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ICANN's Economic Study - It Depends

Economists aren't very good at predicting things, as any one with money in the stock market can attest. The most powerful economist in the United States, the Chairman of the Federal Reserve, is on record predicting a continuing climb in housing prices — just prior to their precipitous decline. And yet their crystal balls still hold some allure for those who need to present "evidence" about the future. Such is the case with ICANN and the new generic Top-Level Domain (gTLD) program.

The latest economic report to be presented to ICANN uses a great number of pages to say very little. It tells us that gTLDs may be useful, or they may be harmful — it depends. We are told that cybersquatting may increase, or not — it depends. We learn that registries might make money, or they might not — it depends. To our astonishment, we learn that sometimes things are good for some people, but bad for others.

The whole report could have consisted of this one paragraph, which contains the entire wisdom of its contents:

"Because business model innovations are difficult to predict, experience with the development of gTLDs that serve specific communities is limited, and the community has no experience with IDNs at the TLD level, it is difficult to describe the expected effects of new gTLDs with precision."

In other words, it depends.

Why Do We Even Have This Economic Report?

ICANN has produced many economic reports. Each time, someone objects to the results, and insists ICANN do another one, hoping for a different result. This is not as ridiculous as it might first appear, because two different sets of economists are entirely capable of coming up with wildly disparate results. In this case, the economic study is mandated by the Affirmation of Commitments. So ICANN is obliged to do it, which makes it obligatory, if no less fatuous.

The Language of Imprecision

The authors were handed an impossible task: predict what going to happen, in both an economic and social dimension, if we do something that has never been done before. With consummate professionalism, however, they were equal to the task, employing two effective strategies. First, they used the bulk of the report to review the history of the gTLD program, other surveys and opinions, and different theoretical frameworks for quantifying economic predictions. Second, they predicted various possible risks and benefits, without quantifying any of them — the words "may" and "might" appear 128 times, or roughly twice per page.

Something for Everyone

By saying that new gTLDs might be good, or might be bad, or possibly even a mix of the two, the authors gave both proponents and opponents something to cheer about, which has muted opposition to the report itself and has instead resulted in the two sides brandishing excerpts from the report, each for its own benefit. But the professionalism of the authors shows through: their most important recommendation is that the new gTLDs will provide data for — wait for it — another study.

I commend the authors for taking money from ICANN, and for setting themselves up for more work later, and for producing a document that looks entirely professional, while saying nothing more than "it depends." They were given a dubious task, and performed it to the hilt.

Should observers of ICANN lend any credence to this study? If your goal is to advocate a position without any empirical evidence, it is an excellent tool. If your goal is to understand what the new gTLD program will produce, it will, if printed out and bound, make a splendid paperweight.

In other words, it depends…

(Adapted from a post made to ICANN's comment forum.)

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Comments

Why Do We Even Have This Economic Report? By Paul Tattersfield  –  Jul 22, 2010 4:17 am PDT

The problem is Antony your primary motivation is to get new gTLDs implemented.

When the economics directly affect your company you are not slow in coming forward to offer your opinion to try and influence ICANN’s thinking in direct favour of your company.

Hence your participation in the Vertical Integration working group – which gives some of the participants the opportunity to try and gain a greater share of riches from the new gTLD money printing machine.

When people who are not connected with your enterprise mention they are not happy being obligated to directly or indirectly fund your new found wealth you are too quick to dismiss their concerns with derision.

ICANN needs selfless people on their committees who are committed to building a more vibrant DNS for the benefit of the whole mankind and less self serving people looking to turn a fast buck at everyone else’s expense.

@Paul - you seem to know a By Antony Van Couvering  –  Jul 22, 2010 9:17 am PDT

@Paul - you seem to know a lot about my motivations, and you seem quite sure that I'm a selfish person who is involved in ICANN and the DNS for the purpose of making money at the expense of all that is noble and true.  I am disappointed, given your embrace of selflessness and wish to benefit the whole of mankind, that you are not on the Vertical Integration Working Group, where that perspective is sorely needed. See my comments to ICANN about the Vertical Integration WG.

I've been working on the DNS since before ICANN, and over all that time my besetting sin has been to characterize the motives of those who disagree with me as illegitimate and unworthy. It is an ugly trait. Slowly, I am coming to realize that people may hold opinions different from mine, from the best of intentions.

I'll take your comment as karma.

@Paul - I believe that the economic By Constantine Roussos  –  Jul 24, 2010 11:26 am PDT

@Paul - I believe that the economic report is just like any other economic report that tries to predict the future. It just can not predict the future. Perhaps if we had Nostradamus or if ICANN employed Bruce Bueno de Mesquita, the so called new-Nostradamus, we would have more accurate results. However even De Mesquita's algorithm on predicting the future might not be as accurate since he specializes in politics and foreign policy.

The main question we should all ask ourselves is whether what we are doing is in the public interest and how we will go over-and-beyond to accomplish this. Public interest is a great discussion to have. Is .music in the public interest of the music community (to help them achieve their goals and making a living as musicians) or is it for the general public (to give them free music despite composers/musicians not getting paid for the piracy that is occurring today).

I was not granted permission to participate in the Vertical Integration working group but I will make sure I will be heard during the public comments period. I already expressed my opinions on the Economic Report.

I agree with Antony on many levels regarding this. It all depends. Some new TLDs will be a success and some will not. I do agree with your underlying concern though about ICANN policy making. While many of us voice our concerns, it seems fruitless sometimes because in the end there are other players with a longer history at ICANN, with more influence and financial prowess. This will inevitably change.

The challenge is determining what new TLD initiatives actually will create value to consumers, the Internet and as you said "mankind." Well there is only one way to find out. Is not finding out a better choice? If you look at innovation and new breakthrough discoveries, they required to go through countless, failed experiments in order to find what works and brings true value to mankind. Without experiments and the opportunity to at least try new things, there can not be any progress forward. As the Pareto 80/20 rule suggests, expect only 20% to bring something truly exciting to the table. The other 80% will not. We can not be held back by the 80% fear. I guarantee you ICANN will collect a lot of insightful information from that 80% which will serve public interest and the Internet as a whole.

Constantine Roussos
.music

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