Business models dependent on ICANN are risky.
If the new top level domain name process and .xxx are any indication, staking an entire business model on something that must work its way through the ICANN process requires unending patience and a strong appetite for risk.
New top level domain names haven’t even been approved yet, but we’ve already seen layoffs in the new TLD business. Companies that sprung up to launch new TLDs have had to cut back to lower their burn rate.
Frustration with the process was neatly summed up in a blog post by Kieren McCarthy today. McCarthy, who previously worked at ICANN, is organizing a new TLD conference taking place next month.
His post is quite long but worth reading. In it he discusses how the new TLD process has stretched on and how recent developments between ICANN and the Governmental Advisory Committee may push it back further. He refers to the ongoing battle over .xxx as another example of a “damaged process”.
I think this one paragraph sums up the tone:
…The Board and staff think they are being clever, and the GAC thinks it’s being clever. The cleverness is so intoxicating that it’s all too easy to forget that the process has actually become quite idiotic.
The dot-xxx farce (yes, it has gone beyond “saga†and is now firmly in the “farce†camp) is a case in point. Neither the Board nor GAC really know what they are doing from one day to the next. There had to be a public comment period on the substance of course. And a comment period on the process steps that might be taken (which no one agreed with). And then discussions of the upshots of those comment periods. And then a discussion about what the Board was likely to do in response to those comment periods. And then a check whether that likely decision would break the GAC’s advice. And then a discussion about what to do if it did. And then the Board saying ‘we think we disagree with you, do you agree?’ And then a discussion saying ‘so you agree we disagree with you. How do we find a way to agree to disagree’. And on and on and on. It would be funny if it wasn’t so appalling.
On the one hand you can say businesses that operate with ICANN knew what they were getting into. But I can’t help but feel that this process has been much longer than it could have been.
The problem is the underlying thinking is flawed, and the new gTLD process needs to go back to GNSO for substantive revision, rather than have the ICANN board trying to out point the GAC with such a fundamentally flawed proposal.
ICANN needs to grasp it should be creating open platforms not offering selected would be contracted parties the advantage of a monopoly position over all their competitors.
The best way to make this work is to release the new gTLDs in waves of something like 5 every 3-4 months and fine tune the process as it goes to contain any damage control. However, most of the new applicants are firmly against this. So, the only alternative is to release them en masse as they pass through the approval system. And what are the chances that something somewhere is going to go terribly wrong? In my opinion, quite high. Once the horses are let out of the barn they’re gone.
If new gTLDs are going to be successful it requires users to perceive names to the right of the dot as superior or definitive.
Therefore by implication names to the left of the dot as inferior.
This gives IBM DELL a huge advantage over HP as two letters are reserved for country codes.
The situation is even worse for Proctor & Gamble, because not only is it not possible to have .pg but they brand on products and $185,000 + $25,000 p.a. just doesn’t scale across multiple product lines.
But most importantly is if Microsoft moves to .microsoft this means medium sized software vendors need to consider whether they too should also spend $185,000 + $25,000 a year with ICANN to brand their offerings to the same level. For small business and startups the cost is likely to prove prohibitive.
Therefore ICANN will have managed to damage one of the most important advantages of the Internet – $10 + hosting and then its down to skill and innovation to reach an unfathomable number of customers.
ICANN taking time to arrive at a long-term defensible decision is one of the best things they have done. .xxx has implications. Unlimited new tld’s have implications, and they are not all good.
As stated above, once the horse is out of the barn, it will be extremely difficult to reverse a poor decision and any resulting damage. So avoiding a mistake up front with new tld’s is much more important than appeasing the few who are chasing profit to the detriment of the majority. Releasing new tld’s en masse is unnecessary and a recipe for quick problems. Why even consider a route like that?
It is indeed difficult to handle such a high degree of uncertainty for such an extended period.
That being said, many businesses are dependent on regulatory decisions and are experienced in managing this type of risk.
In such a situation one hopes for but does not expect, a decisive, prudent and transparent regulator that understands how their actions and words move markets.
One of the things that went very wrong in my opinion was the domain name formatting system.
if http://www.example.com were written down as
com/example/www/ and prefixed with the authoriative host
ICANN:/com/example/www/
One would have been able to unleash the unfairness a long time ago.
I know the arguments as to why this doesn’t work but it does work with digital certificate trust.
However what is lost is breaking system but what is gained is that URLs could have been country specific to start with. All other forms or extension are, effectively silly (IMHO) because there is no place to draw the line and say – this is enough.
However the current system does at least allow the name and the server to be separate. Even if that does make search indexing harder.