On Monday, June 20, 2011, the Internet’s governing body approved a plan to greatly expand the number of generic top-level domains (gTLDs), opening up the naming process to the general public through a newly developed application system. Generic TLDs are the Internet extension found to the right of the last dot in a web address, such as .com, .gov., or .edu. After more than five years of debate, the Internet Corporation for Assigned Names and Numbers (ICANN), agreed on Monday to a plan that will allow public or private organizations to create and apply for any domain name they choose. Currently, the vast majority of web addresses retain the familiar .com as their gTLD. ICANN’s new proposal could change all this, making .com domain names a thing of the past for large companies.
ICANN’s newly approved plan to grow the number of gTLDs opens up a number of opportunities and considerations for brand owners, as it is designed to promote competition in the domain name market while fostering creativity among corporations and Internet entrepreneurs. The new gTLD plan gives companies greater flexibility in how they build their brands and market online. Companies with multiple websites dedicated to different products or services could consolidate the addresses under one company-owned gTLD. For example, a company called Acme Corp. could register .acme as their gTLD, and create multiple web addresses all ending in .acme. An exclusive brand gTLD could be more memorable for consumers, and would offer companies the assurance that cybersquatters could not infringe on the names of future products.
There are additional security benefits as well, particularly for companies who handle sensitive client information. Customers of online banking services, for example, would be assured that they were operating on official, secure websites owned by their financial services company. Beyond banks, exclusive brand gTLDs can help ensure authenticity, as companies could guarantee that genuine products are only available from websites in their brand gTLD.
These benefits, though, come at a not-insubstantial cost. Application fees alone for new gTLDs are $185,000. Beyond that initial outlay, however, there are additional ongoing costs that come with the responsibility of owning, operating, and maintaining a discrete portion of the Internet: an annual fee of $25,000, as well as the cost of maintaining the computer systems required to support the domain. And if multiple organizations apply for the same domain, the matter will move to auction, with the high bidder winning the rights to the gTLD name.
ICANN has capped the first round of applications at 1,000. The first three-month application period begins January 12, 2012, which means that brand owners still have time to assess the costs and benefits of purchasing their own gTLD. The group hopes to offer a second round of applications within the year, but the exact dates have not yet been set. Nonetheless, a number of large companies have already said they plan to take advantage of the opportunities presented by the new gTLD application process.
For brand owners who find the cost of purchasing their own gTLD to be too high, ICANN has built brand protection mechanisms into the application process. Within two weeks of the close of the application period, ICANN will post the public portion of the submitted applications. At this point, interested parties can file formal objections to the request for specific domain names. Objections must be filed directly with dispute resolution service providers, not with ICANN, and objectors will be forced to foot the bill for these services.
Nonetheless, the cost of sitting on the sidelines could still be substantial for brand owners. While brand protection mechanisms exist in the proposed application process, companies might not want to run the risk of others buying up gTLDs with similar names and capitalizing on their popularity. There is also a ban on registering “confusingly similar” names, so a company that waits to protect its brand might be out of luck if a like-named company makes an immediate purchase. Wrapping up your company’s name could also reduce future legal costs associated with fighting cybersquatters.
Brand owners who have not already started planning for life on the Internet with the new gTLD rules should start thinking about whether or not buying a gTLD makes sense. Whether or not an owner purchases a gTLD, every owner of a valuable trademark should calendar the date to check the posted applications (April 12, 2012), to preserve their right to object to third party gTLD registrations which may tread on their trademark rights. Each brand owner must consider its own Internet marketing strategy to determine how to best capitalize on this new opportunity, and to decide whether it can afford to cede online real estate to those who take immediate advantage of the change.