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Multi-billion dollar market now open as ICANN lifts domain name extension restrictions

Multi-billion dollar market now open as ICANN lifts domain name extension restrictions

Domain names ending with .hotel and .bank present a wealth of opportunities for domain name registration players

A multi-billion dollar market has opened up after the Internet Corporation for Assigned Names and Numbers (ICANN) approved plans to expand the types of domain name endings available for website addresses, according to domain name registration companies.

ICANN directors met in Singapore to vote on the proposal which would see restrictions for common domain name endings, called generic top-level domains, such as .com or .net to be lifted.

There are currently 22 generic top-level domains. Under the new arrangement, endings such as .hotel, .bank or even .idg will be permitted. Applications for generic top-level domain names will be accepted from January 12, 2012, to April 12, 2012.

“ICANN has opened the Internet’s addressing system to the limitless possibilities of the human imagination,” ICANN president and CEO, Rod Beckstrom, said in a statement.

Melbourne IT has determined through a recent survey of 150 organisations worldwide, most companies are interested in taking on a Web address with their own brand attached to it.

Larger organisations are predicted to be the predominant segment to snap up new domain names with consumer facing brands the most keen.

The average market cap of interested applicants for new top-level domain names is $US36.7 billion, according to Melbourne IT.

“We will help customers launch their names in the new environment because it won’t just be launching .ford for instance, it will be launching a range of second-level names as well such as ‘mustang.ford’ or ‘spareparts.ford’,” Melbourne IT CEO, Theo Hnarakis, said.

The company is keen to aid customers in ensuring their .brand portfolio of names co-exists nicely with their legacy domains that existed in the .com space.

Hnarakis predicted a wave of confusion due to the new domain extensions and a large amount of cyber-squatting. That is, individuals or companies that hold a domain name ransom. Those with the trademarked rights to the name are then forced to pay an inflated price to regain the domain name.

“The best defence for organisations is to take control of their own name and educate customers of the new web destination,” Hnarakis said.

Small businesses can also participate in the new Internet domain environment by adopting generic extensions such as .sydney.

But for those eager to register a new domain extension, they may have to pay a premium to get it.

According to Hnarakis, the application fee to ICANN alone is $185,000 with an ongoing fee of $25,000 to maintain the domain extension. Other costs to support second-level names could be between $50,000 to $100,000 per year.

It’s not for everybody, he said, but for the domain extension could play an invaluable role in an organisation’s e-commerce and online strategy.

With a number of companies flagging interest in acquiring a top-level domain name, AusRegistry claimed time is of the essence.

“Today’s decision is going to have a significant impact on the Web as we know it and will pave the way for the next wave of online innovation,” AusRegistry International CEO, Adrian Kinderis, said in a statement. “The race is now on for companies, governments and entrepreneurs to secure their slice of this billion dollar opportunity.”

With a relatively short window of opportunity to register domain names, it is important for interested parties to act now before it is too late, he said.

“The biggest revenue-making opportunity lies within the formation of generic word top-level domains such as .music,” Kinderis said in the statement.

“Rather than trying to become the next .com, entrepreneurs could own boutique name spaces, turning over lower volumes, but at higher margins.”

Companies that want to buy a domain ending as part of a branding exercise can also commercialise the name by reselling it to customers, he said.

For example, eBay could sell a .ebay extension to online retailers for a small domain name fee.

While this sounds like easy money, Hnarakis claimed it would be extremely difficult for businesses to profit from generic top-level domain extensions.

“If you don’t have intellectual property rights over that name, if you don’t satisfy the bona fide purpose, financial or technical stability criteria set by ICANN then your application will fail,” he said.

For companies that want to offer their domain extensions to customers, their business models will have to pass scrutiny with ICANN, Hnarakis said.

“In cases where you don’t have a trademark associated with the name such as .music, different business models will be considered,” he said. “Some organisations or communities may apply and ICANN will consider all applications to potentially reward it to the business model that is most attractive to the group.

“Or ICANN may encourage several organisations to form a consortium as long as their purpose is genuine.”

Domain name registration companies are expected to offer services that will guide customers in the ICANN generic top-level domain name registration process.

Hnarakis would not discuss profit projects from the ICANN announcement but said he expects Melbourne IT to make significant gains.


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Tags e-commerceMelbourne ITdomain namesInternet Corporation for Assigned Names and Numbers (ICANN)AusRegistry Internationalwebsite addressescyber-squatting

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