New top level domains, new issues, new risks

business-dreyfus-81-150x150On 26 June 2008, the ICANN (Internet Corporation for Assigned Names and Numbers) confirmed its decision to provide the public with the opportunity of creating new top level domains. Several hundred generic top level domains have been created since 2012.

What is the purpose of these new top level domains? – As the range of available top level domains became increasingly limited, the creation of top level domains unlocked the opportunity of choosing preferential domain names and to increase the size of the market.

What’s in it for business? – The creation of new generic top level domains raises considerable stakes for businesses. Henceforth, each entity can benefit from a top level domain in its name. These top level domains allow a better exposure on the Internet, bringing real added value to businesses, as a clear and definite top level domain allows Internet users quickly to identify the owner of the website. As the name of the domain is the gateway to e-commerce, an informed choice of the top level domain should be carried out to guarantee cyber traders all chances of success. The acquisition of a new generic top level domain is in effect an advertising investment.

What are the risks? – The first issue raised is that of the identity or similarity between a new top level domain and an earlier right. But the ICANN has introduced a legal system of protection to prevent giving rise to unmanageable legal uncertainty. The next issue is the  registration of generic terms as top level domains. The domain name does not have to be distinctive. A generic, necessary or usual term may be registered as a top level domain if the applicant has a justified interest to proceed with such a registration. Yet monopolising such a top level domain provides for a competitive advantage which is difficult to defend.

Furthermore, the increase in potential domain names may give room for increased cybersquatting activities, which consists in purchasing a domain name to subsequently resell it at an inflated price to companies that need it. Yet a report called The Name Sentry Abuse by Architelos chambers, which specialize in the management of domain names, in order to evaluate the amount of abusive registrations, shows that the number of registrations of new generic top level domains is inferior to that of abusive registrations of domain names comprising of a pre-existent generic top level domain. This outcome should be qualified nevertheless since the number of abusive registrations comprising a new generic top level domain has increased substantially.

Besides these legal problems, there is the issue of the reaction of Internet users towards the creation of these new top level domains. A survey carried out on a thousand of American consumers by Interbrand during October and December 2014 shows that these new top level domains have a lesser influence than .com on Internet users. Firstly, it is shown that people remember the name of domains with .com more easily than the name of domains in a new top level domain. The rate of “clicks” also shows that users are more likely to steer towards an address with .com than towards a new top level domain even if the name of the domain with .com appears lower in search results. It would thus seem that  e-commerce websites run the risk of losing visitors and hence, potential customers. Nonetheless, the outcome of such a survey have to be put into context. The emergence of these new top level domain is still relatively recent. Internet users should be given time to adapt before the attractiveness of these new top level domains can be assessed.