Lydia Leong

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Lydia Leong
Research VP
11 years at Gartner
19 years IT industry

Lydia Leong is a research vice president in the Technology and Service Providers group at Gartner. Her primary research focus is cloud computing, together with Internet infrastructure services, such as Web hosting, content delivery networks…Read Full Bio

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New gTLDs require a business case

by Lydia Leong  |  July 23, 2011  |  1 Comment

Recently, I’ve been deluged with client inquiries about the new gTLDs that ICANN finally approved last month. (That’s three years after they first accepted the gTLD stakeholder recommendation, and two years after they said they expected to start taking applications… which they now say they won’t do until January 2012.)

Tonight, I decided to write a research note, in hopes of persuading clients to read the note rather than trying to talk to me. I sat down at 5 pm to write it. I figured it’d be a quick little note. I finished at 3 am, with an hour break for dinner. It’s not a short note, and I’m not convinced that it’s really as complete as it should be, so it’s not done per se, and it still needs peer review…

I’ll throw out a couple of quick thoughts on this blog, though, and invite you to challenge my thinking:

  • If you’re going to get a gTLD, you should start with the business plan, driven by your business / marketing guys, not IT security guys nattering about defensive moves. Lots of organizations won’t be able to come up with reasonable business plans, especially given the cost.

  • A gTLD is valuable to a business with many affiliates or affinity sites. That includes companies that franchise or have agents, companies with partner networks, and companies that have big fan communities. It may also include companies that have a ton of unique names that need to be associated with a domain, for some reason, or which otherwise need a namespace to themselves.

  • Most companies won’t become .brand rather than brand.com; among other things, nobody knows what second-level domains are going to be logical, in many cases. Global companies currently operating under a mess of country-specific domains may usefully consolidate under a .brand, though.

  • Government entities are facing a ton of hype, especially from consultants selling gTLD-related services. But most governments won’t significantly benefit from a gTLD for their locale, and the benefits to residents of a geographic-name gTLD are pretty limited. (That doesn’t mean that you can’t make a successful business out of a geographic name, though; at the very least you’ll get the obligatory defensive registrations.)

  • Defensive registrations of gTLDs are relatively pointless. Nobody’s going to cybersquat for the kind of money that a gTLD costs to apply for and operate, and the dispute process is so expensive that people aren’t going to go spend money applying for a gTLD that’s likely to be contested on trademark grounds.

  • There will be some contention for generic terms, both by companies associated with those terms, trade associations, and registry businesses that want to operate general-public registries for those terms.

  • The proliferation of new gTLDs is going to multiply everyone’s defensive registration headaches for domain names. Many new gTLD registries will probably make most of their money off defensive registrations, and not active primary-use domains. This is very sad and creates negative value in the world.

I’m a fan of the digital brand management guys — companies like MarkMonitor, Melbourne IT, and NameProtect (Corporation Services Company, the “other CSC”), to name a few. I think they have a lot of specialized knowledge and I tend to recommend that clients who need in-depth thinking on this stuff use them. If you really want to dive into gTLD strategy, they’re the folks to go to. (Yes, I know there are tons of other little consultancies out there that now claim to specialize in gTLDs. I don’t trust any of them yet, and what my clients have told me about their interactions with various such shops hasn’t made me feel better about their trustworthiness. Beware of consultants who either try to scare you or make your eyes light up in dollar symbols.)

1 Comment »

Category: Marketing     Tags: ,

1 response so far ↓

  • 1 Dashworlds   July 23, 2011 at 6:28 am

    But what does the future hold for these gTLD “investments”?

    Especially as ICANN won’t allow applications from any individual or sole proprietorship, effectively ignoring the interests and needs of the vast majority of Internet users worldwide. Add to this equation non-refundable deposits of $185,000 PER extension (plus potentially unlimited annual costs/expenses), and how many new gTLDs will actually see the light of day? Is this a commercial venture or simply a loss making exercise in vanity?

    ICANN’s main aims have always been to convince Internet users that they’re the only game in town and then try to herd everyone into a tiny part of an otherwise infinite universe. In this respect, ICANN has been quite successful. However, it’s rather like telling people that the only place they can shop on the entire planet is the local “convenient” Safeway in High Street, Kilburn, London NW6 and that there’s nowhere else to go. Yes, the current ICANN Internet set-up may be “convenient” right now, but then some years ago sending a telegram was convenient and sending an email meant inventing the computer (and the World Wide Web). So whether or not ICANN’s new gTLDs seem like a good idea, it’s worth considering if instead of bringing organisations to the forefront, ICANN gTLDs may have the reverse effect of putting you in cold isolation. It’s also worth considering that the Internet is evolving and more fitting and less expensive options are coming on-stream.

    ICANN is assigned (and describes itself) as a “non-profit” organisation (with all the global commercial advantages that this title carries). Yet for more and more people, ICANN acts as a profitable coercive monopoly; from ICANN’s destruction of the first .biz TLD (originally set up by a competitor) to ICANN’s implementation of the .xxx TLD, specifically against the wishes of the sponsored community and several Governments.

    For anyone not familiar with the .biz affair, some years a group known as ARNI (AtlanticRoute Network Inc) opened a new “.biz” TLD alongside ICANN’s “.com” and “.net” etc. What was the reaction of “Non-Profit” ICANN? ….ICANN went straight in with a sledgehammer, and contrary to ICANN’s own stated principles opened up a second .biz” TLD to collide directly with ARNI’s original “.biz” TLD. There was no subtly or pretence in these actions. ICANN’s new TLD was not just similar to ARNI’s TLD. It wasn’t a “.bus” or “.trade” or something vaguely comparable. No, it was exactly the same “.biz” TLD. By doing this, ICANN ensured the complete destruction of the original “.biz” TLD without regard for ARNI, their employees or their clients. What happened afterwards? Well, ICANN went on as normal; ARNI didn’t.

    One has to ask could a Microsoft or a Google or a Twitter have undertaken something similar, apparently without any consequence whatsoever? It’s highly unlikely. Perhaps devoid of their “non-profit” status shield, ICANN might have been hauled up in front of an antitrust/monopolies commission….and if found guilty, what then?

    More and more ICANN finds itself under pressure to modify. The rules have changed and Alternatives are already available (for example, as well as Dotcom domain names there are now Dashcom domain names). As ICANN realises that competition is finally at hand, the true value (or rather, the true cost) of ICANN gTLD “opportunities” will become all too apparent. Still….look on the bright side…. at least ICANN and their associates will have made money from your efforts.