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A Case for Limited New TLD Flavors

Alex Tajirian

La Casa Gelato in Vancouver, Canada, is doing just fine by selling a grand total of more than 500 ice cream flavors (wild asparagus, balsamic vinegar, dandelion — you get the idea). On the other hand, Apple Inc. has built its enviable business on the principle of the fewer options the better. So, what does the confused ICANN need to do with its proposed new top-level domains (TLDs)?

My advice: Go the Apple route. When ICANN unleashes its next wave of new TLDs, it should keep them few in number.

Scarcity increases demand. ICANN has already created information scarcity by giving up on its Expression of Interest submissions initiative, a decision taken at its March 12, 2010, board meeting in Nairobi. In doing so, it dropped the idea of having a stage prior to a formal TLD request submission. On top of this information vacuum, keeping the next launch to just a few TLDs would create physical scarcity.

But why aren't new TLDs like gelato flavors? For large offerings to succeed, customers must be able to sample before buying Variety also works when customers know what they want and just need to find a store that provides it.

The initial demand for previously launched TLD expansions, such as dot-biz and dot-info, can be understood in the light of sampling. Note that, after sampling through relatively inexpensive registrations, brand owners decided to keep only a few of the TLD flavors, which explains the drop in their corporate demand over the years. A large wave of new TLDs may make them less likely even to take that first look, since sampling costs can become prohibitive when TLD types, and the number of combinations within the TLDs, get as plentiful as flavors at a gelato store.

By Alex Tajirian, CEO at DomainMart
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Related topics: Domain Names, ICANN, New TLDs
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More flavors are always good Volker Greimann  –  Sep 23, 2010 9:43 AM PDT

Anyone should have the choice to try a new business model that he has confidence in. Of course most new TLDs will not perform like dotCOM, many will be comparable more to dotPRO, dotCAT or dotMUSEUM. So what? We are looking at a brand new domain world, with new trails waiting to be blazed. True, many experimental ventures are doomed to failure, but it is always surprising which ones succeed despite all objections.

The Apple route is a closed ecosystem disallowing anything they do not like. The Apple route essentially disallows innovation, or allows only the innovation that benefits Apple. I prefer the Google (Android) route. More options are good for free development and innovation.

How should ICANN go about chosing which TLDs "deserve" their seal of approval? Your suggestion would lead to a perpetuation of the current use of domains. Who is to say that todays flavor of the month will not be here to stay? Let the market decide what it wants. Sure, many flavors will not meet public approval and slowly pass into obscurity. But let them try!

Volker Greimann

PS: I happen to like Matcha (Green Tea) Ice Cream and it saddens me it is not carried by stores anywhere near my neck of the woods, not even as a flavor of the month.

choice Richard J Tindal  –  Sep 27, 2010 1:19 PM PDT

I like giving consumers the choice of which ice cream they like, not regulators.

Richard

(1) Choices A number of new employees Alex Tajirian  –  Sep 27, 2010 3:16 PM PDT

(1) Choices
A number of new employees when given the option to sign-up for a retirement plan, they choose not to despite very attractive incentives. Studies demonstrate that the more investment choices, the less likely the employees were to enroll.

When Procter & Gamble reduced the number of versions of its Head & Shoulders from 20 to 15, it experienced a 10% increase in sales.

I can give you other examples including Japanese car manufactures.

All the above examples involve public knowledge of the various product versions. Imagine what would happen when the consumer has no knowledge about the value/benefits of products, as in the case of new TLDs.

(2) Technical & Operational
I internally stayed away from technical and operational procedural limitations that have been pointed out by many experts.

(3) Regulatory Incentives?
I did not realize that ICANN is operating on pure regulatory-agency incentives. Can you elaborate?

Terrible idea. Apple and Google are not Constantine Roussos  –  Sep 28, 2010 4:09 PM PDT

Terrible idea. Apple and Google are not about open systems. They position themselves to create closed ecosystems. Look at the iPhone and Android app business. Apple and Google accepts who they want, when they want, how they want to be part of their "system".

If you look at search, Google does as it pleases given the monopoly power, including what ranks where. Google Instant serves as an example how Google tries to gear searchers towards keywords they want searched. You bet those keywords are the best returning keywords in regards to pay per click. End result: fattening Google's wallets.

