Advertisement

NEW CGI Directory

Home Guides General Information Article

New TLDs: Business as Usual for EuroDNS!

2.5/5.0 (2 votes total)
Rate:

Xavier Buck
August 15, 2008


Xavier Buck

Xavier Buck
Chief Executive Officer, EuroDNS - President, Domain Invest



Xavier Buck has written 1 articles for DomainInformer.
View all articles by Xavier Buck...

 

Over the last weeks a number of people wondered about “the ICANN Paris announcement on new extensions ”(1) and how it could affect the market in general and our projects in particular.

Based on our collective 10+ years of experience of the market and on independent research, this article aims at clarifying the existing situation (I.) by presenting both an historical (A.) and geographical (B.) perspective, to ultimately explain why so-called “new TLDs” are an opportunity (II.) to comfort the customers’ understanding of existing domain names (A.) while strengthening the power of generic names (B.)

 

I. An overview – why the announcement was expected and will not be ground breaking

A/ A necessary and long-standing process

a) Opening of new TLDs was inevitable

Even if for most people, the Internet “just works”, more and more governments are challenging the legitimacy of ICANN and are strongly reluctant to see what is first and foremost a “US entity” ruling the global “naming structure” of the Internet. If one could see China’s “solution” as a bit extreme (2), Russia’s formal request to get a Top Level Domain (TLD) in Cyrillic Script (3) could be a sign of things to come on a larger scale. As is already the case for .Cat (4), new TLDs could, for example, allow for communities or even governments to reinforce their presence on the Internet.

Less-known outside of the community, the fact that the “Joint Project Agreement” linking ICANN to the US Department of Commerce should be terminated in September 2009 is an even stronger signal. Not only will ICANN have to formally prove its independence, it shall also “maintain and build on processes to ensure that competition [is] identified and considered in TLD management decisions, including the consideration and implementation of new TLDs and the introduction of IDNs » (5)

So the fact is, ICANN could not not launch new gTLDs. And given the criticism it faced following the rejection of the .XXX extension (6), the “Internet Corporation” has to do it right this time. Indeed, the way “.xxx” got rejected (7) showed once more how strongly influenced ICANN is by one administration. This situation is borderline inacceptable to interest groups and other “unaligned” governments.

While the so-called “bottom-up” process which theoretically allows various groups to express themselves and to disagree with future decisions has always been one of the best arguments of ICANN when asked about democracy (8), the fact is that the road to independence is still a long one, despite the fact that various stakeholders are meant to think they are all part of the “family” through Constituencies and that even end-users have now been given a budget to organize a summit (9).

It stands to reason therefore that the biggest token of independence ICANN could give the world would be to implement more and more Top Level Domains. ICANN was forced to show the world that they are not stopping new TLDs but rather are opening them to the world over.

b) New TLDs: when and how?

The guidelines to submit an RFP and the exact costs for launching a new TLD have yet to be set. ICANN, an expert at spending money, burned 10Mio $ already to “reflect” on the topic. Granted, a change of this magnitude should involve experts and possibly paid consultants, but one can wonder how this spending will be passed on to the incumbents. As every great spender, ICANN knows how to recover money when needed, and, for this reason, the RFP costs could be quite high.

Even if it is eagerly awaited by many, the RFP will, most likely, create a lot of frustration. Indeed these rules will most certainly contain a range of subjective criteria to comply with, require approval of Ad-hoc Commissions, whether a certain Commission offers opportunities to object for third-parties, etc…

So even though publication of the RFP is definitely going to be a step towards transparency, water will become clearer but only for the actors agreeing to sit altogether in a well-delimited aquarium. One can hope the RFP remains as neutral and welcoming as possible, and EuroDNS will use its networks and influence to steer in this direction.

This is why, If anything, the announcement represents a set-back. All stakeholders expected ICANN would choose Paris to finally publish the RFP (10)for new TLDs, they were told to wait for the Cairo meeting, in yet another three months. The fact is that ICANN is far from being ready to release such an RFP. Setting-up the kind of rules required for a new TLD application is highly complicated. As a result, they have been postponing it for years, from one ICANN meeting to another. So instead of just saying “see you in November!” they decided to “stage” a big Board vote about it to show the world that things are still moving on – albeit at a sluggish pace – and, cross their hearts, the world will (eventually) see new TLDs.

