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Credit: Reuters/Stoyan Nenov
By Georgina Prodhan
Thu Jan 12, 2012 9:36am EST
LONDON (Reuters) - A quiet Internet revolution begins on Thursday. Organizations can begin applying to name and run their own domains instead of entrusting them to the operators of .com, .org, .gov and others.
Up to 2,000 applications are expected to be made to ICANN, the body that oversees the Internet's naming system for so-called "top-level" international domains. The window to grab some virtual real estate will close in three months' time, probably for years.
The most radical move in U.S.-based ICANN's 13-year history is designed to foster competition and innovation, allowing the new domain owners to build new communities, strengthen ties with customers and give consumers more power.
"It's a fascinating new chapter in the Internet's history," says Jonathan Robinson, non-executive director of Afilias, which is helping with applications and already provides key infrastructure for .org, .info and .mobi.
"It's opening up new fronts of Internet real estate and that brings opportunity and threat."
Most of the first wave of applications is expected to come from leading brand owners who see an opportunity to boost their visibility online, or simply fear that others will grab "their" space if they do not do so themselves.
At $185,000 per application, estimated start-up costs of $500,000 and annual running costs of about $100,000, a .yournamehere domain will be out of reach of the smallest companies and Organizations.
But applications are expected from cities or regions with strong identities, such as .london and .mumbai, from companies aiming to build a business based on new domains, and from community identifiers like .eco or .gay.
Melbourne IT, a leading consultancy firm that is preparing about 100 applications for customers, says most interest has come from the financial services and consumer goods sectors.
"They're looking at it as something they can use as an additional weapon." says the firm's European sales director Stuart Durham.
"Banks are looking at it for online authentication, to prevent fraud and build trust, while consumer goods makers believe they can use this to become more effective in their online marketing and consumer engagement," he says.
For example, a customer on a site ending .hsbc could be certain it was genuinely operated by the bank, or a consumer goods maker like Canon might give each customer their own .canon domain to keep details of their purchases and for communication.
Camera maker Canon is one of just a handful of companies to have acknowledged they are applying to operate their own brand domains -- Deloitte and Hitachi are others. Others are more secretive, fearing unwanted competition, and ICANN will publish details of applicants only after the window closes in April.
In cases where more than one applicant has a legitimate claim to operate a domain - for example, .apple could be contested by the iPod maker and the record label -- ICANN will hold an auction.
The trademark lobby in the United States has some issues with this process. It argues that brand owners will be forced to mount expensive and unnecessary bids to protect their brands online, and has mounted a last-minute offensive to change the rules.
But ICANN says strict criteria are already in place to protect interests.
Applicants have to demonstrate that they have relevant intellectual property rights, and detail how they will operate the domain. The aim here is to prevent cybersquatters from buying up valuable ones and then leaving them inactive while they negotiate a profitable sale to a more legitimate claimant.
The $185,000 application fee is a far cry from the $10 or so needed to register a .com site. Applicants have to fill in a lengthy and complex application form, around which a whole consultancy industry has sprung up.
"It's not something you can just complete in five minutes online using a credit card, like you can for a .com domain name today," says Melbourne IT's Durham.
Jeff Ernst, principal analyst at technology analysis firm Forrester, says he is advising customers against a knee-jerk application.
"I'm not an evangelist for the program myself. I've talked to about 50 companies now in the last six months. There were only about five or six that we found had reason to apply," he says. I'm advising against just doing a defensive registration."
Beyond the big brands, the revolution in Internet naming could give smaller businesses the chance to increase their visibility online.
With the introduction of geographical top-level domains, a bicycles firm, for example, might boost its profile by winning bicycles.london or bicycles.mumbai, whereas bicycles.com could be prohibitively expensive to acquire from the owner.
"There's tremendous artificial scarcity that's been caused by the delay in the development of these new domains," says Jacob Malthouse, co-founder of Big Room, a Canadian company which is applying to run the new top-level domain .eco.
Malthouse believes the changes mean global communities such as the environmental movement will be better able to unite and work together in future. His organization is backed by some of the world's biggest environmental groups, including Greenpeace, WWF International and the Green Cross.
Malthouse argues that with such backers, .eco would have the authority to certify genuine environmental Organizations and individuals, allowing only them to register a .eco address, and screening out much of the "greenwash" that exists.
"The environmental community has never had a home on the Internet before," he says.
"We see .eco as an opportunity for smaller Organizations or smaller businesses. Maybe a .org doesn't really communicate what they do, or .com doesn't communicate it."
Malthouse says he has been open about his bid to gather the most broad-based and authoritative support possible, to prevent commercial interests from grabbing the domain.
"I think there's a real risk that private groups will try to force .eco to auction. The way we manage that is by demonstrating environmental community support. That's why we've been so public about the bid," he says.
A handful of potential new domains such as .eco seem likely to succeed but many may turn out to be little used, as was the experience for .jobs, .museum .travel and others in previous, experimental rounds of liberalization.
The .com domain remains dominant for companies, Tim Freeborn, technology and media analyst at London-based brokerage Xcap points out.
"The .mobis were a bit of a washout even though people made money selling addresses," he said. "There may be lots of addresses but they just may not catch anyone's imagination."
Freeborn follows Top Level Domain Holdings, a London-listed company set up to exploit the possibilities of the program, and which is applying for 20 domains on behalf of customers and 30-50 for itself.
Peter Dengate Thrush, TLDH's executive chairman and a former chairman of ICANN, says the process has been protracted -- six years in the planning -- and skepticism widespread, but interest is belatedly gathering momentum.
"A lot of people are waking up to domain names in general. The availability of .xxx (for pornographic sites) has alerted a lot of people," says Thrush.
Some investors are buying TLDH shares as a pure-play bet on the value of the new domains. Its share price has risen 41 percent since the end of November, as fears that the U.S. trademark lobby might derail ICANN's plans have faded.
Still, the model has yet to be proven. ICANN is likely to take until the end of 2012 to award the first new top-level domains, and in the case of hotly contested ones it may be years before they come online.
"The main risk is that people and companies will still gravitate towards .com, and the second risk is that the process of sorting out some of the major generics will be protracted," says Mike Jeremy, analyst at London brokerage Daniel Stewart, who also covers TLDH.
Xcap's Freeborn says: "It feels like candy floss. It's very hard to get a grip on it at the moment. A year from now it should be a lot clearer."
(Reporting by Georgina Prodhan; Editing by Andrew Callus)
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