Apple? Here is a prime example of closed ecosystems: If you are an artist and you want to get on Ping? Good luck with that. They do not accept indie artists. They suggest you pay an aggregator eg Tunecore to have access to their system.

The web is open and consumers should be able to choose whatever TLD they want. Lots of competition equals lower prices. Consumer wins. This forces new TLDs to innovate. Again consumer wins.

Support an open web, not supporters of closed systems such as Google or Apple.

Constantine Roussos
.music

I agree with your point about Apple Alex Tajirian  –  Sep 29, 2010 5:21 PM PDT

I agree with your point about Apple being a closed ecosystem. But,

(1) Volker, above, has also made the same point.

(2) You are completely forgetting about an organization’s objectives. In the case of Apple, they seem to think that such a closed system generates higher shareholder value. We can argue whether such a corporate objective makes sense, but that’s not the point here. So, what are ICANN’s objectives? Then, given these objectives, we can analyze whether limiting new TLDs makes sense.

(3) In my comment, above, I provide three other examples of “more is not necessarily better,” which you overlook. By limiting new TLD choices, ICANN is reducing the selection overload that an average consumer would face, unless you (unlike consumers in general) think that information and choice overload is a good thing. It has nothing to do with a “closed” or “open” system.

AlexHow do you propose to limit the Richard J Tindal  –  Oct 03, 2010 9:27 PM PDT

Alex

How do you propose to limit the number of new TLDs?  Who would make the choice and how would they decide?

Richard

Good question Richard!The answer would be easy Alex Tajirian  –  Oct 05, 2010 5:12 PM PDT

Good question Richard!

The answer would be easy if ICANN has coherent actionable objectives; Industry members ‘ conversations and arguments would be more fruitful when focucsing on which TLDs best meet these objectives. However, even with such objectives, ICANN would not necessarily get it right in the first round of new TLDs launch. The market would then determine the need for new TLDs and gives ICANN and the community a chance to learn from the experience. In contrast, ICANN has presented the new TLDs as a problem looking for a solution.

The Governmental Advisory Committee (GAC), for example, has proposed a selection framework. ICANN has also outlined a prioritization framework in the event that the number of applicants exceeds the 1,000 technical threshold.

Another alternative is to focus launches based on their signals: location, community, etc.

If new TLDs would be based on Constantine Roussos  –  Oct 06, 2010 4:20 PM PDT

If new TLDs would be based on selection, then the criteria would obviously be based on demand, need, reach and business plan. However, I doubt ICANN is interested in creating business plan competitions or suffering the rage of TLDs being left out. Unfortunately, ICANN has made the decision to open up the web and turning back will be problematic, despite it being a safer option.

While I love the idea of selecting only the TLDs who have shown demand and a viable business model that is innovation-friendly, the truth of the matter is that it is not in ICANN's best benefit. More applications and more TLDs equate to more revenues, power and control as well as responsibility to sustain the new TLD ecosystem. ICANN is primarily launching TLDs to bring innovation and competition in the space. Will be interesting to see the Vertical Integration final resolution. It will certainly indicate whether ICANN is committed to competition brought by new entrants or if it is based on a moneygrab. Consistency is key. I think that ICANN has been very wise in its decision making thus far, despite the delays. What we need is consistency in the ultimate goal of the launch.

Whether there is 20 or 1000 new TLDs is irrelevant. In the end, the marketplace will sort things out. Will be quite exciting to see how so many TLDs will compete against each other. I just hope that a free trade and openness in distribution model is adopted. You will see a lot of creativity arising from that. If you keep things the way they are and only release a few TLDs, then less companies will compete and innovate as a result and we will see more of the same boring "business models" that plagues the domain industry of new TLDs which is primarily based on speculative domainers.

It would be useful for ICANN to incorporate presentations to the Board of "competitive" bids of TLDs with more than one applicant. Maybe that could be a possibility before the last case scenario of auction.

Constantine Roussos
.music

You are right that ICANN has opened Alex Tajirian  –  Oct 07, 2010 6:03 PM PDT

You are right that ICANN has opened a Pandora’s box with new TLDs. But that should not stop us from learning and improving on the experience.

If new TLDs would be based on selection, then the criteria would obviously be based on demand, need, reach and business plan.