B/ Benefit of Hindsight: why new TLDs will not change the landscape (11)

Like many others, this industry has no crystal ball. Rather, one only has to analyze the existing offering to guess quite accurately what the future holds. As previously said, while the general public sees ICANN’s announcement as groundbreaking news, the reality is it means absolutely no change in the rules on ICANN’s side. Over the last years many new extensions have been created, mostly without fanfare and little memories – anyone knows .Coop? – so what is changing is not whether or not new TLDs will come, but merely the set of rules [allowing the creation of new TLDs] itself… And what it will contain is anybody’s guess at this point!

People who wonder whether new TLDs will modify the importance and value of .com and ccTLDs (12), seem to have forgotten that many other “new” extensions have come out steadily since 2001, including worse-sellers like .jobs, .travel, .coop, .museum, .aero. Some people don’t even seem to remember that there is a .biz out there! Likewise, the arrival of even more TLDs should not shift traffic away from the Generics and the ccTLDs.

II/ A chance – Why new TLDs will actually boost the old ones and strengthen the market

A. The user point of view: the Behavior Pattern

Because of the “somewhat limited” perception with which people see their world, various basic but well known scenarios of Internet usage which show people usually surf either to a big/international portal or to a local website.

• Whenever somebody looks for a service, such as Facebook, , he/she will enter facebook.com (unless facebook produces content for the user’s own country and language, then some percentage of the users will surf to the ccTLD like facebook.de).

• Whenever somebody wants to read local news, he/she will enter “localnewspaper.his ccTLD”

• When somebody looks for a hotel in London he will either go to a global portal, such as expedia.com or hotels.com, or try to find local deals under domains like londonhotels.co.uk or London.de.

 

 

For clarification, the pyramid behavior pattern can be split in:

Global (gTLD): .com, .org

Larger Regions: .eu, .asia, .lat (soon)

Country (ccTLD): .de, .dk, .fr, .co.uk, .ru, .nl,


This is the pattern used by the Internet population today. This population understands global and local. Even the TLDs in between (larger regions TLDs, like .eu, .asia) will have a hard time to be integrated into the daily behavior pattern.

The reason why this behavior pattern does not accept TLDs like .museum, .coop, .jobs, .travel, .aero simply comes from the fact that people use the descriptive part of their target in the subdomain and not in the TLD. The brain tells: “whatorwho.where “.

The “.Where” being the global (.com for commercial and .org for organization targets) or the local ccTLD. The “where” also solves the language issue for global players, by giving the right content and language to local communities.

As an example, Monster.com, the world leader for job postings does uses Monster.jobs to redirect on its website. The same applies for Delta Airlines, United Airlines and Lufthansa who don’t use a Delta.aero or Lh.aero or for TUI, the large travel group who doesn’t have a Tui.travel, neither do Expedia or Lastminute…

Besides, concurrently with globalization and its consequences, we are witnessing the resurgence of regionalism and protectionist tendencies. Populations have an emotional relationship with their own TLD because country-specific content talks to them about them and about the world but in their own language with their own cultural sensitivities. Their country extension is their home on the internet. Their extension provides a link, a strong attachment to the country in populations’ eyes. Any company doing business through the internet needs to adapt not only the website language to be accepted in a particular market but must also adopt the relevant ccTLD. This sense of belonging can be seen more and more with “enlargement states” from the former Eastern bloc using the .EU TLD in their communication or services: Europe is not a given to them, it is a strong part of their (new) identity and therefore they want to show it to the world and on the Internet.

Research shows (13) that local search is the second most important occupation on the internet after emails as people (obviously!) tend to search for things in the areas where they live and in their own language rather than looking for things on a global scale. ccTLDs give a clear answer to this need.

We believe that the more TLDs the more lost the Internet users could be… All the more reason to stick to today’s pattern.

Because of this behavior pattern a company is unlikely to build a business on a new TLD. Imagine RYANAIR had started its online flight reservation portal under ryanair.aero (let’s leave Trademark issues aside). It would have been an extremely ill-conceived move. Why? Following the Pattern above, people are most likely to enter ryanair.com or their ccTLD (e.g. ryanair.it, when they take off from Italy), but almost never a .Aero name, firstly because they do not know it exists but more importantly because they do not want to know it does! Putting it simply, since .Com and “my” country are the logical options, why should I care about the 280 TLDs that could be available?

