Are dot-brand domains going to be the haemorrhoids of the internet?

09 September 2011

The proposed .brand domains are the most controversial of a glut of new gTLDs (global Top Level Domains), being released by ICANN, the International body that in 2004 allowed us to register .eu, .asia, .mobi and .travel domains, amongst others. Any of you use those? The new ones include generic domains, like .music, and also .city suffixes which are bound to find a market, following the much talked about adult .xxx domains.

However, the latest plan for .brand gTLDs (dot-brand) is the most controversial and has wider implications than anything previously considered. In practice they will allow brands to ‘own’ and manage private internets. The unintended consequences of this approach are simply mind-boggling.

At a Westminster eForum in London on September 8th, Nick Wood of Com Laude asked whether this was “the beginning of the privitisation of the Internet?”. Certainly looks like it.

With a few exceptions brand owners are not keen. The US Association of National Advertisers (ANA) claims the plan “is likely to cause irreparable harm and damage” and has not ruled out legal action to force ICANN to abandon its plans. ANA’s stance is backed by the Advertising Association of America, Interactive Media Bureau, UK Direct Marketing Association and, now World Federation of Advertisers. These organisations represent the majority of the largest brands on the planet, so one should presumably conclude that their views reflect the views of their members.

Speak to a domain name registrar and you’ll find some of the same brands are talking to them about their gTLD strategies. This should not be taken as affirmation, just that brand owners are prudently preparing to defend their intellectual property rights, if they must.

So who does want them? ICANN, obviously; trade mark attorneys, probably; registrars, certainly; lawyers, absolutely. For all these parties gTLDs mean more and higher fees. Then there are those brands that do want to set up private internets, particularly global telecom and technology businesses.

Here at Nucleus and at our trade mark attorney team, Nucleus-ip, there is lively debate with both positive and negative views argued. You can certainly see the benefit for some brands. But you can also see it’s not in the interest of the vast majority.

Grasping for justification, there is talk of ‘brand purity’, e.g. having only your brand in the url. But in practice that’s not how it would ever appear, once CMS applications automatically add their long strings and SEO consultants optimise them for the benefit of Google.

While big brands consider this dilemma, smaller brands will simply not be able to afford dot-brand gTLDs. ICANN is asking $185,000 to acquire a dot-brand domain, plus $25,000 a year. In addition, you will need global infrastructure and systems to operate gTLD domains and DNS securely, available 24/7, 365, worldwide. We reckon the cost will be between $500,000 and $1,000,000 in the first year and $000,000s a year for the initial 5 year term. Whether or not to apply will be a big decision for all major brands, with each and every one of them now needing to define its own dot-brand strategy – before the end of the 90 day application submission period in April 2012.

Many big brands will conclude they simply have to bid for their dot-brand domain to defend existing intellectual property rights. So, how is ICANN planning to arbitrate on these matters? Is it equipped to do so fairly? Well, it has a complex process as you’d expect, but it’s not convincing when applied to real scenarios. Take a dot-brand domain such as .polo where many trade mark owners have parallel rights in different geographies or trade mark classes. Will ICANN give the domain to the Federation of International Polo on the basis of their international community; or to Volkswagen for it’s Polo brand; or to Nestlé for Rowntrees Polo; or to Ralph Lauren for its apparel brand? On what basis is ICANN going to rule? Are they qualified to take such huge decisions? Do they realise the consequences? How likely is it that they will have to fall back on awarding it to the highest bidder? And how huge a figure will that end up being?

In these circumstances gTLDs will be a licence to print money for ICANN. The process will also fill the coffers of lawyers and WIPO, the World Intellectual Property Office, which has already set its fees at $2,000 per single objection, plus $8,000 for a single panel review and $20,000 for a three panel hearing for single objection. Get the picture? This is, of course, before trade mark attorney and other legal fees. It will be territory for only the deep of pocket.

Then there’s the important issue of what consumers want and need? ICANN and its advisers seem to have missed the point that we now live in a world of links. Heard of LinkedIn anyone? Facebook? Twitter? Blogs? Bookmarks? Shortened urls? Far fewer of us actually look at the domain names than we used to and, if we do, we are more likely to enter them in a search box than type them into the url field. When we do is www.home.ft/UK actually any more intuitive than www.ft.com/home/UK?

Wouldn’t ICANN be better off putting their weight behind clearing up cybersquatting than pushing on with making the whole domain space even more expensive and complex? For example, if ICANN introduced non-use terms along the lines of trade marks, it would free-up plenty of useful high-level domains.

As there are no plans to do this, it’s likely there will be two main outcomes for dot-brand gTLDs. If the brand lobby makes its points clearly and forcefully, maybe ICANN will reconsider its plans; if not, highly expensive IP wars will break out in cyberspace for the right to buy your own brand haemorrhoid, or sue for trade mark infringement if someone else gets there first.

Peter Matthews
Nucleus Founder & CEO
September 2011

Agree? Disagree?
Share your views by emailing horizons@nucleus.co.uk