Get ready for the biggest change to the internet since Facebook!

This past summer the Internet Corporation for Assigned Names and Numbers (“ICANN”) approved the “New gTLD Program,” ending the restrictions on the generic top-level domains (“gTLD”).  What is a gTLD?  gTLD refers to the most common category of domain names used to navigate the internet (i.e., “.com,” “.net,” or “.org”).  Starting on January 12, 2012, ICANN will begin accepting applications for new gTLDs.  That means the internet could soon be filled with gTLDs like “.nike,” “.ipad,” or “.sport.”  So, what’s the big deal?  Some say that this development provides an incredible opportunity for branding a corporation, a city, or any public or private organization who can afford a new gTLD.  Instead of having to navigate through McDonald’s website to find potential career options, or looking for a local branch in Anchorage, Alaska, we may soon find websites such as “careers.mcdonalds” and “anchorage.mcdonalds.”

The application fee for ICANN to evaluate your gTLD is $185,000.  If your application is approved there is a fixed $25,000 a year fee for your new gTLD.  On the other hand, if your application is not approved, the best you can hope for is a partial refund of your application fee.  Another exciting aspect of the new gTLD program is that it will provide the opportunity for domains with non-English characters for the first time in the history of the internet.  Of course, if you want the rights to the domain “.restaurant” in English, but you also want the rights to the translation in Chinese, Arabic, Japanese, and Hebrew, you will have to pay five evaluation fees and a total of $100,000 a year for maintaining the gTLDs.

ICANN, a non-profit organization, is in a position to make a lot of money.  ICANN is not willing to predict exactly how many applications they expect to receive on January 12, but they concede that market speculations have estimated hundreds or thousands of expected applicants. To give you a better idea of the amount of money this program is expected to create, Peter Thrush, former ICANN chairman, helped to put this in context when he said, “The current domain name market is worth about $12 billion.  We think it will expand by some $3-4 billion with the new gTLDs.”  Not a bad pay-day for a non-profit.  ICANN claims that the reason for the fees is to make the system self-funded, but admits it is possible ICANN may “over-collect.”

The announcement of the new gTLD program created a stir among law firms who are looking to advise their corporate clients on how to deal with this new development (if you are interested in some of these firms’ advice, click on any of these firms for a few examples: Kelley Drye, Steptoe & Johnson, Banner & Witcoff).  It is clear that the new gTLD program will have trademark implications, but they may be less impactful than most people think.  With the way that most consumers interact with the internet these days the only real change may come if Google or Bing decide to create a “.google” or “.bing” domain.  Otherwise, consumers will likely not see much change.  Brand owners will now have to be even more diligent in protecting their brands.  The Anti Cybersquatting Protection Act will still apply to gTLDs (and the $185,000 application fee will likely serve as a deterrent to potential squatters), but this development will definitely lead organizations to increase domain name monitoring and enforcement in order to protect their brands.

Since it is unlikely that organizations will do more than move their websites to another domain name (or perhaps maintain two similar websites, assuming they decide to keep their original “.com”), it will be interesting to see if this new program proves to be an important branding tool, or nothing more than a way for ICANN to make a quick buck.

– Talor Bearman

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6 Responses to Generic Top Level Domains: Ingenius Trademark Branding Tool, or ICANN Moneymaking Scheme?

  1. Tracy Hancock says:

    I also think that Megan hit the nail on the head. I run Google Chrome, and the address bar doubles as a search bar. I always just type in keywords when I’m looking for a website. Either the autofill finishes out the address for me or I click the first hit on the Google search results that appear. ICANN must realize that many people share this sort of browsing habit. If that’s the case, it’s hard to believe any explanation for it offers for the change other than money.

    Interesting post Talor!

  2. Brandon Trout says:

    It really seems like this is just a money-making scheme by ICANN. Like Megan said, it doesn’t matter if you’re at careers.mcdonalds.com or careers.mcdonals. If anything, this could actually serve to confuse consumers who do not know about the new gtld’s.
    Although the high application fee should deter squatters, I can see a potential for registration of generic gtld’s, imaging .news, .school, or .search. Such tld’s, if they gain traction, could pose a threat to any company who relies on ‘name’.com, especially if consumers come to think that the new .news gtld is the proper place to go to get news.

    Another new gtld that ICANN has approved is the .xxx domain. There are already many of the issues that are suggested here, especially squatters. Again, it begs the question – do we even need these new gTLDs?

  3. Charles Michels says:

    This is pretty cool, or at least I think so.

    I think corporations will pony up the big bucks for reasons such as you referenced, “career.mcdonalds”. Moreover, the high fees will definitely deter cybersquatting, and corporations who are currently being thwarted by cybersquatting could use this to get around it.

    As Megan alluded to, only a small, if any, # of consumers will actually type these things in to the web address bar, but I still think it will be a good marketing tool. I’d bet we see substantial investment in it from Fortune 500 companies ASAP.

  4. Katharine Skinner says:

    Megan, I agree with you 100%, and I think that sentiment is exactly why some companies may be hesitant to spend the money on a trademark gTLD. Many businesses, including large corporations like Walmart, have expressed opposition to the new program because the timeframe ICANN has outlined doesn’t give them a chance to test the market. The application period opens in January and closes 3 months later, and ICANN has not announced whether it will open a second application period later. A second application process would allow companies to watch how businesses who applied the first time around fared in the market. But without that, many trademark owners say they feel backed into a corner- good business sense tells them that they have to apply now, in order to protect their trademark, but they have no idea whether it will even be worth the expense, or be successful in the market. They simply feel pressured into buying now since they don’t know if they will have that option later in time. It will be interesting to see if ICANN does announce whether or not it will open a second application period, and how that might impact the number of applicants in January.

  5. Megan LaDriere says:

    Talor you mentioned this in your post, but I don’t think these new domains will change anything for consumers. Actually, I don’t know if it is financially worth it for companies to even register/pay for them. Who actually types in specific websites anymore? I always type in keywords to the toolbar and it just takes me to the right website. It won’t matter to me if I end up at starbucks.com or home.starbucks. Thanks for the post – it will be interesting to see what happens with this new program.

  6. Francie Kammeraad says:

    It does seem like the gTLDs are a money-making venture. Not only is it very costly to buy a gTLD, but ICANN will presumably make money if a gTLD is contentious. For example, if two companies want the same gTLD, it could presumably go to the highest bidder. Additionally, ICANN could/likely will charge a company that chooses to file an objection to a gTLD.

    However, it isn’t likely that ICANN will make a substantial amount of money at the outset. ICANN has indicated that it could create as many as 1,000 gTLDs in a year, but this is unlikely, as it has also said it could take up to 20 months to process a gTLD application.

    For now, it looks like only wealthy public corporations will be able to afford a gTLD, but it will be interesting to see if ICANN can revise and improve the process so that it becomes more accessible to smaller corporations, non-profits or even individuals in the future.