$2 Million Wasted on Economic Studies for Fresh TLDs
Economic studies regarding fresh top level domain names are futile.
Depending on which transcripts I read from the ICANN meeting in Colombia this stretch, ICANN has spent $1 million to $2 million on economic studies regarding fresh top level domain names to date.
This is money wasted. Not just since the notes — particularly the first two — were extremely weak. But since getting an answer will require too many baseless assumptions. In other words, the exercise is futile.
The first two major notes were a joke and seriously tarnished the reputation of ICANN. The first note from Dennis Carlton was a complete whitewash. It was like when firms commission a whitepaper to reinforce their stated point of view and pitch their product. Then ICANN paid more for Carlton to re-evaluate his first note. Not surprisingly, Carlton’s re-evaluation agreed with his first note.
Then ICANN turned to different lead researchers (although through the same main outfit) for another round. The fresh analysis is certainly better than the first. There’s plenty to find at fault with the latest “study”, but I think the conclusions are on target.
So Why is ICANN spending domain registrants’ money on these notes? Since it has to. In an effort to slow down or derail the fresh TLD process, opponents are making what I call the “economic study” argument. They say that the benefits and costs of introducing fresh TLDs must be quantified, or at least shown that the benefits outweigh the costs, ahead of going forward.
This is impossible. We know there are potential benefits. And guaranteed costs. But figuring out what those are is never going to happen in advance of releasing fresh TLDs.
Benefits:
-Money for the domain channel. Fresh TLD applicants make money, registries make money, registrars make money, ICANN makes money, domain bloggers make money from advertisements, and perhaps some registrants make money, too. That creates jobs and wealth. That’s a benefit. But your guess is as good as mine as to what this adds up to.
-A sense of community. Here I’m referring to both localized TLDs such as .nyc as well as — and more importantly — IDN top level domain names. I’d love to see someone try to put a number on what this is worth to the greater good.
-Fresh ways to use the web. Supposedly some people have nifty ways to use TLDs that are outside the realm of what you can do with them today. I haven’t heard any that can’t be done on a plain-old .com. Seriously, I doubt anyone has thought of the killer application. Yet. But some day someone will. And it could be a game changer.
Costs:
-Trademark holders have to spend money defensively registering domains or even feeling compelled to get their own TLD. How much will this cost? Both sides have tried to quantify it. Proponents of fresh TLDs come in really low, opponents say it will cost the GDP of a modest country. The truth is we don’t and can’t know. Consider this: will the cost be different if there are 10 generic fresh TLDs versus 500 fresh generic TLDs?
-User confusion. Lots of people will be confused when they see TLDs they’ve never seen ahead of. They might end up at .com instead. How many people? What will the “cost” be to them? Will they end up getting phished? How much is their time and inconvenience worth? Yeah, put a number on that one.
-Costs to domainers. Fresh rights protections may be abused and use to hurt legitimate domain name owners, even in .com. But then again, .com owners might get a flood of traffic from people looking for the .play equivalent. (I’m counting this as a joke. It’s not like this would actually be considered in an economic note.)
-Legal challenges. A lot of money will be spent on lawyers. ICANN is setting aside a third of application fees for this. And there will be more governmental interference in the web. There’s a chance that ICANN could implode, landing the domain name system in a complete mess and control by another entity. Quantify that.
This isn’t a complete list of the benefits and costs of fresh TLDs. But even with this short list, I think it’s impossible to put a “real” number on it.
