.

Impact on small businesses

One major impact on small businesses will inevitably be increased cost, as they have to purchase more domain names in order to protect their names and trademarks. Many business owners see this as a form of protection racket by domain registries - if they don't register the domains, they risk someone else registering them maliciously, or being snatched by a competitor. To quote Ian, "there's going to be an almighty bunfight over domains in 2009".

For example a London hotel would not just have to register hotelname.com and hotelname.co.uk, but also hotelname.hotel, hotelname.london, hotelname.accomm, etc etc etc.

On the other hand it also creates an opportunity - while most businesses won't be registering new TLDs, they could buy "normal" domains with the new registries. It is currently extremely hard to buy simple and descriptive domain names, since most have been registered already. New TLDs open up virgin territory.

New TLDs we expect to see

Big companies

.google
.microsoft
.bbc
.amazon
.yahoo
.disney
.virgin

Geographic

.london
.nyc
.dubai
.paris
.scotland

Generic

.hotel
.bet
.casino
.guide
.mortgage
.medicine
.sucks
.buy
.search
.video
.photos
.web
.dot
.news
.sport
.bank
.email

Filth

.xxx
.sex
.porn

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