Top-level URLs not good for SMBs

Launch of new generic top-level domains penalizes small and midsize businesses, which must now register their brands in defense, says anti-cybersquatting coalition.
Written by Liau Yun Qing, Contributor

Small and midsize businesses will be penalized by the new generic top-level domain (gTLD) launch due to the need for defensive registration, according to a nonprofit association against cybersquatting.

In an e-mail interview with ZDNet Asia, Josh Bourne, president of Coalition Against Domain Name Abuse (CADNA), said a trademark owner would likely pay an average of US$500,000 over the next two years to protect against exploitative registrations of generic domains such as ".shoes", ".sports", ".shopping" and ".music". Sports apparel manufacturer Adidas, for example, might think it necessary to fork out additional resources and register domain names such as "Adidas.shoes", "Adidas.sports" and "Adidas.shopping", to protect its brand.

"Many brands will feel they have no choice to but take on this administrative and financial burden in order to protect their consumers and reputation from unauthorized registrants," CADNA said.

The situation can be worse for small and midsize businesses (SMBs), said Bourne.

"These type of businesses frequently do not own trademarks, [making] them more vulnerable to competitors or others registering domain names [containing these SMBs'] names to [cause] disruption and confusion in the marketplace," he explained.

He noted that fraudsters are already taking advantage of brand names with the existing 27 gTLDs, including ".com", ".net" and ".biz", and he expects brand owners to continue to struggle to protect themselves and consumers with the new gTLDs.

"The current enforcements mechanisms have proven to be inadequate and ICANN should govern better to eliminate fraud in the current space before making it 10 times bigger," he said.

The Internet Corporation for Assigned Names and Numbers, or ICANN, is a nonprofit organization that oversees the infrastructure that matches Web addresses to their corresponding IP addresses.

An ICANN spokesperson told ZDNet Asia in an e-mail that it is working on mechanisms to protect the new gTLD against cybersquatting. The latest version of the proposed mechanisms will be included in the Draft Applicant Guidebook that is slated for release before the ICANN Brussels meeting in June, he noted.

However, the spokesperson acknowledged that it is difficult to completely eliminate cybersquatting as such instances happen on many layers of the domain name ecosystem.

Bourne noted that while much attention has been directed to the potential of ".brand" gTLDs for businesses, a bulk of the registration will not be focused on such domains but on more generic domains.

High maintenance cost
He added that SMBs will miss out on securing their own ".brand" or ".generic" extensions as they are inhibited by the high cost. He noted that fixed fees for a TLD or gTLD owner will climb to over US$1.5 million in a course of 10 years.

The one-time registration cost is roughly US$150,000, that is, if there are no other parties bidding for the same domain, Bourne said. The TLD owner will also need to pay a fee of US$700,000 to ICANN over 10 years, another US$200,000 for infrastructure setup and US$50,000 annually for to maintain the infrastructure, he added.

At least one IT vendor has already made plans to acquire gTLD for its brand.

Japanese imaging product maker Canon said it will be acquiring the ".canon" domain.

In an e-mail with ZDNet Asia, a spokesperson from the company's corporate intellectual property and legal headquarters, said the new domain would indicate that the information presented on the site is from the genuine Canon brand.

The company plans to utilize addresses such as "(product brand).canon", "(service name).canon" or "(specific message).canon" to convey its brand "in a straightforward fashion".

It also hopes the move will be easier for customers to reach their intended destination on a Canon Web site without relying on a search engine.

The ICANN spokesperson noted that users will not be seeing the new gTLD any time soon as the official launch date has not been confirmed. Furthermore, after the launch and application period, applicants still need to go through an evaluation process before signing a contract with ICANN, he said.

The organization has predicted that 400 gTLD applications will be accepted in the initial round after the launch.

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