How will new TLDs affect your portfolio?

(Editor’s Note: this is a guest post by Shane Cultra, author of the popular domain investment blog DomainShane. I was interested in hearing new perspectives on new top-level domains, and Shane was good enough to provide his thoughts.)
It was inevitable. The growth of the internet and the ever increasing number of people using the web, was going to cause a shortage in domain names.
As the big three – .com, .net, and .org – reached the point that available domains were merely comprised of unpronounceable and hard-to-spell leftovers, internet users began looking for more.
Countries began to market their own ccTLDs as generics, trying to appeal to both local and international users alike. Domain name registries saw the dollar signs and began clamoring to introduce alternatives.
So now that they’re on their way, how will new TLDs affect the value of your domains? Will .web, .car, .love and all the other endless possible TLD options impact the value of your portfolio?
My answer to this question is simple: yes.
There is no doubt all the new TLDs will impact your portfolio’s value. If you own anything other than .com, I think the value of your domains will fall. I feel that .net and .org will fall the least.
The real answer comes down to how the search engines rank the new TLDs. The TLDs that hold the most value will be able to compete in both the US and the international search market.
If Google treats them well, then they will be in the upper tier. The problem is the more TLDs that Google ranks, the more choices a domain owner will have.
As we know, the more choices the lesser the value and chance of a sale. If there are only three shoes on the shelf from which to choose it bodes better for the seller than a shelf with 100 shoes.
In my opinion, the real money being made is by the companies selling these new TLDs. The new releases will leave the domain investing community and domain buyers in general “holding the bag”.
The .travel and .mobi TLDs showed early what will happen as people shy away from a TLD after a short period of time. Speculators were left with worthless domains.
In order for a new TLD to work it takes massive adoption. The local geographic community, the domain investing community, business, and the general public must be a part for it to succeed.
The new .co TLD has come as close as any in the last five years to getting over this hump; .tv, and .me, have also found their place.
A profitable endeavor for the companies managing the release , but only profitable for a handful of people that hold the best of the names.
So back to the original question, will this hurt the value of my portfolio? My second response to my “yes” answer is I think it will increase the value of your .coms.
Dot-com domains are king and will always be the king. They are scarce , wanted and all those that hold the same keyword in alternative TLDs wish they held the .com. Those that tell you different are either naïve or lying.
Domains are often compared to real estate and .com to beachfront property, and I think it’s a good analogy. Beachfront has continued to be considered the most-wanted and highest-priced real estate.
I would throw in big city real estate in this comparison too. You can still buy homes and land outside the cities and away from the beach. Homes just as nice or nicer. Areas of land that are twice as big but still don’t have the value of the beach and city.
When people think of the internet they immediately think .com. When they think of high priced real estate they think of the beach and city. Along with beach and city property, I believe people will always perceive the .com as the highest value.
This is how I am approaching my investment in newer TLDs. I am treading lightly. I continue to invest heavily in .com with a 10% investment in other TLDs. That 10% is invested in super high-quality keywords.
I have no plans to invest in lesser domains, as I think the only possible way to make a profit on my investment is development and I don’t feel comfortable developing domains outside of my field or keywords from random categories.
When I buy outside of .com, I tend to buy in my niche (the names of plants) as they are in my “comfort zone”. For example, I purchased hosta.me because hosta.com is taken and would cost me a ton of money.
I have all the photos and information to develop a site and with hosta being a very collectable plant I thought hosta.me would work. I also can target US Internet users using my webmaster tools – the audience I am trying to reach.
That same domain was a hand-register which tells me that although that has value to me, I would have very little chance of reselling that domain. In short, a bad investment for a flip. In my opinion, this will be the case with 98% percent of all the new TLDs so be very dot-careful.

