Risks Remain for IDN Investors

Fresh IDN TLDs may pose problems for second level IDN holders.

For years, domain names were only available in roman characters. Domain names in these characters don’t make a lot of sense to web users who’s primary languages don’t use these characters.

But then so-called International Domain Names (IDNs) using non-roman characters became available. Domainers jumped on board and invested heavily. Many of these domains get solid type-in traffic or have been turned into search engine friendly destination sites.

There’s just one problem: regardless of the language and characters left of the dot, these domains still end in traditional roman TLDs such as .com.

That will soon change. As part of the fresh gTLD process, we’ll see lots of applications for IDN TLDs. This could render existing IDNs less valuable, but many questions remain. In many ways it’s like the mid-90s: there were risks as rules and regulations changed, but there were also big rewards.

If you registered IDN second level domains (non-roman characters left of the dot), you will not necessarily get the “.com equivalent” if it is ever released in a different language. There are a couple reasons for this. First, “.com” doesn’t necessarily translate into other languages and character sets. Second, the .com registry Verisign (NASDAQ: VRSN) may not be awarded the registry contract for .com equivalents.

Even if Verisign is awarded the equivalent, it will be up to the firm to decide how to distribute them. It could decide to automatically forward these domains to the .com equivalent, offer them on a first-come, first-served basis, or offer existing .com holders the right to register them for a fee.

But there’s no guarantee Verisign will be awarded these IDN TLDs even if it applies. Still, in the fresh gTLD process allows firms to challenge applications on the basis of likelihood of confusion.

ICANN’s Director, IDN Program Tina Dam notes, “Keep in mind that the fact that VeriSign does not automatically get to be registry operator to some translated or transliterated version of .com is a policy requirement.” In other words, she states, it was a community decision that ICANN will abide by.

There’s another risk for existing IDN domain owners. The next revision of the IDN technical standards may essentially void some of the characters right now used in by now registered IDNs — even those that were officially approved for use ahead of.

One concern many people bring up regarding IDNs is the potential to trick internet users in phishing schemes. For example, an IDN may look like “Paypal.com”, but the second ‘a’ is actually a different letter that looks similar to the roman ‘a’. This is not likely anymore, since domains can no longer combine two different scripts. Domains that were previously registered in two scripts will not be renewed.

Will risk takers who registered second level IDNs make out like bandits or fall on the “wrong side of the dot”? It’s unclear at this point. A couple IDN investors I talked to stated they aren’t too concerned. They believe Verisign will go following any similar TLDs, and that “fresh .com” translations will be similar to .info and .biz: people who right now type in .com will keep doing it even if it’s in a different script.