Home / Blogs

Singular and Plural New gTLDs: Costly Headaches

Alex Tajirian

ICANN has recently stated that it will allow the public to register plural and singular gTLDs that are variants of words already registered as domain names. .Books will be able to join the currently allocated .book, and .pet will be able to join .pets. Of course, a pair like .blue and .blues, two words that look alike but have different meanings, isn't at issue here. The focus is just plurals and singulars. But that leaves plenty of room for trouble, and ICANN has to tackle some tough questions now, before the policy launch.

Somebody who owns, say, .car has to wonder if Internet users will be confused when .cars comes along. The same applies to the owner of .bikes, suspiciously eying the newly created .bike. Whoever owns the original word stands to lose business when the variant word pops up. This poses an unintended harm (negative externality) to the Internet. To compensate for the harm, ICANN would have to charge the variant name's owner. If ICANN doesn't, the government can levy some kind of tax on the variant's owner and raise the money that way. Although there might be other sources of harm caused by the introduction of the new gTLDs, there isn't much that ICANN can do now, given that it did not impose any such penalties in the first round of new gTLD allocations.

I don't know the terms that current gTLD owners have signed with ICANN. But when it comes to owners of variant words, the first-round winner of a new gTLD can claim breach of contract and sue if ICANN allows any further variations on the gTLD.

If the owner of .book wants to buy .books, the key is to calculate the additional value that the variant will bring. Buy the variant for a penny over this figure and money is being wasted. Of course, the calculus has to factor in how much revenue will be lost if the variant belongs to somebody else.

For somebody who doesn't own .book but does want to buy .books, a key point to remember is that the word has a built-in competitor. Revenues have to be estimated in the presence of this competitor, with due attention to closed versus open environments, the value of the option to open up an initially closed gTLD and vice versa, the possibility of an externality tax, and the chance of legal costs if the owner of the original word sees reason to sue.

It has been suggested that current owners should have right of first refusal of any gTLDs that are variants of words they already own Hypothetically, this could create a dilemma for ICANN if allocation was done by beauty contest instead of auction. In the second round, a bidder might be more "qualified," based on published requirements. If the owner of a current word turns down a variant, buying it would probably not have added value. With an auction, of course, right-granting issues would not exist, and the entity that won the bid would be the one that valued it the most. Under a non-auction sale, ICANN would need to prohibit current owners from abusing their first-refusal right through buying them only to flip them.

The upcoming new policy on variant words poses complications for ICANN and for whoever wins a variant word that they didn't own in the first round. ICANN needs to deal with possible externalities that arise from user confusion, while the first-time winners of the variant gTLDs need to be on guard against possible law suits from the owners of the original words — which, in turn, presents a headache for ICANN.

By Alex Tajirian, CEO at DomainMart
Follow CircleID on
SHARE THIS POST

If you are pressed for time ...

... this is for you. More and more professionals are choosing to publish critical posts on CircleID from all corners of the Internet industry. If you find it hard to keep up daily, consider subscribing to our weekly digest. We will provide you a convenient summary report once a week sent directly to your inbox. It's a quick and easy read.

I make a point of reading CircleID. There is no getting around the utility of knowing what thoughtful people are thinking and saying about our industry.

Vinton Cerf, Co-designer of the TCP/IP Protocols & the Architecture of the Internet

Share your comments

Once a rentier, always a rentier John Levine  –  Aug 05, 2013 10:55 AM PDT

I thank Mr. Tajirian for once again reminding us of the way domain speculators view the world.

Is the problem with .books vs. book consumer confusion, that users won't understand the difference between similarly named web sites or other resources?  Is the problem security, that bad guys will phish their victims using nearly identical URLs?  Naah.  The real problem is that it might interfere with the entirely hypothetical rent flow to the prior registrant, and by golly, someone's going to pay for that. Oh, please.

It has been obvious for years that the only string conflicts ICANN worries about are strings so similar that the visible version of one is within a few pixels of the other: .unicom and .unicorn, .hotels and .hoteis, and from the previous IDN round .бг and .br.  Whatever the merits of allowing singular and plural names, they don't have string conflicts.

Furthermore, anyone who has looked at the new TLD guidebook would know that there are pages of waivers and other legal conditions, including one in which an applicant agrees not to sue ICANN for anything related to its application, and another in which it indemnifies ICANN against lawsuits related to its application. So in this silly scenario, the prior domain holder would be suing itself.

Finally, there is nothing secret about the contracts between ICANN and the TLDs, since they're all published on ICANN's web site, including the four new ones signed last month, and they (unsurprisingly) make no promises about what other domains ICANN might or might not approve.

Hi John Chris McElroy  –  Aug 14, 2013 1:24 AM PDT

So Google and the other big corporations who filed for TLDs because they can afford the outrageous and anti-competitive application fees aren't domain speculators?

