There has been a significant development that you may want to consider regarding your presence on the Internet. The governing body of the Internet, at the moment, ICANN, has announced an expansion program for gTLDs, generic or general top-level domain names. This means that, in simple terms, a company will be able to act as its own registrar with its brand on the right side of the dot. The proposed changes will add generic gTLDs, such as .bank or .insurance as well as permit some brand gTLDs, for example, .newbalance or .dvf.
As of today there are a limited number of TLDs. By way of example, the classic .com and the newer ones such as .biz or .gov, etc., are TLDs. There are currently 21 of these. Our use of the Internet has thus been governed by using one or more of these gTLDS, such as dvf.com or newbalance.com.
In addition, there are about 250 ccTLDs, which are the next-highest level and are keyed to countries, such as .fr or .tv or more recently .co (Colombia). Most of these are used when one wants a presence in a local language and the culture of the specific country is to search in that native language. Thus, a person in France is commonly known to search the .com and .fr domains before anything else. In addition, Google ranks according to the TLD in use, with .com first and the cc versions next.
ICANN believes that the current categories, while providing millions of choices for domain name registrants, are not sufficient, due to the substantial growth in the internet user population. ICANN argues it has become more challenging for registrants to find memorable domain names in the most popular TLDs, and as a result ICANN is expected to allow companies to apply for their Brand gTLDs.
A Brand gTLD, in the form ".mybrand," may enable companies to reorganize their Web presence. For example, a company could purchase a Brand gTLD to serve as a hub and then assign second-level domain names to individual products and services. It could do the same for authorized resellers such as ".reseller.mybrand." There are both positive and negative aspects to consider before deciding whether or not to participate in this program (due for rollout sometime next spring).
On the positive side:
A Brand gTLD may provide important commercial benefits because it may enable companies to set requirements for who can register second-level domain names under their Brand gTLD;
This capability may help brand owners protect their brands and trademarks by helping to prevent unauthorized resellers and by maintaining brand trust in the eyes of the consumers;
Possibly improved brand marketing and management;
Greater online visibility;
More convenient access for customers as a result of potentially fewer clicks;
Potential new revenue from the sale of branded email addresses;
Enhanced security, control, and customer trust by providing additional brand protection through potential control of activity and content within the gTLD;
Controlled, customized domain names for partners and vendors;
An added layer of protection for brands that are often the target of phishing and other online attacks.
On the negative side:
Applicants may face challenges in applying for their own gTLD (especially if the brand is initials or a word that others in the world may use and may seek to own as a registrar);
The initial investment is significant. To purchase a gTLD will require an initial fee of $186,000, together with investment in hardware and software, as well as third-party fees. The current estimate is that a company will invest approximately $500,000 for each gTLD;
The application process is rigorous, time-consuming, complex and thus expensive in that it will require experienced counsel to guide the process;
Once a gTLD is up and running, it will require time and expense to manage and support;
Potential applicants may not have the in-house expertise and resources to integrate new gTLDs into their existing operations and to manage the resulting changes and may therefore need to turn to a third-party for support;
Determining which Brand gTLDs to purchase will require careful planning since it may not make sense to purchase multiple Brand gTLDs;
There is no guaranty that the new program will be successful for private industry. While institutions, such as New York City, are enamored of the marketing possibilities of a .nyc gTLD, no one can say that the Internet users will be equally drawn to search and use the new gTLDs as opposed to a .com or other TLD now existing. Many thought the initial expansion to such TLDs as .biz would be overwhelmingly popular, but in fact most acknowledge now the first expansion to be a failure.
It is tempting to consider prophylactic purchasing, to prevent pirates from grabbing your brand. However the true costs of operating as a registrar plus the high start-up costs are seen as a deterrence to such conduct. We would not counsel our clients to purchase a gTLD unless there was a significant economic or operationally positive impact in addition to preventing unauthorized use.
In addition, any business must consider the real costs of educating a consumer to now search for information using the new .brand gTLD as opposed to what they have been inculcated to use, the .com or the .[country] TLD. The costs of change will be significant. Consider how many places the brand currently uses the its current URL, such as www.[brand].com. All these will have to be changed. Existing e-commerce sites will need to bring new viewers to the new .brand site. The hidden costs of change are expected to be large and significant.
We are not in a position to recommend that any company purchase a gTLD. Each company must evaluate its needs and financial abilities. On an overall basis, subject to the sunrise and sunset provisions (where the brand will get a limited time to apply exclusively), we would counsel in most cases to wait and see how the new introduction plays out. At the same time, there may be overriding considerations that mandate such purchase if a company can afford to do so. For example, if a company's trademark is now the subject of significant domain name squatting or counterfeiting, the purchase of a Brand gTLD might well be offset against the savings in having to chase third-party illegal users.
We know this new development is complicated and will not be an easy decision to make. We are at your service to help your company evaluate whether a Brand gTLD makes sense for you. If you do choose to register your brand, we can help you with the cumbersome application process.