ICANN's Release of gTLDs: More .Hype Than .Hope

June 20, 2011 - The Internet Corporation for Assigned Names and Numbers (ICANN) made an announcement that it would open its list of generic top-level domains (gTLDs) to anyone willing to dish out the $185,000 application fee. Registration for these domains will be open from January 12 to April 12, 2012, and will be able to end in almost any word, in any language, such as “.hosting.”

The decision to release the gTLDs comes after years of discussion and deliberation between businesses, governments and the online community. The Applicant Guidebook has gone through seven revisions to integrate more than a thousand comments from the public.

"ICANN has opened the Internet's naming system to unleash the global human imagination. Today's decision respects the rights of groups to create new Top Level Domains in any language or script. We hope this allows the domain name system to better serve all of mankind," said Rod Beckstrom, President and Chief Executive Officer of ICANN.

Unleashing the global human imagination doesn’t come cheap. In addition to the $185,000 application fee, the application itself is several hundred pages long.

There is an annual fee to ICANN for $25,000, along with the cost of running the domain suffix, which can be anywhere between $10,000 to millions of dollars.

Additional fees, including set-up, maintenance, legal fees and security evaluation fees add another $50,000 to the price tag.

The cost of acquiring your own domain suffix doesn’t make sense for most companies. “For us, the domains seem expensive and offer negligible value,” said Jeff Brown, spokesman for Electronic Arts, Inc.

Competition for some domains may end up in an auction, sending companies into a bidding war for the most sought after domain extensions. Winners will also be determined by their financial and technological capabilities, as well as their intentions for the domain.

For businesses, having a web address that reflects their name can benefit both branding and security. The question becomes: what domain extension will businesses and trademark lawyers go after? Would Clausen go after .claussen or claussen.kraft? Are their lawyers filling out the ICANN application right now, trying to be the first to purchase .pickles? Perhaps the new influx of domain extensions will make it more difficult (and expensive) for firms to decide how to establish their web presence. It will also make it more confusing for Internet users, most of whom search for brands using the dot-com extension, and are mostly unwilling to change their search behavior.

In April 2011 there were more than 211 million domains in the world, with more than half using the dot-com suffix. There are currently 22 possible domain endings, all of which you can acquire affordably through a domain name registration company like Verio.com. You can also check if your desired domain name is available by using whois, a domain name lookup tool that tells you who owns a domain, for how long and when it expires.

Those who are considering applying for a gTLD to benefit their Search Engine Optimization efforts, think again. Because the Search Engines don’t use the gTLD as a ranking signal, there are minimal SEO benefits.

“A website would be much better off investing their resources into measurable online marketing campaigns, rather than spending hundreds of thousands of dollars on a domain extension,” said John Schoofs, Director of Web Analytics at Parallel Path, Inc., a Boulder, CO based Internet Marketing and Web Analytics agency.

Unless you are in the business of buying and selling domain names, the costs heavily outweigh the benefits for acquiring a gTLD. Small and midsize businesses should consider sticking with the dot-com extension and allocating their marketing dollars through paid search advertising, SEO and Social Media efforts.

We will have to wait until next January to see the effect that these new gTLDs will have on the Internet and search, but as for now, don’t ditch the dot-com.