Reglikedomain industry desk

Fresh Economic Study: Limit Fresh TLD Rounds To Measure Effects

Fresh ICANN-sanctioned note suggests limiting fresh TLD application rounds in order to collect more data.

ICANN has published its latest hired economic note on the costs and benefits of introducing fresh top level domain names. Unlike the last note from a different author, this one lays out clear logic rather than just playing to the hands of ICANN.

It is a well reasoned note that lays out the truth regarding the costs and benefits of fresh TLDs, and comes to a conclusion I’ve repeated many times: there’s no way to accurately predict the costs and benefits of fresh TLDs.

Following discussing many possible studies that could be undertaken to try to determine costs and benefits, the authors conclude that doing so would largely be a waste of time. Instead, the authors suggest a staged approach to fresh TLDs to get a better read on the cost/benefit equation:

First, it may be wise to continue ICANN’s practice of introducing fresh gTLDs in discrete, limited rounds. It is impossible to predict the costs and benefits of fresh gTLDs accurately. By proceeding with multiple rounds, the biggest likely costs—consumer confusion and trademark protection—can be evaluated in the earlier rounds to make more accurate predictions regarding later rounds.

Second, in order to derive the greatest informational benefits from the next round of gTLD introductions, ICANN ought to adopt practices that will facilitate the assessment of the net benefits from the initial rollout of additional gTLDs. Specifically, ICANN ought to require registries, registrars, and domain names registrants to provide information sufficient to allow the estimation of the costs and benefits of fresh gTLDs. For example, there might be mandatory reporting of trademark disputes.

The note does an excellent job summarizing previous studies on fresh TLDs. Here’s one tidbit I wasn’t ware of — each fresh TLD introduced in the 2000 round underperformed its forecasts:

The number of domain names registered in the fresh open gTLDs was far less than each registry had projected during the application stage. The .info registry had 39 percent of its projected registrations as of the end of 2003, while .biz had 61 percent, and .name had just two percent.

If I have one criticism regarding the note, it’s that it references studies undertaken by parties with an economic benefit from the introduction (or not) of fresh TLDs, and doesn’t note these conflicts.

Still, this is a step in the right direction.

Also on the wire

Other reporting from the domain desk.

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