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Why Colombia Is About to Make a Colossal Mistake With .CO

Kieren McCarthy

The good news: there's still time to fix it

Ten years ago, the most effective branding exercise the internet registry market has ever seen began. And to celebrate the anniversary, its owner is going to strangle it.

At the ICANN meeting in Montreal this month, the Government of Colombia booked a meeting room, prepared a Powerpoint presentation and invited representatives of the world's largest registry operators to attend. Once there, they were offered a rare and valuable opportunity: to take over running of the .co registry.

A representative from the ministry of technology and communication ran through a 14-page slide deck to a room of people who have tried and failed, repeatedly, to emulate the success of the .co registry: an internet space that went from invisible to Superbowl ad in less than a year.

If attendees had hoped the presentation would provide some insights, however, they were disappointed: the presentation could have described any one of hundreds of registries. Likewise, the list of characteristics the government was seeking in a new contract provider was no more than a simple checkbox of technical requirements that assumes the only function of a registry operator is to provide a "dumb backend" technical service.

Which brought it to the all-important evaluation criteria, comprising four factors: economic proposal, technical proposal, national industry score and handicap workers score. Each was given a weighted score of 70, 19, 10 and 1 respectively. And with that, it became very clear that Colombia is about to make a colossal mistake with its .co internet space.

It may have overall control of the country-code top-level domain, but Colombia hasn't a clue how its internet namespace went from 28,000 addresses to 2.3 million, or how it has become one of the most trusted registries on the internet, or how it built a business around specific groups that keep it thriving.

Colombia has the keys to a Ferrari and thinks it's selling a pick-up truck.

Bad data

And nowhere is that more clear than a graphic in its presentation showing the growth of the registry over time — the blueprint that defines the character of a registry; its past, present and future.

The line chart provided by the Colombian government shows a steady, gradual increase in domain names to a point where, in late 2016, it finally hit one million domains. That milestone appears to spur faster growth up to the present day and the registry's 2.3 million domains.

There's only one problem. It is wrong. As in completely, entirely 100 percent wrong. The .co registry didn't hit one million domains in 2016. It hit it in 2011, just over a year after a small but highly focused .CO Internet company took over operation of the registry.

We know that because the company proudly announced the milestone on June 2, 2011. Coming off the back of a Superbowl ad from GoDaddy and high-profile sales of some of its premium domain names to Google (g.co) and Amazon (a.co, k.co and z.co), the registry was flying.

So how come the stats from the Colombian government said the one million mark was hit five years later? Its graph shows a classic upwards curve that threatens to turn exponential. A footnote in the presentation explains that the data that has informed its view of its own registry comes from Domain Name Stat; a useful service but not one renowned for its accuracy.

Why not just ask the company running the actual .co back-end, Neustar, for the real stats? After all, the Colombian government is in overall charge of its contract; it's not going to say no. But it clearly hasn't, so we did. And Neustar sent the stats.

And the reality is that the actual .co registry growth is a mirror-image of what was pitched to registry operators in Montreal. Rather than a slow start with growth picking up over time, the .co registry was an explosion of growth followed by a gradual slowing — something that is a recurrent trend in mature registries.

This is critical because it drives — or should drive — every other decision made about the registry. In its presentation, the Colombian Government placed a huge 70 percent weighting on a bidder's "economic proposal" which, if you strip away complicated looking formulas, amounts to no more than a lowest-cost model. The cheaper the bid to run the 2.3 million domains, the better the score.

That weighting makes sense if a registry is growing according to the upwards curve that Colombia believes it is. It is the low-margin, high-volume model that the internet industry has long promoted and which in some senses it has become addicted to. But it is also the very model that the .co registry managed to explode — and precisely what makes the .co registry unique.

Colombia has fundamentally misunderstood its own success story. And the space between the two lines — the real stats and the stats that the government appears to believe? As any economist will tell you, that's where the profit lies.

