Clearing the Air Around New TLDs

From conversations surrounding this new TLD launch, it appears that some people do not understand the total investment required to become a new registry. Brands cannot just pay the application fee for a branded or generic TLD and get operational privileges for it- actually using a TLD for Web sites, email and other applications also requires the development, implementation and maintenance of a fully functional registry.

Even if the owner of a new TLD does not plan to sell any domain names to the public, there will be operational costs required in addition to the ICANN application fee. First, brands would need to build or outsource the infrastructure. Then experts, developers and advisors may need to be hired and consulted to ensure that the TLD delivers on the agreed upon terms with ICANN. The bottom line is that it may require nearly a million dollars annually for a brand owner to create and use a new TLD.

I’m not trying to advocate either for or against participating in the coming new TLDs. However, as brands are planning on investing in their own new TLDs, I feel that it is important to highlight the significant budgetary expenditures required to register for one or more TLDs. Manpower, technology, insurances, ICANN fees and the other resources that are necessary to keep a TLD running are integral parts of the deal.

Another aspect of the TLD launch that brands should be aware of is that the launch will not be limited to the creation of new dot-BRAND extensions. Hundreds of unbranded TLDs might be created by entrepreneurs – think along the lines of industry extensions such as dot-TEL, dot-MOBI and dot-TRAVEL that have launched in the past. Entrepreneurs might now apply for something like dot-HOTEL or dot-SHOES.

In my opinion, it’s likely that the majority of the new TLDs that will come in the next three years will be unbranded and companies will have to decide whether or not to register their brands under someone else’s extension. If half of the expected 1,000 new TLDs are unbranded, and you register an average of five names in only 50 percent of the sunrise periods, then you can expect to pay $625,000 in registration costs. It will cost a similar amount to maintain the names biannually. With these potential costs looming, this is a great time to ensure that your domain strategy is narrowed to the pursuit of only the most productive domains for your brand; such a strategy will help prepare you for weathering the coming launches.

Brands should consider the source of much of the information regarding the launch; some in the industry are touting the launch, while others are dismissing it and there may be conflicts of interest. Brands should beware of over-hyping from those looking to strike gold through sunrise periods, for example. If you have any questions about registering for a TLD, feel free to submit them – we’ll keep cutting through the smoke and mirrors to provide the facts you need.