The Real Truth Regarding Fresh Top Level Domains

Here’s what is really happening with fresh TLDs.

I’ve written ahead of regarding why I’m opposed to how ICANN is releasing fresh top level domain names, even though I stand to benefit financially from the release. But over the past couple months we’ve heard plenty of spin from everyone involved in the process. So I want to clear a few things up. I’m going to tell you what everyone is thinking, but may not want to come out and publicly say.

Fresh TLDs will be introduced – There’s no stopping this freight train. But it can be slowed down. If ICANN were to halt fresh TLDs today, it would be sued. Of course, it will also be sued when it releases them.

Everyone is a ‘special interest’ – Everyone who is fighting for or against fresh TLDs is a special interest, and everyone stands to gain or lose financially depending on what happens. That’s why it was ironic that a letter penned by dozens of fresh TLD supporters called those against them ‘special interests’.

These ‘special interests’ are using the process as an excuse to push their agendas – Beyond the current financial implications for these interests with regards to fresh TLDs, they are using the fresh gTLD process as an excuse to fast track other proposals. For example, the intellectual property interests are trying to push through massive changes to domain registration rules and dispute policies. This is being done without regard to the ICANN policy process. Governments are trying to change rules regarding who can register geo domains, at both the top and second level. It’s like slipping an unrelated, last minute amendment into a bill in Washington.

The IP interests are overstating their worries – I’ve worked in the intellectual property industry. I understand how it works. The goal is to cry that the world is ending. In this case, they say the internet will be overrun by scams, phishing, and cybersquatters if fresh TLDs are introduced. Although it will certainly exacerbate the current situation, the world won’t end.

There will be defensive registrations – Although the IP interests are overstating the effect of fresh TLDs, they will certainly be forced to pay up for defensive domain name registrations. And those proposing fresh TLDs are counting on these defensive registrations for a sizable part of their payday. IP owners may not have to buy their trademarks in every extension, but most. If they don’t, someone will snap up yahoo.tel and heineken.tel and their boss will ask why they don’t own it.

Consultants such as Mark Monitor and Fairwinds really want to see fresh TLDs approved – IP protection firms are acting like they don’t want fresh TLDs. Their clients expect them to advocate against their introduction. But they secretly hope they are introduced, since they’ll make a lot of money working with clients to protect their brands in fresh TLDs.

.Com values won’t be hurt – Recently, a few pro-fresh TLD special interests have suggested that .com domain owners are opposed to fresh TLDs since .com values will drop in their wake. Don’t buy it. It’s especially ironic to hear these words from eNom co-founder Paul Stahura. He suggested someone might buy resume.online instead of buying resume.com. If he really believes this, then his employer Demand Media will lose big money when fresh TLDs are released. The firm is a sizable .com portfolio owner, makes money selling expired .com domains at NameJet, and sells lots of .com domains through its Acquire This Name entity. So unless Demand Media thinks it will make more money selling fresh TLDs than it will lose on its .com holdings…

It’s possible that domain name use will gradually change over time. But I suspect that’s at least 20-30 years off. That’s longer than most people have been on the web.

Newer TLD values may be hurt – Although web users may become more accustomed to typing in non-.com domains, the value of newer TLDs such as .info, .biz, and .mobi will likely be hurt. Although I don’t believe someone would consider resume.online on par with resume.com, they probably would view it on par with these other extensions. The same goes for commercialized ccTLDs. .TV will compete with .video, and .me will compete with .you.

A lot of TLDs will fail – Preparing for registry failure is one of the most notable aspects of the fresh gTLD rollout. I don’t have a lot of faith in ICANN on this matter. Its first plan was to require registries to show that they’ll have enough in reserves to pay for basic registry operations for 3-5 years if they fail. That’s like telling a startup that it needs to shut down when it has only 5 years of capital left.

That stated, we might need to redefine what makes a successful TLD. Many people look at .biz and .info as failures since they didn’t conquer .com. But the $10M + they bring in to their registries each year isn’t chump change.

There are lots of loopholes being inserted into fresh TLD agreements – Once fresh TLDs are released, look for radical changes to be applied to existing TLDs. For example, pricing policies inserted in fresh registry agreements will eventually be applied to .com. ICANN seems to think we ought to trust that VeriSign won’t try to pull this off. ICANN must have a short term memory.

There will be an innovative TLD that could shake things up – Proponents of fresh TLDs suggest that innovation will occur with the release of more TLDs. I agree — there will be one or two innovative TLDs that could make an impact. I don’t know what they are. If I did, I’d be working on it. Unfortunately, no innovative fresh TLDs have been disclosed. They’re all just “label” TLDs. And no, offering software applications to registrants is not innovative. That can be done in the layer above the DNS.

Registries have more to lose in the registry/registrar separation battle – There’s an ongoing battle over ending or curtailing registry/registrar separation. In the near term, registries have more to lose in this battle than registrars. The registrars own the clients, and registries will take a while to catch up.

Consider this. Say grocery stores were forbidden from selling their own store brand products. Then rules are changed to permit it. At the same time, big food brands are allowed to open grocery stores for the first time. The incumbent grocery stores would immediately gain power as they control existing shelf space and client relationships. The brands could build their own stores, but it will take a couple years.

That stated, don’t be surprised to see a merger between a major registrar and a sizable registry. There’s by now some cross-ownership of registries such as Afilias.

Blame ICANN for TLD trademarking – when DNW first wrote regarding how fresh TLD applicants were filing trademarks for their non-existent TLDs, there was a lot of backlash against these applicants. But I understand these applicants’ predicament. They don’t trust that ICANN will not consider the trademarks in the application process. ICANN could put an end to this in five minutes by announcing that TLD trademarks will not be considered. Better yet, they’ll be penalized. Give people 60 days to cancel their trademark applications, otherwise a penalty will be assessed.

We got into this mess since ICANN doesn’t want to be boring – ICANN is supposed to be boring: manage policy and technical underpinnings. But it was founded by smart people. And it has hired a bunch of smart people. Smart people want to be notable. They want bigger budgets and more responsibility. That’s what’s going on here. The Joint Project Agreement suggesting some mechanism for the release of fresh TLDs is the excuse, not the reason, for the introduction of fresh TLDs.

Now, pass the popcorn.