Nope John Levine  –  Aug 14, 2013 6:55 AM PDT

Having read most of the applications, I see big companies are primarily applying for vanity domains, like .OLDNAVY for the clothing chain, or generic names that they plan to tie to existing products, like .DRIVE for Google Drive.

Speculation means buying something in the hope of reselling it at a higher price to someone else, so while there are plenty of reasons not to like all these new domains, this isn't speculating.

Nope Chris McElroy  –  Aug 15, 2013 10:26 AM PDT

Speculating includes registering a domain name that will have search value as well. For instance; Whether .book or .books will get more inherent search traffic, including type in traffic once the public realizes all the new TLDs exist.

In regular domain speculation, something like mini-projectors gets invented. Domain speculators buy up domains like microprojector.com, miniprojector.com etc. before they know which name will "stick" for the product.

That doesn't mean they plan to sell the name. They may plan to build a site if the name they registered is the name that "sticks".

So domain speculation does not necessarily mean buying and selling. Speculation is the process of buying something you think will have future value.

I started doing this in 1995 and built websites on most of the domains I bought if I got around to building them before someone made me an offer on the domain name.

sorry, no John Levine  –  Aug 15, 2013 11:09 AM PDT

The definition of speculation has been well understood since at least the 1600s.  Sorry, but you don't get to change it.

My thoughts on investment vs speculation Alex Tajirian  –  Aug 15, 2013 11:14 AM PDT
Define Speculation Chris McElroy  –  Aug 15, 2013 11:30 AM PDT

spec·u·la·tion [spek-yuh-ley-shuhn]
noun

engagement in business transactions involving considerable risk but offering the chance of large gains, especially trading in commodities, stocks, etc., in the hope of profit from changes in the market price.

That profit can come from use of the domain as well as from selling it. Speculation is defined in the dictionary. Sorry, you don't get to change it.

Now I'm confused John Levine  –  Aug 15, 2013 11:36 AM PDT

If you're arguing that someone who buys BOOK and BOOKS hoping that one of them would become amazingly valuable would be speculating, I wouldn't disagree.

But when you read the applications from Amazon, Google, and Bowker (you did, didn't you?) it is obvious that's not what they're doing.  Each wants to use the term to promote their existing businesses.

It's just semantics John Chris McElroy  –  Aug 15, 2013 12:02 PM PDT

If they are speculating that the TLD will have more value in the future, whether that be for resale or value to their own business, they are still speculating that paying the exorbitant application fees and setting up the new TLD will be offset by the value of the TLD in the future.

So we don't disagree that much. It's just that you used the words domain speculation as a bad thing and made it seem that it was completely different than what others were doing.

Business is business. If you spend money on something in hopes that it will pay off later, you are speculating. It has a very broad definition.

That's not speculation John Levine  –  Aug 15, 2013 2:00 PM PDT

This is silly.  By your definition, if my local greasy spoon buys a new fryolator in hopes that they'll sell more onion blossoms, that's "speculation."

My main point stands, the attitude that people have some intrinsic right to make money from domain speculation, and need to be compensated if they guess wrong is somewhere between pernicious and pitiable.

Never said that Chris McElroy  –  Aug 15, 2013 2:24 PM PDT

Not once have I said I agree with them being compensated if they guess wrong. Assigning statements to me that I never said is a poor way to make your point about speculation.

I like to sit in the chair of the user Jean Guillon  –  Jan 21, 2014 1:04 AM PDT

How will he feel when:
- he finds out he can (has to) register 2 domain names instead of one?
- he finds out he registered one and the other one is not available anymore (taken or cybersquatted)?

Was there a group at ICANN to consider these question?

Users John Levine  –  Jan 21, 2014 9:16 AM PDT

I know a lot of users, and the fraction of them that have ever registered one domain name, much less multiple ones, rounds to zero.

Domain speculators are not "users". Despite what they might want to believe, the Internet does not exist to enable them to make money.

John's Scientific Study Chris McElroy  –  Jan 21, 2014 1:35 PM PDT

"I know a lot of users, and the fraction of them that have ever registered one domain name, much less multiple ones, rounds to zero."

Wow. I'm happy you used such a scientific method of gathering data. From the "lot of users" you know, we should use that as a "sample" from which we apply their level of usage to the whole Internet.

And the word, "Users" is all-inclusive. Of course speculators are also users of the Internet. So your statement is just so obviously wrong, I probably just wasted my time pointing it out at all.

This kind of desperate flailing would be John Levine  –  Jan 21, 2014 2:56 PM PDT

This kind of desperate flailing would be funny if it weren't so sad.

I agree john Chris McElroy  –  Jan 21, 2014 3:36 PM PDT

Your hatred of domain speculators is obvious, but they have a right to their business model every bit as much as anyone else.

To post comments, please login or create an account.

Related

Topics

DNS Security

Sponsored byAfilias

IP Addressing

Sponsored byAvenue4 LLC

New TLDs

Sponsored byAfilias

Cybersecurity

Sponsored byVerisign

Domain Names

Sponsored byVerisign