Direct navigation is a fact. 37% of the traffic comes from direct navigation, which in practical terms shows people transposing the pattern explained above into the navigation toolbar. Speaking of RYANAIR again, having only RYANAIR.areo would run the risk to see a large percentage of traffic go to another portal that would use the .Com or a strong ccTLD.

As long as this pattern exists new businesses will not grow at an international level on a new TLD without also promoting and using primarily the global and local TLDs. Besides, everything runs a (virtuous) circle since until a significant quantity of large international portals do not appear under the new TLD the behavior pattern of people will not change.

Because of this Chicken – Egg dilemma the behavior pattern will in all likelihood never change.

B/ New TLDs: great news for the Market!

Judging by last June press coverage new TLDs will attract even more publicity for domain names in general. More and more attention will be given to the domain industry and the marketing and communication world should finally understand the sheer importance of domain names. The main street and financial spheres will start to realize that domain names are the real-estate of the Internet.

The launch of new TLDs will give a strong boost to this process as well as give the opportunity to startups to found a business on a good generic name at decent price, saving them the embarrassment of creating brands with double “HH” or triple”iii”.

Indeed, one the strongest advantage of having had to wait for new TLDs for so long is that we can hope the market will learn from its mistakes. dotBiz never actually got many users because it was too similar to .Com and with virtually no intrinsic value. This is why a “.Web” would not, in our minds, be successful: .Com is already the “dot on the Web”.

Instead, so-called “city TLDs” such as .Berlin, or more recently .Paris which have been endorsed by the city itself (15) could prove a tremendous opportunity for generics and new markets (i.e: Taxis.Berlin, Fashion.Paris…). The same would be true for “categorized” TLDs (i.e: Basket.sport or Recover.health).

Conclusion: Much aDot about nothing?

Be it due to the (relative) futility of the exercise or to (strong) force of habit we clearly believe new TLDs will not create a breakthrough in this industry’s economy.

Because most users do not even know there is anything outside of .com or of their usual ccTLD, those will still rule the naming game and assets in .com or in ccTLD will should at the very least stay untouched. Better still, since new TLDs could very much confuse the user (Do I go to www.Hotel.Berlin, to www.Berlin.Travel or to www.NiceBerlin.Hotel ?) the safe and well-known become even more attractive, which means the value of .com and ccTLDs will arithmetically rise.

As a leading global Registrar, EuroDNS will embrace any Top Level Domain its customers want to register. We have the capabilities to welcome hundreds of them, if they were to materialize. Our track record in recent launches clearly shows that we can be ready quite quickly and offer the best experience to our customers: even if new TLDs should not change the market, we will be ready to adapt, if need be.


 

(1) also called Top Level Domains or TLDs throughout this document

(2) http://www.domainnews.com/en/general/us-warns-china-of-technological-isolation.html

(3) http://www.domainnews.com/en/general/russian-president-requests-new-russian-internet
-domain-in-cyrillic-script.html

(4) See http://en.wikipedia.org/wiki/.cat

(5) http://www.icann.org/general/jpa-10-responsibilities-table-09jan08.pdf

(6) http://www.domainnews.com/en/general/icann-rejects-creation-of-.xxx-domain.html

(7) Mainly under pressure from the US and Brazilian governments

(8) As stated in the Memorandum of Understanding between ICANN and the US DoC

(9) See Board Resolution #12, Paris Meeting

(10) Request For Proposal: the set of rules to follow in order to submit an application

(11) “The creation by ICANN of additional generic top-level Internet domains will offer value in some instances. But [we] expect classic extensions like ".com" to continue to dominate overwhelmingly in the marketplace” – Gartner Group : http://www.gartner.com/DisplayDocument?doc_cd=159489&ref=g_homelink

(12) country-code Top Level Domain : .FR, .UK, .JP, etc…

(13) Piper Jaffray Research, The User Revolution The rise of the Internet as a Mass Medium – February 2007 pages 161-164, 201, 307, etc

(14) http://www.iht.com/articles/2008/06/22/business/net23.php

(15) See speech endorsing .Paris from the City hall : http://www.youtube.com/watch?v=xobNi9iAM0I

 

 

               Hosting Bookmarks   


Submit Your Articles or Press ReleaseAdd comment (Comments: 0)  

Advertisement

Partners

Related Resources

Other Resources

arrow