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CADNA: New gTLD Launch to Cost Businesses $746 Million

The Coalition Against Domain Name Abuse (CADNA) has released a report today suggesting that the Internet Corporation for Assigned Names and Numbers' (ICANN) anticipated launch of 400 generic top-level domains (gTLDs) could cost brand owners worldwide over $746 million. "CADNA's findings are based off a document released by ICANN last month regarding the expected number of gTLDs, or the letters found after the last dot of a domain name like .COM or .ORG, that will be created during the first round of the TLD launch."

On the other hand, Earlier this year, Minds + Machines reported on an analysis predicting new gTLDs will only cost $.10 per trademark worldwide.

Related topics: Cybersquatting, Domain Names, ICANN, Top-Level Domains

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Comments

Support data, please... Jothan Frakes  –  Apr 06, 2010 2:54 PM PDT

This press release provides no real support data and makes some wildly expensive assumptions to conclude with a terribly magnified number.

Please provide support for the findings and a rationale for $500 per name in sunrise and 3 SLD registrations per brand per TLD.

There seems no support data or analysis, so this 'news' seems like it is a cognitive distortion campaign.

Last year it was $2 billion Antony Van Couvering  –  Apr 06, 2010 11:19 PM PDT

I guess Fairwinds (the people behind CADNA) really are doing well if they charge $500 per domain name.  They say that this is a "low price" so maybe they charge even more.  Brands, find a new provider!  You could realize a 5000% savings just by using an ordinary registrar!

As the article notes, at Minds + Machines we used actual data (inconvenient to obtain, but perhaps more reliable) and found that among the top 1000 brands of the Fortune 100, only 29% of brands were registered in the newer gTLDs.  The three SLD registrations number is pure fantasy.

Certainly Not "Fair and Balanced" Statton Hammock  –  Apr 07, 2010 11:43 AM PDT

The "report" cited in this press-release is nothing more than a one-page statement intended to stir up fear among CDNA members. The lack of concrete assumptions for the conclusions made has already been pointed out by the other posts. How productive releasing something like this is, I really cannot say.

Furthermore, the "report" hardly tries to be objective - maybe that is the point.  The last sentence summarized by saying ICANN has exhibited a "chronic lack of responsiveness" in addressing brandholder concerns. This is untrue and unfair as CADNA conveniently ignores mentioning all of the efforts by ICANN to: 1) create a process to handle trademark disputes during the new gTLD application process; 2) form the Special Trademark Issues (STI's) Working Group which developed a Uniform Rapid Suspension (URS) process for taking down infringing domains and; 3) create a trademark clearinghouse where brandholders can file their marks against which new registry operators can check for trademarks.

If CADNA want to serves its members and brand holders at large, it needs to be credible. Issuing this "report" undermines that credibility.

How to measure the cost of new gTLDs to registrants? Frederick Felman  –  Apr 08, 2010 5:39 PM PDT

Both CADNA and Minds+Machine could consider a broader view the problem of the expense of new gTLDs.  The costs will be to most registrants and will be composed largely of three elements: 1) Defensive domain name registrations (everyone makes them, including M+M), 2) Cost of monitoring for interlopers, 3) the expense of taking action – which isn’t limited to UDRP (It includes C&Ds;, UDRP, lawsuits, demand letters and purchasing names from third parties). A reasonable economic study should be undertaken that considers these elements and the new proposed rights protection mechanisms mentioned by Statton above.

Value of a domain name Robert Rozicki  –  Apr 08, 2010 7:09 PM PDT

There seems to be an assumption in this article and posts that defensive registrations are seen as sunk cost, a purely static registration that adds no value to the brand apart from making sure someone else cannot have it (no real thought given to whether they'll even want it but that is another story).

Well that is not necessarily true. Some defensive registrations often have a positive ROI which over a period pays for the initial cost of the name and some. This value is derived from direct navigation. This is Internet users who choose to search using the address bar. Estimates claim that this figure is between 20%-25% of all initial navigation. Marketers will also understand that each visitor has an intrinsic $ value. Often very small but a value non the less. Consider also that if a consumer reaches you through direct navigation, studies suggest that they are 3 times more likely to buy your product or service.

Understandably new TLDs will have a longer adoption time for consumers therefore the residual direct navigation figures will be smaller but over the long term most (if a good strategy is in place) should see a positive ROI. This means that the cost of the initial registration is covered and we can all sleep soundly knowing its protected and its paid for itself.

I would suggest people that spread F.U.D or only talk about additional costs such as monitoring and enforcement talk to brand owners marketing people and ask them how much each visitor is worth. You'll have the bones of a real ROI analysis then. Even if you take 1% of a brand owners typo .com's direct navigation traffic (if you know how) as an estimate of potential traffic in a new TLD, then the value of each visitor and combine it with even a $500 price tag, you might find a different story to tell.

If i was a CADNA member I Constantine Roussos  –  Apr 09, 2010 2:54 PM PDT

If i was a CADNA member I would ask for a refund of my membership fee. How is this report credible? A 12-year old art student can come up with stronger assumptions and premises.

So the cost is nearly $2 million per top-level domain? Let us do some basic math here. An extension such as .pro has approximately 40,000 registrations. At $20 a name we are looking at revenues of $800,000. I would even say the average number of registrations would be less for new TLDs, especially with a widely competitive 400 TLDs out there. So answer me this CADNA. An average registry expected to make about $1 million revenues per year will cost brand owners $2 million?

With all due respect, this is just outright hilarious. How is someone supposed to take your press release seriously. This is synonymous to saying that you will go do business in China and throwing an assumption that 1% of Chinese people will buy your product. This is the biggest mistakes that new entrepreneurs make with their business plans. The premise of their financial assumptions are usually wrong by being overly optimistic. In this case CADNA takes the opposite view. Is wildly pessimistic and assumes that $2 million is a great figure per TLD when the chances are that only a few new TLD registries will reach those kind of financial numbers. Unless CADNA is planning for its members to register all domains available for defensive purposes. So what happens when a defensive registration actually makes money for brand owners? Only a few people have considered the benefits.

Let me ask CADNA. How big is the domain name industry? According to 2009 figures, the TLD size is $2 billion dollars. So according to CADNA the costs to business will be 50% of today's global generic top level domain market?

Let me ask CADNA another question. Nowhere in your report do I see the benefits of new TLDs. So where are the revenues? I see no number attached to that. How much do CADNA members pay to get support from this organization? Some realism and credible numbers and basic financial knowledge will help. CADNA refers to costs to businesses when it does not seem to understand basic principle of finance and business formula 101: 

Profit = Revenues - Costs

Where has the revenue part for businesses gone? If you want to refer to writing a press release about business costs then you have to complete the whole equation. This is synonymous to saying Apple has incurred $48 billion in costs for 2009. Based on the CADNA methodology of finance, Apple should close their business. Oh wait, didnt Apple make $60 billion dollars in revenues last year? That brings about nearly $12 billion in profits. This profit is the benefit not the cost.

Is there anyone in the community that believes the CADNA numbers are even remotely close? When CADNA refers to costs do they refer to overall profit loss or are they referring to just costs. If it is overall profit loss then it means that the costs actually are much larger. If they assume just costs, then where are the revenues and ultimately the most important number: profit (or benefit to businesses)?

Constantine Roussos
.music

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