I sat on a panel Friday at the Domainer Mardi Gras with Jeffrey Eckhaus from Demand Media, whose company is expected to apply for at least several new gTLD’s, Ken Hansen from Neustar whose company is trying to provide the back end for many of the new gTLD’s registries.
Mike Rodenbaugh who is an attorney hoping to represent some of the applicants for new gTLD’s and who also sits on the ICANN committee working on the new gTLD’s.
Mr. John Berryhill, who represents domain owners against trademark claims who appeared through Skype since Philadelphia was basically shut down by the snow storm.
My first thought as I found myself on stage was that I was the only one not looking to profit off the new extensions.
I think that pretty much sums up my opinion on the new gTLD’s.
Its simply a big money grab.
ICANN wants the new extensions because its going to add ten’s of millions of dollars to their coffers.
While ICANN is a non-profit corporation, we just read the compensation report the other day to discover that in addition to six figure salaries the higher ups of the non-profit receive they in addition entitled to bonus of up to 50% of their salary based on performance.
To me it seems that a lot of this bonus money is going to be tied to getting the new extension approved and up and running ASAP.
Instead of awarding a new gTLD, which get competing applications to the company that would agree to provide the service for the least amount of cost to the consumer.
ICANN decided to award the extension to the company will to pay the most for the privilege.
Actually the proposed cost to the consumer is not even a factor in the decision of which company would receive a competing extension.
By awarding the extension to the company that pays the most, the process almost guarantees that the winning bidder will be the one with the highest cost to the consumer.
Of course this is the history of ICANN.
Competitive bidding to drive prices down?
This is the same ICANN gave a no bid monopolistic contract with guaranteed price increases to VeriSign desipte the fact that other company wanted to bid on the contract and offered to provide the sames services for less money to the consumer.
It only makes common sense if a company has to pay millions of dollars to get an extension, rather than just $185K, they are going to have to charge more per domain registration to recoup their costs.
While some on the panel I sat in on, will tell you the whole point of the new extensions is to increase competition and lower costs to the consumer, the way the system is being set up by ICANN pretty much insures the opposite.
Those that spend the most will win and they will charge whatever they want to make their investment back.
For companies seeking to become a registry of one or more new extension the financial rewards can be substantial.
While domainers may consider such extensions like .biz and .mobi to be failures from a domain investor point of view, from the business of operating a registrar, TLD’s can be a cash cow.
Neustar a public company, which operates the .biz registry among other business, said there were over 2,000,000 .biz domain name registered.
At $6 per year that’s $12M in recurring cash flow.
Neustar also provides back end support for other companies looking to sponsor a new gTLD another nice money making business.
So companies like Demand Media which seem ready to apply for multiple new gTLD’s as a registry and sell the new gTLD’s as a registrar through Enom are all standing to make a big payday.
There is also plenty of room for consultants and attorneys to represent applicants through a fairly complicated process with plenty of potential for disputes and conflicts.
Trademark holder are screaming that its going to cost them a fortune to register domain names in extensions they don’t want or need.
While trademark holders can use the sunrise period to secure their domain in every new extension, registries and registrars have traditionally charged a premium price for this service, usually in the hundreds of dollars per domain per extension.
As an attorney I try to see all sides and actually for companies that have hundreds, even thousands of trademarks your talking about huge dollars.
Many trademark holders do not apply for their domains in the sunrise period,
I guess hoping that other will stay away, usually just to find they then have to spend even more in UDRP or WIPO or lawsuits to get their trademark domain back.
My suggestion to avoid this ongoing mess is to give trademarked holders of famous and global brands their domains for free, or at least at a nominal charge, certainly not the premium amount past TLD rollout’s have charge.
Moreover the each registry could reserve globally trademarked brands so only the trademark holder could get the domain but no one else.
The response back from the panel was a resounding No Bueno.
No to giving away domains to those global brands.
The dirty little secret of the whole deal is that while a domainer who registers a domain that’s the subject of a trademark is labeled a cybersquatter, and is subjected to a fine of $100,000 per domain, and loss of the domain.
Registries and registrars are perfectly fine with making money off of trademarks by selling the registrations back to the trademark holder for premium amounts.
Moreover if the trademark holder doesn’t register its domain during the Sunrise period then the registry will auction the domain off as happened multiple times in the .me release to the highest bidder, trademark or no trademark.
So lets be clear.
Domainer get fined and have their domains taken away on the basis that they can’t be allowed to make money off of a trademark.
However, a registry can hold a trademark holders hostage for hundreds of dollars per domain to get their domain registered under the Sunrise period.
Or even auction off the trademarked domain to the highest bidder, stuff the money in their pockets and let the trademark holder and the auction winner fight it out to who should have ownership.
Aren’t registrars and registries thereby making money off of others trademarks?
Of course they are.
Sometimes a lot more than any domain would be registering and parking on a new extension.
If a domainer does it, they face fines, sanctions and ridicule. If a registry or registrar charges $250 for a domain its just good business.
If a domain owner isn’t allowed to make money off a trademark holders domains, why are registries and registrars?
Most Sunrise application are historically in the hundreds of dollars per domain, per extension, making a company like Microsoft which own hundreds if not thousands of trademark fork over huge sums to register the domains that match their mark.
Apparently many new registries have the premium fees for trademarked domains budgeted into their business plan.
Its all about the money.
The question that was raised on the panel but really went unanswered is what becomes of domainers in all this?
The lifting of price caps on domain names is still in the guidebook.
All registries want to be treated the same, new one’s and existing one’s.
So if one registry is allowed to adopt .tv variable pricing for a new gTLD then VeriSign would want to be able to operate the .com registry with no price caps.
This is not science fiction or a scare tactic, its just the way the situation currently is.
While ICANN say they want the domain names from the new extension to go to end users, the rules they set up will guarantee that most wind up in the hands of domainers.
Registries of new gTLD’s will hold back their best domains and auction them off.
I would expect most registries of new gTLD’s to follow the .me model (even the rollout of the 2 character .biz domain currently ongoing) and put any domain back ordered by more than one person into a private auction (this raised over $2M for the .me registry).
Then auction off the few thousand of best domains they reserve, in domain industry auctions like TRAFFIC and DomainFest and online through Sedo.
There is even a movement that registries should be able to keep whatever domains they want for themselves, never making them available to the public.
Bottom line the new gTLD aren’t about the public interest.
They aren’t about giving more choices to consumers or lowering costs to consumers.
No the new gTLD’s are about the all mighty dollar.
More for ICANN.
More for the registries.
More for the registrars.
Domainers be damned.
Trademark holders be damned.
Big money is being made.