How .co became a go-to

There are over 1,500 top-level domains on the internet but fewer than ten have ever achieved mainstream recognition: .co is one. What's more, it did it while bucking the market. It still charges more than double the market rate and has more than two million domains, putting it in the top 25 of registries by volume.

That was no mean feat, especially given the market dominance of .com and the fact that the companies .co was competing against had been around for at least a decade: .org was the home of non-profits, country-code names like .uk for the United Kingdom and .de for German were the online focal points for those countries' advanced economies. Colombia's economy was ten times smaller and its internet registry thousands of times smaller.

It seems a little redundant to describe the .CO Internet marketing model that made it such a success — it has been the focus of lengthy and detailed analyses over the years — one of which I wrote back in 2012. In essence, it did two key things.

First, it identified groups of people open to the idea of stepping outside the .com default that wanted new internet addresses. The primary target was, and remains, entrepreneurs and start-ups worldwide. Fast-moving firms that want an online presence and a good name.

And second, the registry eschewed the traditional model of exclusively trying to reach people through the companies that sell internet domains, domain registrars, and decided instead to brand itself, putting significant energy and effort into making a .co a consumer good.

It took out billboards in New York's Times Square and in San Francisco and started attending and sponsoring events outside the internet industry to find its new customers. It ran pitch competitions with prize money, launched a "membership program" offering perks to registrants, and partnered with industry-leading coworking spaces, incubators and startup communities, consistently pushing the idea of a .co domain as something more than just an internet address.

It required a lot of resources and effort, but it worked. In fact, it worked so well that the world's largest registrar, GoDaddy, came to it, eager to have something new and exciting to sell to its customers. The result was the first of three multi-million dollar Superbowl ads that ran in 2011, 2012 and 2013 and introduced .co to a global stage.

All of that is demonstrated in the enormous leap in .co registrations that literally hundreds of other companies have tried to emulate ever since, with limited success.

Building trust

In recent years, as .co has matured, it has scaled back its Super Bowl scale promotional efforts to focus on making the registry a safe, trusted namespace, particularly as the explosion in new top-level domains has put more than a thousand new internet extensions online.

That explosion has seen everything from free domains to those costing hundreds of dollars as new registries try to find a niche in the market. In response to that fundamental shift, a number of new measures of a registry trustworthiness have cropped up. One — Cisco's Umbrella — attempts to measure the traffic to certain registries i.e., where millions of people are really going when they travel around the internet. Unsurprisingly, .com came in first; but somewhat surprisingly — Colombia's .co ccTLD came in fifth — even though it is 24th in terms of size. There are a range of others, and in each .co has ranked highly.

All of which is to say that .co may fit in the mid-tier of top-level domains, with between two and four million domains, but it continues to outperform the market and that is a direct result of the determined community-building and marketing effort the .co registry has consistently put in over the past 10 years.

As incredible as it may seem, the overseer of .co — the Colombian government — has seen that success but failed to understand it. Taken at face value, the rebidding approach outlined this month is focused on extracting as much money as possible from the current situation. A lower cost contract typically means higher overall profits.

Except that approach undermines the very value that .co has built up by consciously not acting as a lowest-cost operator, but rather investing in itself by building and growing an online brand that consumers have been prepared to pay more than double the market rate to register and renew on an annual basis.

Today is the last day the Colombian Government is accepting comments that they say they will consider when finalizing the final evaluation criteria for the bidding process. Here is my comment: The evaluation criteria for the .co registry operator needs a fifth component: marketing and community building. And it should take half the weighting from the economic proposal — 35 percent of the overall evaluation score — pushing future registry operators toward supporting the high value .co brand as its own separate space — rather than simply treating it as a database of available names.

Colombia is about to make a huge mistake with its .co registry. I hope that someone is listening and fixes it before it's too late.

By Kieren McCarthy, Freelance journalist; Executive Director at IFFOR
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