"Discrete, Limited Rounds?" ICANN's Economic Analysis of New TLDs

Somewhat lost in the coverage of the recent ICANN meeting in Brussels was the release of "An Economic Framework for the Analysis of the Expansion of Generic Top-Level Domain Names" on June 16th, a copy of which is available here.

The first 10 pages, comprising the Introduction and Overview and Background sections, provide a nice overview of how we got to this point and should be mandatory reading for those how are new to the issue. The Theoretical Framework section outlines the pros and cons for the introduction of new TLDs, as well as the Department of Justice's concerns that prompted the Economic Evaluation itself. The next section consists of a survey of studies conducted by Summit Strategies, Minds + Machines, Edelman and Stahura, which makes me feel better personally to know that someone else has waded through these papers.

The final section, however, is the most useful, in the sense that suggestions are made in connection with analyzing the costs and benefits of the implementation of new TLDs. The authors conclude that analysis of domain name registration volumes, domain name resale prices, and the prevalence of domain name registrants switching to new TLDs should all be given low priority. The authors do posit, however, that the increased costs to trademark owners in connection with protecting their brands through domain name registration, monitoring and enforcement should be monitored and analyzed. The authors are also concerned with the costs to consumers due to consumer confusion and fragmentation of the Internet related to new TLDs, although that is obviously not easily measured or monitored.

Finally, the authors propose "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." That does sound wise and kudos to Michael L. Katz, Gregory L. Rosston and Theresa Sullivan for contributing to the discussion. Nevertheless, when I remotely asked the panel for "Brand Management in the Age of New gTLDs" at the ICANN meeting in Brussels the likelihood of implementing new TLDs in "discrete, limited rounds," the response was mostly chuckles.

MarkMonitor Surveys Corporate Clients: Majority Undecided on New TLDs

On May 20, 2010, MarkMonitor reported the results of its corporate client survey concerning its clients' intent to register a new TLD. Based on the response of 95 survey participants, MarkMonitor found that 22% intended to apply for a new TLD, 23% do not intend to apply and the remaining 55% had not determined whether to apply for a new TLD.

ICANN's IDN ccTLD Fast Track Process Updates

In relation to the discussion of IDNs below, ICANN is posting updates with regard to the IDN ccTLD Fast Track process here. So far 10 requests for IDNs have been submitted in five languages. Check back often to stay apprised of any information related to the introduction of new TLDs.

Trial Run for Trademark Owners

Last week, the most-recent ICANN meeting concluded in Seoul, South Korea with a meeting of the ICANN Board, in which the Board approved the introduction of non-Latin character domains ("internationalized domain names" or "IDNs"). New IDNs could result in new country-code top-level domains ("ccTLDs") in scripts such as Arabic, Chinese, Cyrillic, Hindi, Japanese and/or Korean as early as mid-2010.

Moreover, during the Seoul meetings, ICANN made clear that the introduction of new generic top-level domains would be delayed beyond the first quarter of 2010, as delineated in ICANN's initial ambitious time line.

Many trademark owners were legitimately concerned with the possibility of ICANN introducing en masse up to 500 new top-level domains concurrently. While the implementation of new top-level domains now appears inevitable, the introduction of IDNs offers trademark owners a unique test case for the development and implementation of processes by which the trademark owner can determine whether to register domain names in new top-level domains.

In anticipation of the introduction of IDNs, trademark owners should now be developing such processes to treat the initial implementation as a trial run for the introduction of new generic top-level domains.