Surprise! More new TLDs delay likely

The launch of ICANN’s new top-level domain program looks set to encounter more delays, after international governments said they needed more time for consultation and debate.
Three days of talks between the ICANN board of directors and its Governmental Advisory Committee, which concluded yesterday, resolved many of the GAC’s concerns with new TLDs, but not enough.
Obtaining final closure of these outstanding issues during the San Francisco meeting, March 17, now seems quite unlikely, especially if the GAC gets its way.
The meeting started on an optimistic tone on Monday, degenerated into stalemate on Tuesday, and ran over into an unscheduled third day yesterday, by which point the frustration was audible.
Prior to the meeting, the GAC had provided a “scorecard” that covered 12 areas of new TLD policy where it was still unhappy with ICANN’s positions.
ICANN, in return, had provided matching summary documents that outlined the GAC advice and summarized ICANN’s current thinking on each of the issues.
It became apparent over the first two days of the meeting that the ICANN board was willing to compromise on a number of matters, but that the GAC was unable to do the same, due to its need to consult with ministers and unnamed “advisers”.
One side often seemed to have done more homework than the other, particularly on the issue of trademark protection, where the GAC entered the room as a proxy for the trademark lobby, but without the granular background knowledge needed to answer ICANN’s questions.
Talks disintegrated on Tuesday afternoon, when it became clear that GAC members could not proceed before further consultations with their respective capitals, and that ICANN could not fully address their concerns without further clarifications.
Both sides of the aisle retreated into private discussions for the rest of the day, with the ICANN board later emerging with a list of areas it was prepared to accept GAC advice.
These positions had been more fully fleshed out when the meeting reconvened yesterday morning, but hopes of resolving the discussions by San Francisco appeared to be dashed by the GAC.
The ICANN board decided in January that March 17 will host a so-called “bylaws consultation”, during which ICANN tells the GAC where it has decided to disagree and overrule its advice.
But the GAC unexpectedly revealed yesterday that it does not want the March 17 meeting to have that “bylaws” designation.
A clearly frustrated Peter Dengate Thrush, ICANN’s chairman, asked repeatedly why, in light of the substantial strides forward in Brussels, the GAC had suddenly decided it needed more time:

what we’ve done is clarify and limit the work, so the work we now need to do in San Francisco is reduced and comes in with greater clarity. I don’t understand how more work and more clarity leads to the conclusion that you come to. So you have to help me with this.

The US representative, Suzanne Sene, said the GAC was “surprised” by the bylaws designation.

Actually, if we can go back to the January resolution, a sort of reaction we had at that time was some slight surprise actually that without having seen the GAC scorecard, you were already forecasting that you anticipated not being able to accept the advice contained in the scorecard.

Despite the generally civil tone of the talks, and Dengate Thrush’s opening and closing remarks – in which he said that the meeting was neither “adversarial” nor a “power struggle” – this part of the discussion came across more than most like a pissing contest.
ICANN officially rejecting GAC advice through a bylaws consultation would be unprecedented, and I get the distinct impression that it is something the GAC does not want to happen.
If you’re a government, being overruled by a bunch of DNS policy wonks in California is bad PR.
But if a mutually acceptable compromise is to be made without any advice being rejected, GAC reps need time to take ICANN’s concessions back to their superiors for input, and then to form their own consensus views. Thence the delay arises.
At the end of the meeting, it appeared that talks will be continuing in private in the run-up to the San Francisco meeting, which starts March 13. It also appears that the board and GAC will hold not one but two days of talks during the meeting.
What’s less clear to me is whether ICANN has already agreed that the “bylaws” designation will be removed from the March 17 meeting.
If it does, we’re looking at a few weeks more delays post-SF, while the GAC and board resolve their remaining differences, which could easily impact the planned April 14 publication of the next version of the Applicant Guidebook.

Hitachi to apply for .hitachi

Japanese electronics giant Hitachi has emerged as the second big consumer brand to officially announce it will apply for a “.brand” top-level domain.
GMO Registry, also based in Japan, is the company’s back-end provider of choice, according to this news release (pdf).
GMO is also working with Canon, which was the first company to announce its .brand TLD bid, .canon.
As I noted yesterday, IBM is also a likely candidate for a .brand domain, but it has not officially announced its intentions yet.
Nokia, Deloitte and Unicef are also known to be considering their options.
(via UrbanBrain)

Clinton confirmed for ICANN’s SF meeting

Former US president Bill Clinton has been confirmed as the star guest speaker of ICANN’s 40th public meeting, which kicks off in San Francisco in a little under two weeks.
According to a tweet minutes ago from CEO Rod Beckstrom, Clinton will address ICANN’s Gala event, March 16 in Union Square.
This is usually an evening drinks-n-canapes event or a sit-down dinner. The SF Gala is scheduled for 7pm.
Given the central, outdoor location, I’m sure security will be tight. We could be looking at another limited-numbers, invitation-only event.
Beckstrom has previously stated that Clinton’s fee will be covered by a special sponsorship deal, but the identity of the sponsor does not appear to have been revealed yet.

