New Top-Level Domains Create Fear, Uncertainty and Doubt, Part 2
In part one of this series, I discussed ICANN’s new top-level domains (TLD) program and how it's a complex issue with great potential gains for those who do it right. As with any big change, we’re seeing a great deal of fear, uncertainty and doubt. Fortunately, some of the common myths are easily clarified. How do these distinct TLD types stand up to concerns about cybersquatting, exclusivity and mass confusion?
Myth No. 1: gTLDs will spark mass cybersquatting. Advocates of new generic top-level domains (gTLDs) view a .brand domain as a marketing game changer, but the program has also attracted criticism from advertising associations claiming new gTLDs will unleash mass cybersquatting. Online trust is a huge issue for brand owners, but the argument that new gTLDs will lead to some kind of free-for-all doesn’t make sense. Here’s why:
- New TLDs cost $185,000 just to apply, not $9.99. Completed applications are expected to be 300 pages and require demonstration of the financial and technical ability to run a registry. The average domain speculator has nowhere near the resources necessary to win a new gTLD bid.
- ICANN won’t permit confusingly similar names or typos to be approved. For example, if .hsbc is approved, .hbsc won't be.
- ICANN must approve a change in control of a TLD. Contracts can't be resold the way .com domain names can. Therefore there’s no economic incentive for a squatter to try to win a name in hopes of reselling it later to a large corporation.
- ICANN will require that all awarded new gTLDs provide policies and mechanisms for companies to protect or recover their legal trademarks from cybersquatters within that gTLD.
- A .brand is a simple visual cue to help internet users distinguish between real and fake sites. No equivalent mechanism exists in the current domain name system. In fact, many companies expect .brand ownership could actually lower risk and build trust. For example, only Canon could own .canon. But Canon could offer space to its approved merchants (e.g., nordstrom.canon), helping consumers to be sure they’re purchasing authentic merchandise.
If companies wish to secure their trademarks in the new open generic word TLDs, protection mechanisms will allow trademark owners to do so prior to general availability and to recover names that are infringing their trademark. These mechanisms have been in place with recent gTLD expansions and in some cases have been added to established TLDs, and they've worked well.
Furthermore, with the addition of more generic word gTLDs and more internet real estate in general, the extreme prices we see for domain names in the resale market should decrease, further diminishing the economic viability of cybersquatting as a business model.
Finally, many of the new generic word gTLDs will enforce criteria that companies must meet to register domain names in the first place. For example, .bank may only be open to banks or .hotel to hotels. Once again, this requirement puts these domain names beyond the reach of the typical professional cybersquatter.
From what we've seen so far, it's likely that many applicants for new TLDs will be brands applying for their brand name. VeriSign forecasts 1,500 applications with at least 1,000 of those for branded TLDs, making the number of truly open new TLDs as the minority.
Myth No. 2: Only big companies will benefit. The costs of applying for and maintaining a TLD are notable. In addition to the application fee, ongoing annual costs to run a registry are expected to run from $100,000 all the way up to $500,000 or more, depending on use. Larger companies can shoulder these costs easily, but smaller businesses are unlikely to be able to afford a .brand. Does that mean smaller companies are simply out of luck?
The primary drivers for ICANN’s TLD program are to promote competition and offer internet users greater choice as the landscape of available .com options further shrinks. Fortunately, small to midsized businesses (SMBs) won't be left out. Community and generic word TLDs will open up many additional second-level domains for SMBs. For instance, a business unable to secure its ideal company name in .com could have additional options as gTLDs and communities emerge and offer relevant online real estate, such as bestmarina.boats or bestmarina.capecod.
Myth No. 3: Consumers will be lost online. There may be “do I add a .com to the end of that?” questions at first, but .brands have the potential to improve the way consumers navigate the web and the way businesses organize information online.
Claims that additional TLDs will lead to mass confusion underestimate the intelligence of today’s consumer. The history of the internet is about consumers quickly embracing change online. Massive industries like online retail and online banking wouldn't exist if consumers weren’t adaptable.
Let’s look at the recent launch of the .co TLD as a generally available, worldwide domain. .co sold 1 million domains in its first year of availability and we saw immediate adoption of .co domains by such major internet properties as Google (g.co) and Twitter (t.co). In fact, leading online retailer Overstock.com actually named an NFL stadium in Oakland, Calif. o.co Stadium as a result. Adoption of new TLDs hasn't impacted these major brands.
Simple and memorable .brand domains will create a far more effective bridge between offline and online media, helping brands generate increased direct website traffic from targeted advertising campaigns. A recent study revealed that among consumers using search engines to find brands online, two-thirds have wound up visiting a different website than intended. Marketers understand that easy recall and navigation are critical, particularly as mobile device usage rises. Friendly domain names like yourname.amazon or toys.amazon offer better personalization and navigation, which ultimately means more traffic to sites.
The full utility and effectiveness of additional TLDs will develop over time and with consumer education, but there are sufficient benefits for a wide range of organizations to dig deeper in order to make an educated decision.
Kanchan Mhatre is senior vice president at Melbourne IT Digital Brand Services, which helps global brands assess and optimize the opportunities presented by .brand domain names and mitigate online reputation risk through online brand protection. Kanchan can be reached at Kanchan.firstname.lastname@example.org.