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Wednesday, June 20, 2012

ICANN's New Top-Level Domain Initiative: An Appreciation

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Since last Wednesday I must have slogged through a hundred articles about the Internet Corporation for Assigned Names and Numbers "big reveal" of the 1,930 folks who allegedy want to be operators of new internet top-level domains. The situation: nobody is saying much, or nobody has much to say, or some combination thereof.

I hereby offer my own impressionistic observations for the benefit of the internet community at large (Remember the First Rule of Domain Names: Everything is for the benefit of the internet community!) and to get today's blogging obligation out of the way with as little effort as possible.

Why Are Domains Different Than Wireless Spectrum?

Several journalists did the math on ICANN's reveal day haul, putting the figure in application fees alone at $357 million. That's a lot of money. Here's an even bigger number: $785 million. That's roughly how much .com registry operator Verisign takes in each year in registration fees for the over 100 million domains registered in the .com top-level domain.

Who gave ICANN and the domain name industry the right to create online real estate out of thin air and pocket all of the proceeds themselves? [OK. This was a rhetorical question. There is no need for anyone else to email me with word that the Dept. of Commerce gave ICANN and the domain name industry the right to create online real estate out of thin air and pocket all of the proceeds themselves. And later, when I write about the "distinguished gentleman in the three-piece suit," I am referring to Vint Cerf. Y'all were supposed to get that reference without any additional help.] I often wonder why the domain name industry is not forced to pay the government for domain name space in the same way that telecom operators are forced to purchase wireless spectrum at auction from the government. [Here again, I am wondering rhetorically, so to speak.]

Thank You For Not Insulting My Intelligence

In 2001, the last time ICANN pushed to add new top-level domains to the internet, there was a lot of tut-tutting from the distinguished gentleman in the three-piece suit about how ICANN needed to move slowly, lest too many new domains too soon "break the internet." ICANN was also interested in picking a select group of promising businesses among the first new top-level domain aspirants.

Of the 44 applications that were submitted, ICANN decided to go forward with the "best" of that group: .aero, .biz, .coop, .info, .museum, .name, and .pro. (ICANN subquently added .jobs, .travel, .cat, and .xxx).

Readers can reach their own conclusions about how well ICANN did in picking the first new top-level domains.

Thankfully, now, we're past all that and the game is unadorned money-grubbing. A simple business transaction. If you have the money, ICANN is going to add your domain to the root.

Here's a bit of trivia. How much did ICANN charge applicants for a new top-level domain back in 2001? Answer: $50,000. Wait, it gets better. At the time, the distinguished gentleman in the three-piece suit told Congress that the application process needed to be simplified and made cheaper. What did ICANN do? It tripled the application fee (now $185,000) and put out a 400-page application guidebook.

The Persistent Value of Domain Names

A long time ago, back when the internet was little more than a system of tubes, the feeling among many technology experts was that the importance of domain names as source identifiers would diminish, gradually giving way to search engines as the primary means of finding information online. After that, search engines would be eclipsed by social networks. Other, even brighter individuals later predicted that social networks would give way to apps and location technologies. Maybe. If you look at your mobile device today, it's small text, URL shorteners, links that are pointing who-knows-where. Nobody is keying an internet address into the too-tiny address bar of the browser app.

So what explains the value that some folks attach to a domain name? I wish I knew, but I don't.

What if Google Just Gave Away the Domains?

Is the customer relationship or the data that a domain registry collects valuable enough make giving away a domain registration a reasonable business proposition? Right now, the situation in .com is that each registrant pays $7.85 to registry operator Verisign but only a few pennies to ICANN for each registered domain name. Google, as a registry operator, would only have to pay those few pennies to ICANN for each domain. Could Google turn a profit by giving away domain names for .corp, .llc, .inc, .esq and others? Seems that they could, by:

  • Monetizing the contact information provided by domain name registrants.
  • Monetizing the network traffic information that registries possess merely by being a registry operator.
  • Selling add-on services like advertising, webhosting, email services, e-commerce services, and privacy protection.
  • Monetizing additional information that registrants might be asked to supply in exchange for a free domains.
  • Selling advertising to businesses that it knows very well due to its domain name registration relationship with them.

I'm sure that there are other ways that Google could find to make a buck on free domain registrations. Google is already an ICANN-accredited domain name registrar, able to sell its own domains.

Free domain registrations in .corp, .inc, .llc, .med, and .esq sounds like a viable business to me, when operated by Google. How about a free .music domain name for every musician that wants one? Google could make that work.

Tar Baby Domains

Plump with the millions it made selling .xxx domain names to companies that do not want to be associated with .xxx domains, ICM Registry is reaching for corporate America's pocketbook again with applications to run .sex, .porn and .adult. The porn industry appeared to be doing just fine on the internet before .xxx came along. There's even less reason to believe it needs three additional top-level domains.

Ditto for another tar baby domain, .sucks. What possible reason does .sucks have to exist other than to extract protection money from businesses who don't want to be associated with the domain? I guess the proponent of .sucks will make the argument that the internet needs a forum for consumers to gripe about businesses. Not much of that going on now, is there?

