Sticker Shock: ICAAN's New Rules for TLDs

Creating a website -- currently a fairly inexpensive proposition -- is about to become a lot more costly and complicated.

Nowadays, domain names, starting as low as $3, are readily available and traded openly. Typically, staking a claim to a specific URL or domain name does not present a financial barrier to entry. In fact, even the least technical businessperson can tackle website creation, although hiring a professional will doubtless deliver higher quality results and should take less time.

Regardless of size, financial status, marketshare, or talent, the web offers an inexpensive and readily available platform for users of all types. But volcanic change threatens the equality Tim Berners-Lee envisioned when he crafted the Internet.

Most domain names end in .COM and .ORG; in a “top 100 sites” listing by Ted.com, .COM accounted for half of the primary list. Another 39 used .ORG, while a mix of other top-level domains (TLDs) rounded out the ranking. Under ICANN's new rules, new and distinctive domain names will be released, after review by ICANN. These names will begin to become visible in the greater web in the fourth quarter of 2013.

A highly visible top-level domain, one of the first to gain approval and plan for market release, is.NYC. According to the City of New York’s information page about the .NYC TLD, pricing for these domain names will be based on estimates of related revenue, a model lending itself to more of an auction-based feel than the traditional domain pricing model.

Qualification for acquisition of a .NYC-related domain is also limited. According to City of New York officials, qualified applicants will have a “bona fide presence" in the City of New York, meaning regularly performing lawful activities within the city and maintaining an office or other facility in the city. This is a drastic departure from traditional domain acquisition practices, where anyone with a few dollars can start a named web entity, regardless of location or taxpayer status.

A TLD differs from a traditional domain in its length and its price. New generic top-level domains (GTLDs) change the playing field, allowing for different associations between companies or cities and their web presence. Essentially, the introduction of this new class of domains separates the big players from the little guys. I question not only this fundamental change in the way the web routes naming conventions, but the basic class-level distinction ICANN is allowing to emerge.

You can find the reasoning for this move by looking at ICAAN’s bottom line revenue. According to its FY13 Operating Plan and Budget, ICANN's total operating income was $14.2 million in 2012. However, the organization predicts income of $85.9 million only 12 months later. Six times the operating income, year over year, is enough to entice any company into a new direction. But I question at what cost this increased revenue will come.

If a wave truly becomes a sound at first hearing, then a product becomes a reality at first adoption. Based on the thousands of initial registrants for GLTDs -- despite the massive cost per registrant -- the market apparently believes this new TLD strategy will succeed.

Esther Dyson, founding chairperson of ICANN, states GLTDs "will create jobs [for lawyers, marketers and others] but little extra value." In 2012, the most expensive GLTLD, CDN.net, sold for $185,000, a clear separation from the traditional pricing model for domain names -- the cornerstone of commerce on the web.

The WWW has (for the most part) provided a level playing field for all entrants, regardless of size. True impact has been determined by the masses, nullifying the law of scarcity, and allowing for viral growth of brands and goods based on value -- not marketing might and size of company. How the new GTLD schema will affect search engines, ability to find products, and baseline competition on the web is still largely an unknown. Time will tell as the new web postfixes hit the digital street. Hopefully the final vote, rate of adoption by consumers, will hold the most weight.