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How to Turn a Closed Generic gTLD Into a Restricted One

Molly Burke

As the New gTLD Program has rolled out over the course of the past few years, the Internet Corporation for Assigned Names and Numbers (ICANN) has made a number of program changes along the way. One of these changes disallows closed, generic gTLD applications, such as Amazon's application for .BOOK.

Now, applicants for closed generics must decide how to proceed: whether to open their generic strings to the public, limit registrations to a defined portion of the public, withdraw the application, or sell it.

While some applicants for closed generics are already considering selling their strings to operators more experienced in running open registries, others are weighing the costs of revising their original business plans and operating restricted registries.

Despite the added work involved, this middle ground can provide as valuable a platform for innovation as closed and open registries.

The Internet Corporation for Assigned Names and Numbers (ICANN), which oversees the New gTLD Program, announced the prohibition against closed generic gTLDs last October. Earlier in the year, ICANN's Governmental Advisory Committee (GAC) had identified over 100 generic strings that it said were contrary to the public interest. The ICANN board endorsed the GAC advice but noted it would not apply if an applicant could demonstrate the closed registry would serve the public interest.

A restricted gTLD won't be the same as one populated by a single-registrant, speaking with one voice. But nor will it dilute the registry operator's central message, purpose, or intention, the way an open generic might.

The traditional gTLD space is filled with successful restricted registries — .GOV and .EDU are the most prominent examples — so ICANN's decision doesn't have to be the death knell for applicants of closed generics. Those applicants can still build an intuitive and meaningful restricted namespace.

The most obvious benefit of operating a restricted registry, as is the case with an open registry, is the potential for profit, though registries will have to carefully weigh potential profits against the cost of running the registry. Of course, determining the potential profitability of a registry is exceedingly difficult, as the market changes constantly. But applicants can take a number of steps to increase their chances of financial success.

Restricted registries can take advantage of options available to all applicants to strengthen their exclusivity. They may, for example, reserve up to 100 names for promotional purposes before going live. They also may reserve any number of second-level domains as "premium names," which can be sold at higher prices, adding to the proprietary nature of the string.

Operators of restricted registries also must work closely with their registrars to enforce the restrictions they impose. Without enforcement, the restrictions will be meaningless. And the registry operator must understand that a restricted gTLD may not discriminate against otherwise eligible registrants, such as competitors.

The Registry Agreement and Registry-Registrar Agreement are the primary places a registry must clarify its new policies as an open or restricted registry. Clarifications must also be made to the Acceptable Use and Takedown policies.

A registry that makes the necessary adjustments to run a restricted generic may reap the benefits, despite having had to abandon its original plan and adopt a new one. As with other types of gTLDs, association with a successful new string can open new avenues for extending a brand, supporting new business models, and creating unique marketing opportunities.

If a new gTLD is well maintained and provides high-quality, relevant content, the operator of that space may be viewed as a trusted, reliable, and useful source of information, which in turn creates demand, and thus profit.

By Molly Burke, Associate at FairWinds Partners
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What happens to harm to 3rd-parties and precedent? Constantine Roussos  –  Jun 12, 2014 6:43 PM PDT

Interesting article which clearly points to a whole host of unfairness, inconsistencies and discrimination issues pertaining to the new gTLD Program. For example, in Community Objections for .MUSIC, .SONG, .TUNES, .BOOK and .MOBILE, the exclusive-access-driven Amazon made their case public and argued with Panelists that exclusive-access is not a problem and that it does not harm anyone or communities. Amazon prevailed in some of those Objections and did not in others (which points to one of the problems with the inconsistencies of the new gTLD Program where one Panel sees exclusive access as harmful and another does not under exactly-similar applications).

It is noted that the Objectors paid hundreds of thousands of dollars to the ICC and Panels after they lost their Amazon Objections in which Amazon plead their case that exclusive-access does not harm communities or public interest i.e Objections were defended by Amazon.

Last month Amazon filed change requests with ICANN to make a complete overhaul of changes on the very exclusive-access policies that were objected in which Amazon defended its position. So what happens to the Objectors who did not prevail against Amazon who were right all along? Why didn't Amazon follow suit (just as other Applicants did) to defend their exclusive access position and go forward with their exclusive access language Applications?

The big tragedy of the situation is that ICANN approved the Amazon changes and deemed them immaterial despite knowing all the issues with the Community Objections and the loss of hundreds of thousands of dollars by Objectors who did not prevail against Amazon based on the exact language that has now been changed and approved by ICANN to be deleted.

According to 1.2.7 of the AGB these are not immaterial since they were not done in error, have financially harmed 3rd-parties (Objectors who were right all along) and create a precedent.

Under the same thinking why can't community applicants now be allowed to submit a change if they do not pass CPE in order to "fix" their score since it would serve the public interest just as Amazon has done?

Where do we draw the line? There seems to be clear discrimination against smaller applicants in favor of the big brands (such as Amazon or Google) or deep pocketed applicants by ICANN. It is disappoinitng that both Google and Amazon were allowed by ICANN to proceed with IP-related applications (such as .MUSIC or .MOVIE) when they both have been profiting enormously (and still do) through piracy anc copyright infringement: one as a the provider of ad networks to pirate sites and the other as a major advertiser on pirate sites which make $4.4m a year.

So now, since an Applicant can turn a closed gTLD to a restricted one - just as your subject illustrates - why can't you do the same with Community Applications? What is the difference? It without question discrimination.

We, as DotMusic, did file a Re-consideration with ICANN asking ICANN to clealry articulate how they did not violate the AGB by approving sweeping material changes to Amazon's applications pertaining to deleting the exclusive access language contained therein and to explain how such approval did not harm Objectors, is fair, creates a precedent or was not in error. Refer to https://www.icann.org/en/system/files/files/request-dotmusic-07jun14-en.pdf. There is no chance these changes were not material according to the AGB 1.2.7, so why were they approved?

Looking forward to seeing you all at the ICANN Meeting in London!

Constantine Roussos
.MUSIC

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