gTLD Economic Framework

[Constantine Giorgio Roussos <costa@xxxxxxxx>]

*".**..if the net social benefits for a particular gTLD are high but the
private benefits are low, ICANN could reduce the relevant fees for
that gTLD(Economic Report)"
*

I completely agree with this statement. In order to figure out the net
social benefits, ICANN would have to dig deeper in the business plans of new
gTLDs and determine whether the net social benefits are indeed much larger.
The traditional method of launching a TLD does not indicate significant
social benefits, even though the TLD itself could serve specialized
communities. Further social benefits could be derived from innovative
business models and technology aided by vertical integration as well as
using all high-valued names for the best benefit of all registrants, not
just a few who can afford to buy them in a traditional premium name auction
process.
*
"Benefits of new gTLDs include:
- User benefits that arise from innovative new business models that are very
different from those of existing TLDs’ registry operators;
- Development of gTLDs to serve communities of interest; and
- Expansion of gTLDs to include Internationalized Domain Names (IDNs) that
use an expanded character set and can thus offer new benefits to specific
user communities.
- Providing competition to existing gTLDs,
- Adding differentiation and new products that are valuable to consumers,
and/or
- Relieving congestion problems caused by having only a few gTLDs
- New gTLDs might provide competition to existing gTLDs resulting in lower
quality-adjusted prices (Economic Report)"*

These benefits can be beneficial to both specialized communities and the
Internet. However, in order to blossom, the appropriate mechanisms are
needed to spur true innovation and leveling the competitive playing field in
the domain space. Since only a small sample size of gTLDs has been launched
over the last decade, it is impossible to make general statements about
whether new gTLDs will be successful or not. The sample size is too small,
especially with extensions such as .biz or .info that were too over-general
to serve a narrow or specialized focus. IDNs will bring huge benefits to
user communities with specific language needs.

By removing the Vertical Separation barrier, new TLDs can bring new business
models in the domain space and expand into other industries as well. ICANN
should move forward and allow both Vertical Integration and specialized
community TLDs to launch in order to test and receive meaningful insights
and results that can assist in future round launches. No economic report can
predict the future. Some will bring significant innovations in the space and
some will not. However, given the great head start, size and user adoption
of the .COM extension, there will likely not be any direct competition to
.COM by one sole TLD. However, the value the new TLDs will bring to
specialized communities will be significant, since communities will be given
the opportunity to be represented by a unique identifier and brand that
describes them. New business models that are unprecedented could also expand
the domain space market in new directions and bring significant social
benefits as a result.

*"**Improved navigation of the Internet may be among the benefits generated
by new gTLDs because Internet users will be able to use these gTLDs as
signposts.** (Economic Report)."*

Some new TLDs will lower search costs by incorporating new search
technologies and methodologies that would improve search, navigation and
discovery on the Internet.

*"New gTLDs may yield positive net social benefits even if they have market
power. The introduction of new goods, even when supplied by a monopolist, is
generally beneficial because the provision of some goods at a
supra-competitive price yields higher consumer welfare than the absence of
those goods (Economic Report).*"

While monopoly market power is regarded as the worst case scenario in
getting competitive prices for services/goods, it would be more detrimental
to society if the monopolist did not exist. The absence of these
products/services creates more harm than good. The main issue that should be
addressed is whether new gTLDs create more social benefits on aggregate,
taking in consideration any social harm in the equation. Social harm in this
case is user-confusion and trademark abuse, both of which are interlinked
and related.

In regards to trademarks, history has shown that trademark holders will not
register their marks with all TLDs. In the case of new TLDs, brand owners
will register their brands in TLDs that are associated with their line of
business, which can even bring benefits to them if used appropriately and
more than pay off the annual registration price. Cybersquatters registering
trademarks in unrelated TLDs will not bring harm to trademark holders
because the brand will have no association with the TLD in question, thus
not causing confusion to the user.

Most trademarked words are shared internationally by different companies
doing business in different industries. There is no confusion there. Why
should there be confusion in the domain space? For example, HP makes ink
cartridges. Another company called HP makes steak sauce e.g HP.ink vs
HP.sauce. This example indicates that brands would most likely register
their brand in the TLD that is associated with them. Registering defensively
across all new TLDs would make no sense since the likelihood of inflicted
harm due to cybersquatting approaches zero.

The big problem with user confusion is that society is not used to new TLDs
and most assume that ".COM is king" and every extension ends with ".COM." In
order to change user behavior, new TLDs need to become widespread and used
to be adopted. The long term benefits for society will be significant. Users
are already used to searching using "keywords." New TLDs can be the
extension to that user behavior. User confusion will only be a short term
scenario, especially in the case of specialized community TLDs.


Constantine Roussos
Founder & CEO
.music

http://www.music.us

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