A Time For Domain Strategy & Discipline, Part 2

Should Brands Create and Manage .BRAND Registries?

The Process

Undertaking the registration, development, implementation and maintenance of a specialized TLD is no small task, and is one that will have a substantial price tag. While not yet specified, ICANN insiders have stated that the non-refundable application to ICANN alone will be substantially higher (possibly many times higher) than the $50,000 fee, which was charged during the last round of new gTLDs. The cost of developing the proposal, building or outsourcing the infrastructure, as well as ongoing maintenance and oversight is substantial as well. Experts, developers and advisors would need to be hired and consulted to ensure that the TLD is a success and delivers on the agreed upon terms with ICANN (which are typically non-negotiable).

Brands applying for specialized TLDs should be fully versed in all of the process requirements, legal and regulatory agreements, opportunities and risks, as well as both short and long term costs related to running a registry and investing in encouraging users to adopt a new way of accessing content online.

While there is cost wrapped up in creating and developing a TLD, the bulk of the price tag for this new domain strategy will be found in marketing the TLD to customers, partners and general Internet users. As mentioned before, the real challenge will be to promote the specialized TLD in a way that will change user behavior, and there is no guarantee of success. It is possible that one brand owner can successfully market a specialized TLD extension, but long-term and large-scale success of the endeavor will rely heavily upon more brand owners following suit. Brand owners have to decide whether they consider the possible success of a specialized TLD to be worth the cost. If brands do go ahead with testing the hypothesis of running their own TLD registry, they will have to consider how they will work on distributing that cost.

One option for those brand owners that may sell domains (example: a franchise model hotel brand owner mandating franchisees to use a dot-HotelBrand TLD) is to charge higher prices for partners that are getting guaranteed safe names within the brand’s TLD. However, because these partnerships already require some sort of payment under contract, some tweaking of the brand’s economic model would be necessary. In that case, there are questions to be answered: do you build this specialized TLD into the agreements, making the registration and its cost part and parcel with the other contract obligations? Or do you take the cost upon yourself and hope to recoup the costs?

The point of a “dot-BRAND” is to mitigate the threat of cybersquatting, financial losses and damaged brand integrity that brand owners now face. According to an independent report prepared by MarkMonitor, cybersquatting increased by 248% from 2006 to 2007, and according to the International AntiCounterfeiting Coalition (IACC), $600 billion was spent online for counterfeits in 2006. There is a clear need to protect consumers and brand owners and to stem the tide of Web sites run by cyber criminals. The ability of a dot-BRAND to provide this sort of protection is dubious at best. Unfortunately, ICANN has not been discouraged in their push for new TLDs even though they are largely unwanted by businesses and the user community. It should also be noted that economic modeling on the need for or value of these Internet addresses has not been made available by ICANN staff.

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