Half of all new top-level domains will fail, CIRA says

Internet domain name managers and corporate branding gurus alike are waiting with baited breath for the Internet’s first batch of new generic top-level domains (gTLDs) to be released after a technical glitch delayed the unveiling planned for the beginning of May.

The Internet Corporation for Assigned Names and Numbers (ICANN) is opening up the Internet’s real estate by allowing more private operators to manage suffix registries. Just as Symantec Corp.’s VeriSign Inc. is the owner of the dot-com and dot-net domains, soon many firms will be operating domains named whatever they like. There are currently 22 gTLDs and ICANN is expected to accept between 500 and 1,500 of the more than 2,000 applications received for new Web address names.

After a technical glitch in the application system for the domains was announced April 12 by ICANN’s chief operating officer Akram Atallah, the system was taken offline “out of abundance of caution.” The glitch allowed a limited number of users to view some other users’ names and files in certain situations. ICANN is offering a full refund to those who’d like them as a result, as the process is ultra-sensitive and secrecy is considered paramount.

After collecting $350 million in fees for the new gTLDs, ICANN now plans to reopen applications on May 22 and close them on May 30. It will likely announce the list of applicants about two weeks after that.

“It’s going to dramatically impact the Canadian domain space one way or the other,” says the CEO of the Canadian Internet Registration Authority (CIRA), Byron Holland. “We assume if you add 500 or 1,000 new TLDs to the Internet landscape, we will definitely be up against a more competitive environment.”

ICANN’s governance model to allow private stakeholders to control the new domains is the right approach, he says. Some critics would have preferred a treaty-based system run by national governments, possibly organized by the United Nations. But less government regulation and a more free market approach should lead to more rapid expansion of the Internet, Holland says. Even if that does mean that for the first time in the Internet’s history, consumers will see TLDs fail.

“Just like any other private business starting up, all these new TLDs will have a 50 per cent chance of going out of business in two or three years,” Holland says. “That’s going to be somewhat disquieting to people.”

TLDs are taken for granted by most Internet users, he adds. But if the TLD hosting your domain name server is suddenly pulled, a brand could suffer serious consequences.

At the same time, the new gTLDs will give small businesses an affordable marketing tool to gain global presence almost overnight, according to Naseem Javed, the president of Brampton, Ont.-based ABC Namebank. Because the new TLDs will allow for language character sets that are not English for the first time, businesses will have the opportunity to address the growing number of non-English speaking Internet users.

Small businesses could quickly replicate their ecommerce models in several different local markets, Javed says. “It creates the possibility that smaller companies with a smart idea and a smart name can chip away business from a bigger company.”

While the $185,000 application cost and $500,000 fee to actually operate the new domain puts this option out of reach of a local bakery on Main Street, an industrial bakery shipping pastries out of a warehouse might benefit. Javed compares the cost to running full-page ads in several national newspapers, or renting out a billboard across a highway.

“It’s the most economical, affordable device for small businesses who are already in that category,” he says.

While more recent TLDs like dot-biz have not become as popular as the Web’s prime real estate dot-com addresses, Javed thinks the new batch of addresses will be different. Those applying for the new registries have a better knowledge of how to use branding, he says, and will be able to apply their own purpose to the domains. For example, a digital camera company could award a Web address to every photographer who bought a new professional model camera. Or perhaps a professional organization would limit its domains to those certified to practice in that field.

“It’s being offered as a naming tool, not as a registry to sell to as many cyber-squatters as possible, “ Javed says.

Holland agrees the majority of those vying for registries are interested in conducting legitimate business. But some may be gaming the system to make life harder for other gTLD buyers, applying for a prime address with the intent of getting a payout from a larger organization.

Five-star branding

Business brands that pass ABC Namebank’s five-star rating system will have the best shot at success with a gTLD, Javed says. If you’re able to answer “yes” to the questions below for your brand, give yourself a star.

  1. Is your name easy and simple?
  2. Is your name one-of-a-kind?
  3. Is your name highly related to your business activity?
  4. Is your name globally protectable?
  5. Is your name paired with a matching and identical dot-com?

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