A number of companies demand pollution rights. Thus, based on your argument, the market should select the amount of pollution, which would be no limit; not a desirable market result. There is also demand for buying human organs. Are you suggesting that it is OK for, say, eBay to allow it? I am sure you can be more creative with other contrary examples to your argument.

I am not sure what you mean by “reach” in selecting TLDs.

I love the idea of selecting only the TLDs who have shown demand and a viable business model that is innovation-friendly.

Which TLD applicant would show you their estimate of demand? No one! What business plan are you talking about? Even early-stage VCs don’t care about a business plan. Are you saying if a TLD is “innovation-friendly,” it should be accepted? What if the innovation has a negative impact (in an economic, not moral sense) on the industry? What if the innovation confuses customers (as in too many TLDs) that they stay away from them?

ICANN is committed to competition brought by new entrants.

Is this competition among new TLDs or with existing TLDs? (I could not figure it out from one of your earlier posts either.) If latter, why not start with TLDs that can potentially compete with existing TLDs. If former, why not start with TLDs that have similar signals with multiple interested parites?

Whether there is 20 or 1000 new TLDs is irrelevant. In the end, the marketplace will sort things out.

So it is OK for Apple Inc. to intruduce a complicated interphase for its iPhone, as eventually the “marketplae will sort thing out”? What about bankrupt GM? Should it have been allowed to continue producing various versions?

If you keep things the way they are and only release a few TLDs, then less companies will compete and innovate as a result and we will see more of the same boring "business models."

But earlier in the same paragraph you said, “Whether there is 20 or 1000 new TLDs is irrelevant.” So, the more the TLDs, the more the interesting the models? Are you suggesting that new industy viable business models can only come (or are supirior) with new TLDs?

To sum up, you are ignoring a number of basic elements: prices, signal qualety, that there are market failures, and that ICANN, as an organization, is driving blind folded with no actionable objectives.

Thanks for your time and comments that have sharpened my thinking about new TLDs.

Anyone can criticize everything and make arguments Constantine Roussos  –  Oct 08, 2010 1:48 PM PDT

Anyone can criticize everything and make arguments against new TLDs. The fact of the matter is it will happen. It is inevitable.

Citing demand is an easy task. You can check Google suggestion tool. The 3 most searched terms on the Internet are music, lyrics & videos. The most searched genre on Youtube, the biggest video site, is music.

We have collected over 1.5 million signatures for our movement and run a few of the biggest social media accounts on the web, including Myspace which is home to 14 million music artist (major/indie/unsigned). Showcasing the element of demand is not brain surgery.

Comparing the demand for official .music websites and the demand for organs is not pertinent to the web. The most active group on the web are musicians and bands. I could go on and on about music consumption and the cultural significance of music but I am sure I have illustrated my point well.

I was baffled on the previous limited rounds why some meaningless TLDs were accepted. .COM is too similar to .biz. The .info is too generic. We could go on and on about this. If we truly want an open web, then the web should be expanded. I agree, it might not be perfect but things will sort themselves out.

I disagree that ICANN is driving blindfolded. I think they have accumulated a lot of feedback on the matter of new TLDs the last few years. You cite pricing and market failures, however I am a firm believer in letting the market sort things out. You would be amazed about the feedback we could receive from Internet users about new TLDs as well as adoption of some TLDs that stand above the crowd.

Most new TLDs will fail or not be an overwhelming success. We all know this. This is the beauty of competition. The successful ones will create new value and bring innovation in the space. You can not deny the 80/20 Pareto rule. This is how progress is achieved. You need failures to truly have successes. Apple is the poster child for creating continuous improvements based on feedback.

If you would like competition and innovation then new players have to be allowed to participate. If countries can have their own ccTLDs why can't communities or niches have them as well? Why should there be a .travel and not a .music?

If some people would like to stay away from certain TLDs it is their prerogative. People visit the sites they like. ICANN has no say in morality or ethics. The web is open. I do not see people deciding not to visit twitter.com because it has a silly name or not using bit.ly because it is a Libyan ccTLD. You are not giving users enough credit. If users trust shorteners, then why wouldn't they not trust new TLDs? Remember you can not even see the destination URL with a shortener. As I said, things will sort themselves out and even if 20% are successful then it is a value added and better than the status quo. How do you expect progress if you just do nothing?

Constantine Roussos
.music

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