The Pros and Cons of new Domain Names
There are a range of views among the Internet community, business users, governments, civil society
and the `domain name industry' on the issue of new sTLDs and unsponsored gTLDs. The advocates of
new domain names say they will lead to greater choice for users and open up options for users that have
recently joined the Internet community or will do so in the future. Advocates of new domain names also
say they will lead to greater competition and allow the market to have a greater say in meeting demand.
They also contend that new services can be facilitated by the introduction of new domain names. On the
other side of the debate are many of the existing users of domain names. For them the cost of defensive
registrations, to protect names associated with their business from uses which might range from abusive to
fraudulent, outweighs the benefits which might otherwise be available.
Disadvantages of new generic Top Level Domain names
The strongest argument for not creating new domain names is the cost to business users of defensive
registrations. It is difficult to quantify what this might be but some of the major elements can be specified.
The cost of a single registration under a gTLD, with prices starting as low as USD 4.95 per annum, is
unlikely to be the major consideration for business users. It is true that many businesses register multiple
domains and this may be a consideration depending on the number they want to register. More likely,
however, the largest cost consideration for business users is the administrative and legal costs of managing
an increased portfolio of domain names. In some cases this may be substantial.
Business users recognise that competition among registrars has driven down prices but they are so low
that any potential new price reductions may not be a consideration. In fact, some business users may prefer
higher fees to discourage speculation. More to the point, expanding the number of gTLDs may create new
registries but not impact greatly on end user prices. This is because the prices registries charge to registrars
are determined by ICANN. Many registrars are already offering retail prices at or near to the maximum
prices set by ICANN which the registries can charge the registrars. More registries, and therefore more
competition, may enable ICANN to adopt lighter price controls with, for example, start up registries. On
the other hand it is important to note that each registry essentially has a monopoly for the TLD for which it
has responsibility. Here it must be remembered that a domain name under a gTLD, such as
worth many millions of dollars to the company concerned. This means that it largely irrelevant to a
business user how many alternative domain names exist, in terms of their ability to shift to a new name.
Due to the investment in their existing domain they would be captive to the impact of any price increase,
by a registry to a registrar, if ICANN did not set the maximum wholesale price.
Business concerns may be addressed by mechanisms such as `sunrise periods' where trademark
owners can lodge pre registration requests for their existing domain names under new gTLDs. There might
also be other mechanisms that might be favoured by economists but may or may not be welcomed by the
business community. One example could be the use of Dutch auctions with initial prices set high enough to
discourage speculators but low enough to ensure those most valuing the name can obtain it. But the use of
Dutch auctions would only be practical with a relatively limited number of names being created.
The major disadvantage for business users, under all these options, is that costs may increase
proportionally, up to a certain point, with the number of new gTLDs created. Beyond that point, however,
no costs might be incurred as business would not, in fact, register under any of the new domains. This is
either because the cost becomes prohibitive or it ceases to matter if huge numbers of new gTLDs are
created. No one can say with any certainty what that point may be. Nor can they determine whether the
domain name market could be large enough to reach that point, even if the possibility to create new gTLDs
was left wholly to the market.