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Wednesday, November 2, 2011

Registry Makes Millions on .XXX Domains by Selling to Folks Who Don't Want .XXX Domains

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ICM Registry Inc., the registry operator for the .xxx top-level domain, announced Nov. 1 that it sold nearly 80,000 domain registrations in the just-concluded Sunrise A and Sunrise B registration periods.

These registrations cost nearly $300 per domain, representing a massive expenditure of cash mostly by folks who want to be kept out of .xxx's adult content neighborhood.

Sunrise A is for adult content sellers who already have a trademark in that market, for example, playboy.com. Sunrise A registrations cost $278 the first year and $79 in subsequent years.

Sunrise B is for trademark owners who want nothing to do with the .xxx top-level domain and would like to block others from associating their brand with the adult content market. Sunrise B registrations cost $299 per domain. Each registration lasts 10 years.

ICM Registry did not say how many of the 80,000 registrants were in the Sunrise A or Sunrise B groups. So we're left to guess. I think it is fair to assume that the overwhelming number of registrants were in the Sunrise B "definitely not interested in adult content" group.

So ICM Registry took in between $22.2 million (assuming all registrations were adult businesses) and $23.9 million (assuming all registrations were businesses who wanted no association whatsoever with the .xxx top-level domain).

These dollars represent an enormous tax on the trademark owner community with very little in the way of countervailing social benefit. It's true that nobody forced trademark owners to participate in the .xxx sunrise registration round. On the other hand, how many companies would risk tarnishment of their brand in .xxx if the cost of protection is a mere $299?

The price tag for keeping out of .xxx seems to bolster the argument of advertising groups like the Association of National Advertisers, who (somewhat belatedly) launched a campaign against ICANN's new top-level domain initiative this summer. ANA argues that an economic case has not been made to justify saddling businesses with what ANA believes will be "billions of dollars" in costs associated with protecting trademarks in the new top-level domains. The fact that ICM Registry coffers are now swelling with millions in trademark owner "protection money" might be just the sort of tangible evidence that ANA needs to keep its lobbying effort alive a little while longer. At a minimum, prospective new top-level domain operators are likely going to meet with strong resistance from mark owners determined to see that their .xxx experience not be repeated in any future domains.

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