Why cybersquatting won’t be a big deal in new TLDs
Cybersquatting is motivated by profit, and it will be difficult to make money cybersquatting on new TLDs.
Much of the talk and consternation over introducing new top level domain names has focused on protections for intellectual property owners. Trademark holders have been worried about having to protect their brands in hundreds of new domain name extensions.
When it comes to cybersquatting, I think it’s clear that it won’t be nearly as big of a deal as it has been made out to be.
Here’s why: cybersquatters have a profit motive. Their goal is to either monetize traffic meant for a brand or to extract a ransom from the brand owner by selling the domain to them.
This works in .com and some popular ccTLDs. But it’s not so prevalent in domains like .biz, which haven’t gotten as much traction.
There are two reasons it won’t be very prevalent in new TLDs, either.
1. The domains will get little type-in traffic. I don’t see many people typing in something like gap.clothing on the assumption there’s a site there. Unless Gap promotes Gap.clothing, it’s just not going to get much traffic. There may be a few exceptions if certain niche TLDs take off, but those can be dealt with with URS and UDRP.
As with .biz, .info, and other domains, this takes away the monetization angle. It may, however, increase some cybersquatting/brand confusion in existing domains if people are confused by something like gap.clothing and go to gapclothing.com or gap.clothing.com.
2. It costs a lot to register many of these domains. Even if the domains get traffic, the holding costs might be too high. So far it seems that many of the new TLDs coming out are going to be priced at $30+. Cybersquatters have dumped millions of domains because they can’t make a profit on monetization at $8 per domain, so it’s certainly not going to happen at $30.
Some people will no doubt still try to sell domains directly to brands under the ransom model. There are fairly inexpensive policy mechanisms to respond to this. But more importantly, trademark holders can just tell the cybersquatters to go shove it. If someone comes to me and tries to sell me domainnamewire.plumbing, would I actually pay up for that?
Sure, brands will still have to look out for things like phishing. But even in phishing, the URLs are rarely that close to the actual brand’s domain name. Most phishers will just buy a cheap .info or .com domain instead, or obscure the phishing link with HTML.
Do you think brands agree with this assessment? I do, and there are some numbers to back it up.
I think most brands have looked at the new environment and decided it will be almost impossible, if not pointless, to register as many protective domains in new TLDs as they do in .com. So they need a different strategy that doesn’t include a lot of defensive registrations.
This is showing up in a couple places.
First, the Trademark Clearinghouse for new TLDs has only 23,000 registered marks. I don’t believe this includes TM+50 registrations, but I think most people are surprised at how low this numbers.
Second, look at Donuts’ sunrise numbers. Even if you add in the registrations that aren’t in the zone file, and the perhaps hundreds (maybe 1,000?) brands that chose a Donuts-wide block, the registration numbers are clearly nowhere near previous TLD launch numbers.
This isn’t a surprise to most people who have been in the business for long. Many TLD applicants have told me that other applicants who are banking on defensive registrations are going to be very disappointed.
I think they’re right.