Box 1. 
The challenges of forecasting demand 
As part of the comparative selection procedure ICANN invited all prospective registries to project the likely demand for 
their proposed gTLD, after four years of operation. This process was undertaken in mid 2000. No registry has, at the 
time of writing, been in operation for four years. The earliest registry to launch was Afilias, with an initial release 
 in July 2001. Sunrise periods, however, mean that the initial release does not represent the full launch. An 
alternative indicator for when registries began offering services is the date of their first report to ICANN (
Table 16
This shows that most registries had been in operation for less than two years by December 2003.  
An assessment of the projections for the demand for new gTLDs, against experience to date, would suggest that most 
are unlikely to meet their forecasts. The registry which has performed best, against their projection of likely demand, is 
NeuLevel. By December 2003, Neulevel had registered the equivalent of 26% of their projected demand for domain 
names under 
. No other registry had reached more than 7% of their projected demand.  Some caveats need to be 
mentioned. The progress of Afilias and SITA, registries which initially projected demand for 
.web and .air, 
is measured 
against .
. That being said, the data indicate that demand, to date, has fallen seriously short of the 
projections of most prospective registries.  In two cases registries have only reached 1% of their targets.  
The reasons that demand has fallen well short of projected levels may be numerous. Prospective registries, for 
example, may have underestimated the challenges involved in winning market acceptance for new gTLDs. On the 
other hand there may simply be very little demand for certain types of gTLDs. The projections for demand by 
individuals for personal domain names, by all prospective registries in that space, seem to have mostly widely 
exceeded real demand. In one case a prospective registry projected they would register 76 million personal names in 
the first four years of operation. The fact that these projections were made during the `Internet Bubble' undoubtedly 
contributed to projections vastly overstating likely demand. Smaller registries may also have over estimated the extent 
to which registrars would be interested in promoting their name given the low volume or restricted nature of sTLDs.   
There is, however, one other possible reading of these projections. The new TLDs were allocated on the basis of a 
comparative selection procedure. In such a procedure prospective candidates have an incentive to show their 
proposals in the best possible light. If the criteria for being selected are to serve a widespread need, provide effective 
competition and so forth there may be an incentive to provide an optimistic projection for demand. By way of contrast, 
an auction forces participants to reveal their valuation of the size of the market through their bids. An auction would not 
have guaranteed an accurate forecast of demand, particularly in a `financial bubble', but it would have forced firms to 
reveal their expected demand.   
For its part, ICANN's assessment team appears to have given greater credence to those firms that forecast financial 
losses for general purpose gTLDs during the first four years of service, than to their projected registrations. The 
thinking being that firms projecting financial losses were demonstrating a realistic commitment to competing, over the 
long term, with the established register for 
. But even here the onus of expertise is placed on the 
assessors rather than on the prospective registries where the greatest knowledge should reside in respect to forecast 
demand and the efficiency of the firm. 



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