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New Economic Study: Limit New TLD Rounds To Measure Effects

June 16, 2010Domaining, Domainnamewire, economic benefits of new tlds, icann, new tlds, Policy & LawComments Off on New Economic Study: Limit New TLD Rounds To Measure Effects

New ICANN-sanctioned report suggests limiting new TLD application rounds in order to collect more data.

ICANN has published its latest hired economic report on the costs and benefits of introducing new top level domain names. Unlike the last report from a different author, this one lays out clear logic rather than just playing to the hands of ICANN.

It is a well reasoned report that lays out the truth about the costs and benefits of new TLDs, and comes to a conclusion I’ve repeated many times: there’s no way to accurately predict the costs and benefits of new TLDs.

After discussing many possible studies that could be undertaken to try to determine costs and benefits, the authors conclude that doing so would largely be a waste of time. Instead, the authors suggest a staged approach to new TLDs to get a better read on the cost/benefit equation:

First, it may be wise to continue ICANN’s practice of introducing new gTLDs in discrete, limited rounds. It is impossible to predict the costs and benefits of new gTLDs accurately. By proceeding with multiple rounds, the biggest likely costs—consumer confusion and trademark protection—can be evaluated in the earlier rounds to make more accurate predictions about later rounds.

Second, in order to derive the greatest informational benefits from the next round of gTLD introductions, ICANN should adopt practices that will facilitate the assessment of the net benefits from the initial rollout of additional gTLDs. Specifically, ICANN should require registries, registrars, and domain names registrants to provide information sufficient to allow the estimation of the costs and benefits of new gTLDs. For example, there might be mandatory reporting of trademark disputes.

The report does an excellent job summarizing previous studies on new TLDs. Here’s one tidbit I wasn’t ware of — each new TLD introduced in the 2000 round underperformed its forecasts:

The number of domain names registered in the new open gTLDs was far less than each registry had projected during the application stage. The .info registry had 39 percent of its projected registrations as of the end of 2003, while .biz had 61 percent, and .name had just two percent.

If I have one criticism about the report, it’s that it references studies undertaken by parties with an economic benefit from the introduction (or not) of new TLDs, and doesn’t note these conflicts.

Still, this is a step in the right direction.


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