ICANN Domain Landgrab: What SMBs Should Know

The next Internet real estate boom is about to get underway. Do you know where your domain name is?

Perhaps a grammatical tweak is in order: Do you know where your domain names are? There will soon be a whole lot more of them. The Internet Corporation for Assigned Numbers and Names (ICANN) just released the list of proposed new generic top-level domains (gTLDs). ICANN received nearly 2,000 applications. Today, website registrants pick from one of 22 gTLDs, though the .com domain has remained the sought-after home for most for-profit businesses, large and small. (After all, it's Facebook.com--not Facebook.net.)

Plenty of large companies applied to create new gTLDs that reflect their brands and related terms, like .apple or .panasonic. Small and midsize businesses (SMBs) could be impacted in major ways--good and bad--by the pending changes, too. Scan the proposed list and you'll see potential new domains like .accountants, .agency, .architect, and .builders--and we're not even past the letter "B" yet. Skip ahead and you'll find examples like .healthcare, .photography, and .restaurant.

A single company, Donuts.co, applied for all of the above examples--and 300 others, too. You'll never see "math" on a list of my strong suits, but that means Donuts.co forked over more than $56 million in application fees; the startup has more than $100 million in venture backing.

[ Looking for funding to grow your business? Avoid killing your chances with potential investors; read 4 Critical Missteps When SMBs Talk To Venture Capitalists. ]

Roughly half of those gTLDs are uncontested, meaning no one else applied for them. Pending ICANN's review process, Donuts.co will likely end up as the gatekeeper of at least 150-plus new domains and possibly plenty more. While the likes of Apple or Panasonic may simply be protecting their brand and business, Donuts.co doesn't plan to keep these domains for its own use. It intends to become a wholesale power broker in the expanding map of the Internet. It stands to reason SMBs will be among the biggest retail buyers of its domains.

"Those TLDs that are delegated to us, we will make them available, the same way Verisign makes .com available, via the network of ICANN-accredited registrars," said Dan Schindler, co-founder and executive VP of sales and marketing of Donuts.co, in an interview. "All our names will be open to [anyone] who wants to register them. They are generic dictionary terms. There are no trademarks and brands included, and they're all for open use."

The ICANN process spawned a good bit of grumbling from some corners of the Internet--and some outright cries of foul play, too. One issue particularly relevant for SMBs: the $185,000 fee ICANN charged to apply for a new gTLD. That's small change for American Express, which applied to own .amex, but it's prohibitive for a small business with, say, $1 million in annual sales.

The application process now complete, SMBs face both new opportunities and new risks. Let's start with the latter. If you currently own [Awesome Name].com, that Awesome Name might soon be mimicked across a bunch of new top-level domains, unless you've got the time and the money to buy up any and all of the surrounding virtual real estate. There's also likely to be a new wave of speculation and squatting once the new domains are made available for general sale. Donuts.co's Schindler likened it to real estate speculation in the physical world.

"With all this enormous new [Internet] landscape available, I can't imagine there won't be people trying to do that," he said. "That is certainly not our intent. We want people to register our names for affordable prices and use them [to] build their own brands on the back of a short, meaningful name."

Search-engine optimization (SEO) is another area of concern. No one's quite saying how the new domains will impact organic search results on Google, Bing, Yahoo, and other sites. (Google itself applied for more than 100 new gTLDs. The company's chief Internet evangelist, Vint Cerf, explained the applications in a blog post. Cerf was ICANN's chairman of the board from 2000 until 2007.) There's simply no way the domain-name expansion won't have an eventual impact on search results, though, and that could cause some SMBs a new wave of SEO migraines. ICANN noted on its website that the new domains will "potentially change the way people find information on the Internet or how businesses plan and structure their online presence."

The coming changes could also lead to potential confusion among Web users. Once upon a time, you might have safely assumed CompanyName.com was the correct URL. With hundreds of potential new top-level domains, brand recognition may be harder to achieve, particularly for the "S" in SMB. An industry expert I spoke with during the application period said: "Small businesses have a risk of getting lost in the shuffle."

Schindler doesn't agree, noting that confusion exists even in today's relatively limited Internet landscape--especially for websites stuck with long, convoluted URLs. (I'd be remiss not to point out it could also affect short names: It's Donuts.co, not Donuts.com.)

Therein lies the major upside for SMBs. If your business has been wallowing at a less-than-ideal Web address--Lame-Hyphenated-Name.net or DifficultToRememberMuchLessSpellCorrecly.biz--the next Internet land rush presents a significant opportunity for improvement.

Today, if Schindler left his job to open a pizzeria, he could fork over $350 to buy danspizza.com from a broker called DomainMarket.com, which buys Internet real estate and then sells it for a (much) higher price than it would cost from a retail registrar. Otherwise, he'd have to opt for a less recognizable domain still available on the primary market, like danspizza.co. (Run, don't walk: GoDaddy will sell you that name for 13 bucks, a nice discount from the usual $29.99 for .co URLs.) His other choice is the aforementioned more-difficult-name-to-remember.com. None of the above options are optimal. But if Schindler's paying attention and quick on the draw, he might snag Dans.pizza for 10 bucks or so, if and when the .pizza domain is approved for sale.

Note that $350 is actually cheap--plenty of addresses available on the DomainMarket site will run a buyer well north of $50,000. A Fortune 500 firm might pay that price; most SMBs could not. Make a killer habanero dip? HotSalsa.com can be yours for just $70,000. (Sorry, pico de gallo entrepreneur: .salsa is not among the proposed new domains.)

Bottom line for SMBs: If your domain names are at all important to your business, take the time now to figure out which of the new gTLDs may be relevant. (You'll find the full list here.) Tax pros, for example, would do well to note .accountant, .accountants, and .CPA are all on the list. Consider which, if any, new URLs you'll need to register for to protect or grow your business. If necessary, set aside some cash now--pricing remains to be determined and will vary by domain, so use the number of domains you think you'll want as the key variable for now. Then keep tabs on the ICANN review process so that you're ready to act when the new domains go on sale. A similar strategy holds true even if your current URL stinks. Start identifying better options based on the potential new domains and be ready to snap them up quickly when they become available.

As Schindler said, there's likely to be a large land grab, just like there was during the first dot-com boom. Someone snapped up Donuts.com long before Schindler's company was even an idea on the back of a napkin. That's a problem Donuts.co hopes to solve, and yet the solution is likely to create its own, updated version of the same problem. Donuts.com isn't owned by Dunkin Donuts, Krispy Kreme, or another titan of the donut industry. It's registered via a Whois anonymizer with an Australian address; the site itself appears to be nothing more than a link farm, or whichever name you prefer for this particular brand of website spam.

"We don't comment on others' individual domain names, but suffice to say we never had any intention of using a .com name for Donuts," Schindler said in a follow-up email. "The domain name space is now all about specific and relevant names. We're looking forward to launching our great extensions as soon as possible."

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