Name Nightmare: New Vanity Domains Could Cost Retailers Millions, NRF Says

Written by Frank Hayes
October 26th, 2011

Ready to pour $185,000 into nailing down your E-Commerce site’s domain name all over again? Starting in January 2012, retailers will be able to apply for new top-level domains (TLDs) that will give them Internet addresses that end with their brand—.macys instead of, for example. But on October 21, the National Retail Federation (NRF) sent a letter to the U.S. Commerce Department asking that the department delay implementation of the new TLD land grab until lots of questions about the process are cleared up.

That could take a while. No one—including ICANN, the body that handles new TLD names—knows how many retailers, manufacturers, cities, organizations or other entities will apply for their own TLDs, or how long the approval process will take (estimates range from seven months to years), or whether there will ever be another chance to buy up vanity domains. What is clear is that it’s going to be expensive—even for retailers who decide not to pop for the chance to slice .com off the end of their E-Commerce site’s address. For those who do, the $185,000 application fee is just the down payment. There’s another $25,000 per year to keep the name. (That’s not including legal fees and consultants, which NRF figures will jack the price up to $250,000 per TLD, plus another $50,000 to $100,000 a year afterwards. Protecting a brand against challenges and cybersquatters could cost millions.)

And you can’t just park the vanity TLD for future use—you’re required to actually be operating the domain on the Internet within a year if you successfully apply for it, which you’ll have to do without knowing if any of your competitors are applying (or if any domain squatters are going after your brand), because the applications will be kept secret until after the window for applying closes in April 2012.

NRF’s letter to the Commerce Department’s National Telecommunications and Information Administration laid out some of the uncertainties and costs for retailers and asked that the department block implementation of the new TLD-approval process “until such time that the business community can be adequately informed of, and digest, its as yet inadequately explained parameters”—in other words, indefinitely. (Commerce got the letter because, officially, the non-profit ICANN is acting on behalf of the U.S. government.)

But even more signs of trouble for retailers are in the applicant guidebook that ICANN issued in September, a 350-page extravaganza of minutiae that explains the process for applying for the new TLDs. Those guidelines outline a bureaucratic maze that might take as little as seven months to navigate. But if a proposed name is challenged by a government or too similar to another proposed name—or even if there are just thousands instead of hundreds of applicants—the process is expected to drag on for years before the domains can be used.

And that’s just for those who apply.


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