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Business Groups Object to Major Domain Name Expansion

Posted by Riva Richmond | November 3, 2011
URL: http://www.entrepreneur.com/blog/220650

Business Groups Unsure About Major Domain Name ExpansionWeb addresses are about to get a major facelift, and small companies could see higher costs, and few gains, when a flood of new online domains take effect.

The Internet Corporation for Assigned Names and Numbers [ICANN] is pushing forward with its plan to add as many as 1,000 new top-level domains to the familiar line-up of .com, .org and .biz next year. But business groups such as the National Retail Federation [NRF] and the Association of National Advertisers are warning that the expansion may simply add up to big bills.

This could be especially true for firms that buy up domain names to keep pace with competitors, or to keep their brand names and trademarks out of the hands of people or companies -- known as cybersquatters -- that register domain names associated with someone else's brand to resell them for an inflated price or defraud consumers.

"Do [small businesses] just buy .hardware or .store, and how do they distinguish themselves and avoid confusion in the marketplace?" asks NRF General Counsel Mallory Duncan. "For a small business, they might legitimately say I don't know if those will ever catch on."  

ICANN says it expects applications from large companies for vanity domains that use their brand names. Examples could include .amazon or .target. Organizations that want to offer registry services will likely apply for catch-all terms like .food, .florist and .realtor, and city names such as .nyc and .london.

Advocates of the name expansion believe the new top-level domains will provide marketing advantages for businesses and make it easier to steer customers to their sites, while increasing competition among domain registries. Search engines have said that they will factor the new domains into their search results, suggesting significant changes to page rankings that could alter the way consumers find businesses online.

Small companies will want to consider whether the domain names that emerge will provide worthwhile benefits for their business, given the costs. With ICANN charging $185,000 per application -- plus legal and consulting fees likely lifting the cost to $250,000, according to the NRF -- a top-level domain of one's own will likely be too expensive for most small companies.

But businesses may want to buy domain names that include new generic domains when they start becoming available next year. For instance, "Wheelies" bike shop in New York City may want to buy wheelies.bicycles.nyc. Prices for these domains will vary, ICANN says.

ICANN will take online applications from January 12, 2012 to April 12, 2012 for new top-level domains from organizations that aim to administer them. ICANN's evaluation of applications will take nine to 20 months. It expects to hold future rounds, but no dates have been set.

Will having a broader choice of domain names benefit your business, or harm it? Leave a comment and let us know.