Lost amid the furor about ICANN's rule change that may (or may not) lead to a flood of TLDs is the uncomfortable fact that almost without exception, the new TLDs created since 2000 have been utter failures. Other than perhaps .cat and .mobi, they've missed their estimates of the number of registrations by orders of magnitude, and they haven't gotten mindshare in the target community. So what went wrong? Users stopped caring about TLDs.
TLDs stopped being important about the time ICANN started. Back when I wrote the first few editions of Internet for Dummies in the early 1990s, once we got past the mechanics of getting online, most of the rest of the book was about how to find stuff, Gopher, Archie, Veronica, WAIS, with only one chapter on this newfangled WWW thing. At the time, it seemed reasonable to hope that one of the ways to find stuff would be that the DNS would grow into a directory, along the lines of what .MUSEUM has tried to do.
I expected WAIS, a full text search system, to be the next big thing, since like nearly everyone else I didn't anticipate the way the web would absorb every other application. But in a sense I was right, because the killer app for the web was and is search engines. These days I know a lot of people whose home page is Google, and who have no idea what the difference is between the Google search box and the browser address box. Domains and even URLs don't matter. They type some words into one of the boxes, and if they get to a place they like, they bookmark it.
One of the oft cited examples of groups who would benefit from a new TLD is small language communities, that it would somehow make an online community possible. In reality, while it's important that their writing system is included in Unicode, and that there be display fonts and input methods available for browsers and MUAs, the domains don't matter because nobody's going to type a domain more than once. After that, the sites are going to be bookmarked and the e-mail addresses will be in the address books.
At this point, the only reasonable argument I can see for a new TLD is branding, and there only in areas where brand vs not-brand is interesting. Among the reasons that .COOP and .AERO are flops is that nobody cares about real vs fake co-ops or real vs fake whatever it is you have to be to get into .AERO these days. It looks like .MOBI will work because .MOBI sites work on phones with tiny screens, mobile users care about that, and .MOBI has a compliance process to check that the sites work like they're supposed to. Something like .BANK might be useful to help distinguish actual banks from phishes. Other than that, the main motivation for new TLDs seems to be wishful thinking combined with faith-based budgeting.
One of my correspondents commented out that the existence of typo-squatting as a profitable endeavour provides some evidence that some significant component of the Internet still uses the address bar.
Ah, but type a word or two into the IE7 or Firefox address bar and if they don't resolve as a domain name, guess what happens--the browser passes them to your favorite search engine. People really don't know the difference, and the browsers encourage that confusion. Hence the typosquatting basically steals a name out from what should have been a search where the search engine would offer spelling corrections.
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