ICANN Releases Another Economic Study on New TLDs

New study finds little chance for competition to .com, but some benefits from new TLDs.

Just a day after the U.S. Department of Commerce chastised ICANN for not undertaking a full economic study of the costs and benefits of new top level domains, ICANN has released phase two of its latest study (pdf).

A summary of the findings:

“…we find that additional generic, unrestricted TLDs using the Latin alphabet would be unlikely to provide significant additional competition for .com. However, because of their potential benefits—discussed below—differentiated offerings might provide such competition…”

“…we do not find evidence that scarcity of generic second-level domain names is a pervasive problem; in a high percentage of cases studied, generic terms are unregistered or unused on several different gTLDs. This pattern may arise because multiple TLDs and second-level names such as car, cars, autos, automobiles, etc. all are potential substitutes available to website creators.”

“although many of the benefits associated with Internationalized Domain Names (IDNs) can be realized through the use of second-level IDNs, the benefits of top-level IDNs derived from reduced confusion, increased convenience, and the psychic benefits of inclusion could be meaningful. Second, the potential benefits from gTLDs that differentiate themselves either by being community-based or by employing restrictions on registrants or on the use of second-level domains within the gTLDs, could in, theory be substantial and, by their nature, the benefits of innovative new services are impossible to predict. However, as the case study of .mobi illustrates, the size of such benefits in practice will depend on whether there are other ways to achieve the primary objectives of the proposed gTLD, such as the use of second-level domain names or communication between servers and browsers that provide information that substitutes for the information conveyed by the use of the restricted gTLD.”

“We find that some intellectual property (IP) protection mechanisms implemented during a sunrise period can be effective in minimizing the number of claimed trademark infringements, but that poorly implemented procedures can result in large numbers of improper registrations, as happened in .info.”

“it appears that brand owners expend less effort to protect their brands on less popular gTLDs, which is the pattern one would expect if there companies suffer lower costs from infringing activities on less popular gTLDs.”