Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
Following its launch of the .xxx domain name this week, the Internet naming authority known as ICANN is preparing to uncork thousands more new names that nobody appears to want or need. The plan would double ICANN’s revenues and create expensive new headaches for trademark owners. Just what is ICANN up to?
For the uninitiated, ICANN is an independent, non-profit group based in Los Angeles and once controlled by the U.S. Department of Commerce that governs the use of domain names. It does this by working with a handful of registers who oversee so-called top level names like “.com” and “.org” (and now .xxx), and with hundreds of registrars like GoDaddy that are brokers for second-level names like “weather.com.” ICANN receives 18 cents every time someone registers a domain name.
In the past nine years, ICANN has introduced about a dozen new top-level names such as “.biz”, “.travel” and “.asia.” Companies have told media outlets in recent weeks that these new names are a pointless nuisance but that they must buy them anyways to prevent them from being hijacked by impostors. This was the case with “.xxx,” which led MTV, the Red Cross and others that did not wish to be associated with porn to complain publicly of a shakedown.
But this is just the beginning. ICANN formerly approved a plan this summer to sell control of virtually any new top-level domain — anything from “.fetish” to “.disney” to “.zuckerberg.” The price is an eye-popping $185,000 just to file an application — $60,000 of which is to be set aside by ICANN to fund a legal war chest, according to one trademark specialist, Adam Smith.
“Most businesses who own lots of trademarks are squarely against this,” said trademark lawyer Gianni Servodidio of Jenner & Block, adding that it amounts to “pay us to keep your intellectual property off the market.” Servodidio says the plan offers scammers two new opportunities for cyber-squatting. For example, an outfit could register “.tiffany” directly or else purchase “jewelry” in order to register domains like “tiffany.jewelry.” Or someone could register “.sneakers,” and then buy up “adidas.sneakers” and “nike.sneakers,” etc., and then force these brands to buy them back.
ICANN spokesman Brad White dismissed such scenarios, saying the group has “gone out of the way to protect rights-holders.” He said ICANN is introducing the new top-level domain names after years of study and consultation, and that the names offer a host of new opportunities not only for companies but for cities as well.
Under the process described by ICANN, brand owners who don’t register their brands will not be notified if a third party files to register their name instead.
According to Lynne Boisineau of McDermott Will & Emery, who advises her clients about domain names, registering brands as top-level domains may be of interest to some companies in the media sector but “it doesn’t make sense for other businesses.”
Overall, the process appears to have few supporters outside of ICANN itself. In the past month, news outlets reported that advertising associations representing major corporations in the U.S. and UK have blasted the initiative. The American Association of Advertisers has warned of “economic losses, brand dilution and resultant privacy / cyber-security harms.”
So why does ICANN appear to be going ahead with the plan all the same? The answer may be money. According to financial statements reviewed by paidContent, ICANN expects the top-level domain plan will boost its annual revenue from $70 million to $154 million in 2012. The plan will also lead to a likely expansion in the industry of domain registrars, many of whom have ties to ICANN’s Board of Directors.