New gTLDs for SMBs: It’s All About Equity

Much of the treatment that new gTLDs have received in the media since ICANN approved the program in June has centered on the possibility that there is now a potential for “.ANYTHING” – in other words, anything can come after the “dot” in domain names. That means that any company can apply for its brand name as a gTLD. Much of the treatment that new gTLDs have received in the media since ICANN approved the program in June has centered on the possibility that there is now a potential for “.ANYTHING” – in other words, anything can come after the “dot” in domain names. That means that any company can apply for its brand name as a gTLD. But is that really true? Will just any company really be able to afford to apply for its own gTLD?

The answer is likely no. In addition to the $185,000 price tag attached to the applications, there is also the $25,000 annual ICANN fee to consider, plus (and in my opinion most importantly), the fact that applying for a new gTLD involves signing up to operate a domain name registry, a completely new business endeavor for most companies.

The reality is that new gTLDs will likely turn out to be a game that only the biggest brands can play. Small- and medium-sized businesses (SMBs), for the most part, will probably not have the financial and other necessary resources to operate their own gTLDs.

This does not necessarily mean that SMBs will be totally shut out from the new gTLD space, though. A question that all brands, both SMBs and larger companies, will have to answer is whether or not they should register domain names in category term gTLDs (i.e., generic or industry terms like .MUSIC or .HEALTH) for reasons other than defensive purposes. Largely, the answer will depend on whether or not those new gTLDs gain “equity.” .COM, for example, currently has a great deal of equity, whereas certain other gTLDs like .INFO and .BIZ have very little (if any) equity. Branded gTLDs will inherently have equity for the brands they denote; .CANON, for example, has intrinsic value for Canon, as well as for consumers because “Canon” is a brand name they recognize.

A major factor that will determine whether or not category term gTLDs will have equity is how they are developed and promoted to potential registrants. For example, if .HEALTH is run completely openly, and any party can register any domain in .HEALTH, it is unlikely to acquire equity in the same way that .TRAVEL has not acquired much equity. On the other hand, if there are sufficiently stringent requirements to register in .HEALTH, such as the requirement that registrants be accredited hospitals or legitimate pharmaceutical companies, that make Internet users regard .HEALTH as a trustworthy space, then there is a greater chance it could gain equity. It will be an uphill battle, though.

Another example is the potential .BANK extension: the American Banker’s Association (ABA) and Financial Services Roundtable (FSR) have indicated that they will apply for .BANK and make it only available to accredited banks. There are hundreds of small and local banks here in the U.S. that are unlikely to apply for their own gTLD, but registering domains in .BANK could offer these smaller institutions access to better technology and increased security features that were previously unavailable or prohibitively expensive.

In a certain sense, SMBs have an advantage here, because they can wait and see how the space develops before they dive in headfirst. As I mentioned before, all brands will have to take defensive registrations into account, but SMBs can hold off on promoting new gTLD domains, if they wish to do so, until they know whether or not they have acquired equity.