It's Your Move, Part I

During the months leading up ICANN's June 13 reveal day, no group was more vocal in opposition to ICANN's new top-level domains program than the Association of National Advertisers. Opposition to ICANN created a lot of publicity for the ANA, albeit at a price: ANA's last-minute lobbying carried with it the tacit message that the ANA had not been watching this issue too closely during the last five years and had not participated in any of ICANN's numerous outreach efforts. They sent a very nice attorney to ICANN's Costa Rica meeting earlier this year. First meeting, she said, and it's been a learning experience, etc.

Boiled down to its essentials, the ANA's argument against ICANN's new top-level domains initiative is that the new domains are not necessary for consumers or businesses, that the expenses associated with intellectual property protection will dwarf whatever social benefit the new domains provide, and that the whole system is a con job designed to transfer money from businesses and consumers to the domain name industry.

The ANA's gripe is that the ICANN top-level domain program is not "in the public interest, does not promote consumer trust, and does not benefit the public."

What's your point, ANA? Isn't your organization composed of marketers, people who sell things to other people? How would you like it if somebody proposed a law that didn't allow your members to sell goods and services that do not "benefit the public" or are not "in the public interest?"

Isn't the ANA dedicated to creating a regulatory climate where businesses can do exactly what ICANN is doing? As a matter of fact, I am pretty sure that ANA members have sold me some things that I didn't really need, for more than they were worth. And if these marketers were really good, they made me happy to spend my money on their stuff. (Like that new 15-inch MacBook, which I am just going to die over if I don't get soon.)

Now that the list is out, the pressure is on the ANA and other ICANN foes to back up all the tough talk and fear-mongering they did before the domain name proposals were announced. We contacted the ANA after the names were announced. They're still weighing their options.

It's Your Move, Part II

The GAC, the ICANN Government Advisory Committee. Precisely how is the GAC, a loosely organized group of mid-level telecom officials from countries large and small, going to evaluate nearly 2,000 top-level domain proposals in the short timeframe provided by the ICANN rules?

These folks don't have a lot of bandwidth. A typical public GAC meeting has about a dozen extremely sharp individuals discussing public policy and engaging ICANN officials in a pointed, constructive fashion. The rest of the group does not appear to be engaged, or is checking sports scores, playing Solitaire, or using their laptop for a headrest.

The new domains initiative is a great opportunity for the GAC to literally wake up, get organized, assert itself, and restore order to the land rush that ICANN has created here. There are signs the the GAC is already doing this. On June 17, GAC Chair Heather Dryden informed ICANN that the GAC is not going to be able to offer GAC advice on new domain proposals until after the Asia-Pacific meeting in the spring of 2013. Already the GAC is signaling that it doesn't feel bound by ICANN's rules.

Once the process is underway, it will be interesting to see which proposed domains attract unwanted attention from the GAC. My guess is that strings associated with regulated industries would be the most interesting to the GAC, followed by strings associated withe geographic names. I'll also be watching to see if the GAC will sit still for the tar baby domains.

It will be interesting to see if the GAC's advice will come in the form of a thumbs-up or thumbs-down communication, or if the GAC will become involved in negotiations with the proposed registry operator's contract with ICANN -- say, to extract concessions, set prices, or to demand additional intellectual property protections.

At some level, the ICANN process is a shared hallucination. The GAC doesn't have to follow ICANN's timetable, or respond to proposed new domains in the manner set out in the application guidebook. Nor do invidual governments and businesses around the world. Anyone is free to go to court to stop a particular domain, and governments naturally have the prerogatives of sovereigns.

What Is the Process?

Finally, it is not at all clear to me what the process is for getting a domain name application through the ICANN bureaucracy, and past objections from governments and businesses. It all seems very ad hoc and uncharted. Top-level domain applicants can be expected to be in constant contact with ICANN during the approval process. Applicants and application foes are going to be making their views known to the GAC and to the Independent Objector, to government officials and to the other businesses in their industry, however they can. There are no rules for any of these contacts. It is free-form lobbying, with rewards presumably to the most persistent and creative attorneys.

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Comments (1)
Bob Griendling
6/21/2012 2:01:54 PM
This is a thoughtful piece, though I’m not sure why you’ve spent so much time fretting over the name because, as you point out with the Google example, it’s not about the name. It’s the business model behind it, and you gave a number of good possible uses. ICANN is not a perfect organization. It’s like many others whose base are volunteers. The bottom up, consensus-driven, “multi-stakeholder” decision making is much like other such organizations. The buck never stops anywhere. There are benefits to organizations that want to be in the TLD business but aren’t looking to make a buck, but to have an impact. The community TLD applications will be interesting to watch, as the TLD enables them to build a stronger community and protect itself from threats. Contrary to what the ANA has argued, TLDs will mean, in many applications, greater security, not less. The idea that we’ll be better off if governments have greater control over the Internet is problematic. The last group I want controlling the Internet is a government as dangerous as Iran’s or as feckless as the United States’.