Back in June, ICANN (the Internet Corporation for Assigned Names and Numbers) approved a proposal to allow new custom top-level domain names, a process that has been in the works since about 2008. Starting in early 2013, the number of generic top-level domain names (gTLDs) that we know, including .com, .org, and .gov, may increase from twenty-two to over one thousand. Applications for new gTLDs (which are due in January 2012) include company-specific names such as .adidas, .canon, .facebook, and .microsoft, in addition to more generic concepts such as .eco and .love. In a little over a year from now, web-surfers like ourselves may be getting used to a new wide-world of .google, .apple, .disney, and 997 other new custom suffixes.
The sale of gTLDs is not just the sale of a domain name—it is also the sale of a registry. Upon purchase of a new gTLD, buyers assume the responsibility of maintaining the registry themselves (or hiring a third-party to maintain it for them). Companies like Verisign (the current registry for .com sites) already advertise their registry services for companies that wish to buy a new gTLD. Companies like Melbourne IT offer consulting services to help companies form marketing strategies for using and maintaining gTLD. Companies like Go Daddy are sure to enter the expanded second-level domain market, as well.
A New Cybersquatting Frontier?
With safeguards now in place, the new gTLD has some significant benefits for IP owners because the new gTLD program will make some traditional forms of cybersquatting more expensive. While second-level domains attached to .com can now be purchased for $10/year, top-level domain names are out of the average squatter’s price range, at $185,000 to apply and $25,000/year to retain. ICANN’s application process aims to decrease the chance that pirates will be able to purchase an infringing gTLD, even if they have the cash. Also, once a company buys a gTLD, the company then owns the entire registry–and can control who owns the second-level domains.
However, in another sense, the introduction of new gTLDs may open up the floodgates for more cyberpiracy of second-level domain names. Suppose Hilton Hotels & Resorts chooses not to buy a new gTLD, and keeps its web presence limited to its current website, Hilton.com. A cybersquatter could buy up the second-level “Hilton” domains at Hilton.hotel, Hilton.site, Hilton.paris, Hilton.nyc, and others. Companies’ complaints regarding such possibilities led ICANN to adopt a few new safeguards, but trademark owners will still have to monitor the new gTLDs for infringers.
A threshhold question that we have not yet discussed, however, is whether the new gTLD program will actually succeed in becoming one of the greatest changes to cyberspace in the internet’s history, as it is heralded to be. Another way to put this is, “So what?” There are already 22 gTLDs, and I bet you can only name about 7. Ever been to a .jobs or a .travel site? Those gTLDs already exist, but never really seemed to catch on. The difference this time is that companies can use the gTLDs for branding and marketing purposes in a more direct way. By investing so much money in the application process, companies are showing that they value gTLDs at over $200,000 (application fee + first year fee = $210,000 to ICANN alone), and some commentators think contested gTLDs could go for as high as $50 million dollars. With so much corporate money riding on success, my guess is that custom gTLDs are the .future.