Myths and Sensationalism Once Again About the New TLDsPosted: January 15, 2012
Despite having written about myths and misconceptions about the new TLD program before on Business Insider, I feel the need to write again about it – because nothing has changed.
It had seemed for a while that more realism had finally gotten into the mainstream articles about new TLDs. Now that the application period has opened up however, it seems the myths and sensationalism has returned.
I was driven to start this article by this line in an article on ChicagoTribune.com: “Now, consumers can completely tailor the end to their web address.” Wait, what? Not at all…not even close!
First off, “consumers” can’t do anything relating to new TLDs except register domains. Average Joe definitely would not have the ability to apply for an extension even if he used his life savings on the application.
Here are all the costs that applicants/registries will face
1. Application fee: $185,000
This non-refundable fee is simply to submit the application. Applications are not auto-approved, and if there are multiple entities vying for the same extension, ICANN may hold an auction for the rights to it (assuming of course they all have proven they can operate a registry). Some of those auctions may end up running significantly higher than the $185,000 application fee.
2. Ongoing fees to ICANN: $25,000/yr and $0.25/yr per name (if more than 50,000 registrations)
To keep the extension, you have to keep paying ICANN – it’s as simple as that. $185,000 doesn’t secure the extension for life and is not the only cost even if no domain in the extension is ever sold. The $25,000 fee comes via a $6,250 fee every quarter and the $0.25/name fees accumulate and get paid quarterly as well.
I’ve rarely seen either of these fees mentioned and have even seen some articles say the $25,000/yr fee is only $10,000, but both fees are clearly spelled out in the new gTLD guidebook.
3. Must have a COI deposit on file: $18,000 to $300,000
I almost never see this mentioned in mainstream articles. ICANN has specified that a “Continued Operations Instrument” is to be kept in deposit to make sure the minimally necessary registry functions can still happen even if the registry itself is failing. This is in addition to the other costs mentioned.
4. Infrastructure to operate the TLD: Minimum $250,000/yr
A rep from Afilias mentions in this video that for a .brand which would have the lowest infrastructure cost, it would be about $250,000 per year minimum. The initial year may be more given having to set everything up, and certainly for a more generic extension there will be more costs due to registering out a lot more domains.
5. Marketing the extension: $?
Think extensions like .co have successful launches out of thin air? Think again! They’ve spent millions of dollars on marketing during the Super Bowl alone, let alone their many other marketing efforts. It takes a lot to reach a significant amount of domain buyers to help an extension take hold.
So – it should be evident that the cost to even consider launching a new extension will run above a million dollars. From that perspective alone, there’s no way consumers could completely choose their own extension.
So what about if businesses went out and applied for every possible extension? ICANN indicated they will only be approving 500 applications from this first round to launch in early 2013. They may approve more of them later, but that is what they’ve said for their first round of approvals.
500 may be a lot more than what’s currently available, but there are over a million English words, and a nearly infinite amount of possibilities for extensions otherwise. So even from the perspective of consumers using approved extensions to completely customize the end of their domain, it won’t even be close to that. Consider too that more than half of the 500 are expected to be .brand domains, many of which wouldn’t be open for public registration.
Unfortunately, sensationalist statements like that are everywhere once again now that the application process began. Most journalists covering the new TLDs lack sufficient knowledge of domains to understand what they’re reporting on and wind up spreading further misinformation. Hopefully, as new TLDs get closer to launching next year, more real information will be spread about them.