Dramatically new Internet addresses will debut over the next couple of years. The Internet Corporation for Assigned Names and Numbers (ICANN) announced that it will accept applications to register new generic top-level domains (gTLDs or “domains”). The new gTLDs will be a paradigm shift in the domain name registration industry.

In the past, ICANN maintained strict control over and issuance of top level domains. While ICANN will continue to control domains, it has presented a new model for issuance of gTLDs. In addition to the current pool of the 20+ familiar gTLDs, such as .com, .net, .org, .edu, and .gov, a virtually unlimited number of new domains could be issued. For example, parties will be able to apply for and register a domain for their business name or brand. Associations and other organizations will be able to apply for a gTLD associated with their organization.

Ownership of key domains could become a way to convey cache to consumers, “.bulgari” or “.vuitton,” or market dominance, “.coke” or “.pepsi.” As an example, browsing to www.paper.com currently redirects consumers to Office Depot’s home page, asserting the brand’s dominant role in the paper industry. The company who registers “.paper” will be able to claim consumer recognition in the new Internet hierarchy.

Entrepreneurs can get creative. Once a new domain name is registered with ICANN the successful party can act as a registrar for the virtually limitless variations on that new domain. As an example, a manufacturer of snowboards and skateboards could register the “.board” domain and establish separate snow.board and skate.board websites. They can also charge a fee to register all of the other web addresses under the new “.board” domain.

Such recognition has its price. Parties seriously interested in these new gTLDs should consider filing an application along with the filing fee of $185,000. Other costs may be incurred for extended reviews of applications, dispute resolution or arbitration of conflicting interests in domains, and legal fees in preparation of the application.

Applicants will be required to operate a domain name registry for the specific gTLD in their application. The new registries will require a long-term commitment to provide IT infrastructure, support, and management. Parties will not be permitted to merely “park” a gTLD to prevent others from using it. The additional costs could potentially raise the price of a successful application to $300,000 or more. Additional annual fees (to be determined), in excess of the initial application fees, will be charged for the operation of each new gTLD.

ICANN also will provide for a “community based application.” This application will allow one entity, representing a particular “community” of interests (geographic region, industry, professional organization, etc.), to collaborate on a new gTLD application. The community application will allow the entity to claim registration priority in case of a dispute over the domain.

While trademark owners will be given priority in requesting the new gTLDs, there is no guarantee that their trademark registration, by itself, will result in a successful new gTLD application. In fact, due to the financial significance and potential of these new domains, disputes may become more common and contentious.

Even though ICANN has identified a start up or “sunrise” period to give priority to owners of trademark registrations, previous experience with domain name launches teaches us that disputes will arise between trademark owners with the same trademark registered for different goods and/or services in different classifications. For example, it is possible for any number of entities who have registered the trademark “UNITED” to file for the “.united” gTLD. The processes and procedures for resolving such disputes are still being developed by ICANN.

Currently, the draft application process includes several major phases:

Initial Evaluation – This is an initial review phase by ICANN to determine if the applicant has the required technical, operational, and financial capabilities to operate a domain name registry.

Extended Evaluation – This phase will allow applicants to file for an extended review after a failed initial evaluation. This phase allows submission of additional or clarifying information, providing an informal appeal from an initial rejection.

Objection Period – During this phase each application will be published to allow other parties to submit formal objections against an applicant. Interested parties will need to monitor gTLD publications in order to object within a limited objection period.

String Contention – In this phase parties holding valid applications to the same or similar domains will try to resolve alleged disputes.

For large corporations with sufficient IT resources and talent, the prospect of entering into the domain name registry business might not be so daunting. However, because of the price and registry requirements, small and middle market businesses may need to thoroughly consider whether to invest in the new gTLDs. As a possible solution to the application requirements, ICANN does not prohibit applicants working with an established domain name registrar to provide the back office technical and administrative support.

Various commentators suggest that the new domains will be a savvy marketing move by any business with an iconic brand as it will provide additional ways for consumers to find the brand, develop loyalty and enhance affinity, and carry with it the cache associated with the new gTLD. They believe that, as the new domains are introduced, companies with crucial domains will be at the forefront of this new Internet landscape.

Some commentators note that the new gTLDs should have little, if any, effect on search result placement and search engine optimization (SEO) strategies. It is believed that search engines will not prioritize these new gTLD in their routine rankings. However, these new gTLDs may provide an opportunity for further sponsored placement in search results.

The window of opportunity to file an application will open Jan. 12, 2012. This initial window will close April 12, 2012. The initial window is open to all applicants. Owners of trademark registrations will be given priority, especially with regard to the “.brand” or “.trademark” gTLDs. It is estimated that an application for a new gTLD will take approximately nine months to process from the date of filing, assuming it does not encounter any impediments. Complications and challenges such as string contentions could extend this period to up to two years.