Should Brands Play Offense or Defense With New gTLDs?

Negativity ran wild at the U.S. Senate Committee on Commerce, Science, and Transportation on Thursday, as the Association of National Advertisers and the YMCA complained that as many as 1,000 new top-level-domains would create consumer confusion and cost companies millions or even billions.

The Internet Corporation for Assigned Names and Numbers (ICANN) plans to begin taking applications for generic top-level domains, or gTLDs on January 12. These right-of-dot domain names could be for a product or service, such as .hotels, a country or region, or a specific brand name.

And there’s the rub.

The ANA’s position is that brands will have no choice but to spend $185,000, the price for registering a single gTLD, to defensively register every brand that they want to protect from brand squatting.

Dan Jaffe, EVP of government relations for the ANA, said, “The hearing was extremely important. It has brought to the attention of a key committee in congress the concerns not only of a broad sweep of the U.S. and international business committee, but also of the not-for-profit community. There’s a growing chorus, and we think we put forward a strong case that there is not a consensus.”

An ICANN spokesman says that ICANN’s Implementation Recommendation Team developed several rights protection mechanisms to reduce the risk of cybersquatting. During the initial launch period, rights holders will have the first opportunity to register their own brands as domain names, and a service will notify them if someone else tries to register their trademarks.

There is also provision for rapidly suspending a registered name if infringement is clear-cut. And, if another company does abuse a brand’s name, a post-delegation dispute resolution procedure will let a brand go after the registry owner, a process that could take 90 to 100 days.

Jaffe frankly scoffs at ICANN’s ability to police brand squatting. At the hearing, he presented two actual whois listings; one gave the registrant name as Mickey Mouse, the other, as Donald Duck.

“If their trademark experts are not adequate in a world of 22 domains, why will they be adequate in a world of 100 or 1,000?” Jaffe told ClickZ.

If brands are squealing, the domain industry is licking its chops at the new opportunity.

In a letter to the Committee on Commerce, Science and Technology protesting ICANN’s gTLD plan, the Council of Better Business Bureaus estimated that registry ICM and the registrars selling .xxx made approximately $23 million from defensive registrations by trademark holders who simply wanted to protect their good names from abuse.

Verisign, which operates the .com and .net registries, is talking to clients about managing or handling the back ends for new TLDs. Sarah Langstone, Verisign’s director of product management, estimates that ICANN will receive 1,000 to 1,500 applications in the first period, with approximately two-thirds of them coming from brands.

Despite the public outcry, she says, “We’ve seen a significant increase in the number of interested parties asking us for more information on how they can leverage our services.”

There are good arguments in favor of branded TLDs. It would eliminate the need to create torturous URLs for microsites and campaigns. Paramount, for example, could simply use movietitle.paramount for its films. And it would let companies with many products and channels create simple URLs for each of them under the brand umbrella.

Only a few brands have publicly said they’ll apply. In March, GMO Internet Group announced that it would work with Hitachi, Ltd. to apply for and operate the new generic top level domain .hitachi.

Neustar is another provider of registry services that hopes to partner with gTLD applicants. Neustar is the registry for .biz and .us, as well as the back-office systems provider for .co. The company does plan to apply for its own brand, .neustar.

“There are opportunities in the market across the board, not only for registrars and registries, but also for businesses who want to differentiate on the web,” says Jim Rogers, vice president of marketing, enterprise services for Neustar. “We are all looking for ways to make our experiences more unique.”

Neustar plans to build a sort of meta website with categories, products and issues important to it, giving them their own domain names under the .neustar TLD. The advantages of this approach, Rogers says, are that Neustar will be able to use simple URLS as it chooses, without trying to find ones that aren’t already taken.

“Everything to the left of the dot is up to us to decide,” Rogers says. “If we want analytics.neustar or ultradns.neustar, those are available for us to build web real estate around.”

Langstone thinks brands are holding back until the last minute so they don’t tip their hands. Acknowledging that new gTLDs are not for everyone, she says, “The argument could be made that it’s an incredibly intuitive way to locate info on the internet.” With the current system dominated by .com, she says, “Although everyone knows a brand, they don’t know what comes to the right of the dot. Now all of a sudden, the brand comes to the right.”