The Next Big .Thing: What is the Impact of ICANN's gTLD Program?

Jan 11, 2012
Carol Finch

How Will New gLTDs Affect Consumers & Businesses? - Photo by annaOMline

How will ICANN's plans for the future of generic Top-Level Domains impact on brand marketing & e-commerce? How might consumers & businesses be affected?

The world of domain names will start to change from Thursday 12th January, 2012. On this day, businesses can apply to ICANN (the Internet Corporation for Assigned Names and Numbers) to register new gTLDs (generic Top-Level Domains). Current restrictions on suffixes will be lifted, allowing you to apply for a name that says just about anything you like.

Marketed as the "next big .thing", this project could change the face of internet marketing and e-commerce. What will change, what are the advantages and disadvantages and how could this affect consumers and online businesses?

What Are gTLDs and How Will They Change?

Top-Level Domains sit at the top of the DNS hierarchy. There are just over 20 that are classified as generic at the moment. These include .com, .biz, .info and .net. Together with country specific suffixes, these names are the best recognised/trusted and can also be the hardest and most expensive to buy.

From this week, however, ICANN is accepting applications for new gTLDs. This will allow people, if approved, to register just about any suffix name. So, for example, instead of using .com, major corporations could use their brand or company names (think .apple, .microsoft and .dell) and will be given more flexibility in their use of language or alphabet.

They will, if successful, effectively become an Internet registrar managing all elements of their names/brands online.

What Are the Advantages of the New gTLD Rules?

Although this process has been under consultation since 2008, it is not yet clear just how this will work for businesses that register a new suffix and for those that operate in related markets but that don't have the buying power to get a name. The true benefits will only become clear once domains roll out. This is unlikely to happen until 2013.

There are, however, some projected advantages. This program will allow a business to effectively buy its own name/brand and to take control of who uses it and how it is used online. This could have other positives:

The extension of the list of potential domains could make it easier for a business to get a TLD.
Internet marketing, SEO initiatives and e-commerce programs could be easier to set-up and manage as companies could use sub-sets of their gTLDs rather than having to rely on the availability of new domains for campaigns.
Consumer security could be improved. Control of a banking domain and the sale of its subsets, for example, could reduce online fraud and scams. Brand name counterfeiting online could become much more difficult.
The ability to use native languages could help companies in non-English/Latin language regions. This could also help businesses looking to extend their reach into these markets.
A business could target individuals, groups, customers and geographic regions on a more personalised basis. This could help with brand and trust building.
Some costs could be recovered by the sale of domain names as a registry.

There are, however, some possible downsides too. What are they?

What Are the Disadvantages of gTLDs?

Cost will be a significant issue here. Just applying for a new gTLD costs $185,000 and there is no guarantee that all applications will be accepted. Companies that are successful will then have to commit to annual ICANN fees and their own operating and maintenance costs. They will also need to develop/employ registry specialists to maintain and manage their domain ownership. You have to commit to keeping your registry running for at least three years and this is likely to be a steep and costly learning curve.

Other negatives that have been mooted include:

Businesses may feel pressured into registering a gTLD in order to protect their name/brand even if they cannot really afford the costs.
Smaller organisations may not have the financial power to register their name.
Owners of trademarks may have to spend more time and money policing their portfolio even though ICANN has built checks and challenges into the application process.
Some businesses may end up competing at auction for the same names. This could put control in the hands of one company, leaving the loser at a disadvantage.
There are no guarantees that your revenues will improve simply because you 'win' your chosen gTLD. This is a new business model risk.
Your competitive landscape could shift bringing more threats into your sector/brand.

The impact of this program won't, however, just be felt by the businesses that apply for a new suffix. How will it affect consumers and other companies?

How Will New gTLDs Impact on Consumers and Non-Participating Businesses?

Consumers may benefit from more targeted marketing, increased competition and the provision of more secure, transparent and trusted online services. Businesses that cannot afford to apply for their own suffixes may miss out on opportunities to expand, target customers and market their brands online in the same ways as those who control their own domains. But, for the most part, the high costs involved in this process are likely to restrict applications to larger corporations, so this may only impact on SMEs if they work in direct competition with a major brand.