ICANN director has .xxx job offer

Sebastien Bachollet, recently installed on the ICANN board as its first elected “At Large” director, has been offered a job working for the .xxx top-level domain, it has emerged.
According to a board “statement of interests” (pdf) released yesterday, independent technology consultant Bachollet:

has been invited to be a member of the Board of the International Foundation for Online Responsibility (IFFOR), which is set up to be the sponsoring organization for the .XXX sTLD, should ICM be awarded a contract for the .XXX sTLD.

He’s only the second person to be named as a potential member of the IFFOR board, after Canadian entrepreneur Clyde Beattie.
It goes without saying that Bachollet will be recusing himself from the (final?) ICANN board vote on ICM Registry’s .xxx contract, set for the San Francisco ICANN meeting March 18.
If .xxx is approved, IFFOR will create policies governing the .xxx TLD. It will be made up of a mixture of the adult industry, security, child protection and free speech advocates.
The SOI also revealed, in an ambiguously plural statement, that: “IBM may apply for new gTLD”.

Registry objects to .jobs shutdown threat

Employ Media will appeal ICANN’s threatened termination of its .jobs registry contract.
The company released a statement (pdf) late yesterday, following ICANN’s unprecedented threat, in which it said ICANN’s claims are “utterly without merit”.
“We view the substance of this notice to be a surprising reversal of position and contradictory to prior decisions issued by its Board of Directors,” the company said.
ICANN yesterday gave Employ Media until the end of the month to cancel its agreement to provide 40,000 .jobs domains to the DirectEmployers Association for its Universe.jobs employment board.
The organization said the allocation of the domains for non-human-resources purposes went against the letter, spirit and intent of the registry’s contract and Charter.
It essentially boils down to a claim that Employ Media hacked its contract to allow it to start making money on names beyond the limited scope of its original “sponsored” community TLD.
The .jobs TLD was originally pitched as a space for corporate HR pages, not independent jobs sites. With Universe.jobs, half of the namespace is an independent jobs site. Employ Media is believed to have a revenue-sharing arrangement with DirectEmployers.
The ICANN breach notice was welcomed by the .JOBS Charter Compliance Coalition, the ad hoc trade group formed by major commercial jobs sites to fight Universe.jobs.
Peter Weddle, executive director of the International Association of Employment Web Sites, said in a press release:

the Dot Jobs Universe was not an innovation but rather an unprecedented attempt by a registry operator to misappropriate an entire TLD for itself and its alliance partner in blatant disregard of ICANN’s rules.

Employ Media disagrees, of course, saying that Universe.jobs came about as a result of its “Phased Allocation” liberalization plan, which was approved by ICANN’s Registry Services Evaluation Process and then survived a Reconsideration Request filed by the Coalition.
The company said: “it is imperative for registry operators to have predictability in the performance of duties and that ICANN has a responsibility to honor its commitments with contracted parties.”
Its registry contract contains a dispute resolution procedure that first calls for bilateral talks and, failing agreement, arbitration via the International Chamber of Commerce.

ICANN threatens to shut down .jobs

In an unprecedented move, ICANN has threatened to cancel a top-level domain registry operator’s contract.
Employ Media, the .jobs registry, faces losing its TLD if it does not shut down Universe.jobs, the controversial jobs board operated by its partner, the DirectEmployers Association.
In a letter to the company (pdf), ICANN general counsel John Jeffrey wrote:

By not establishing any meaningful restrictions on who may register second level registrations in the .JOBS TLD, Employ Media put in operation a TLD where anyone can register names, thus defeating the purpose for which the sponsored TLD came into existence.
…
We are calling on Employ Media to take immediate actions to implement restricted registration policies that support the purpose for which the .JOBS top-level domain was established, and to cancel registrations and/or disavow themselves of the benefits of any registrations that are owned by related parties, if any.

The move comes following a complaint filed by the so-called .JOBS Charter Compliance Coalition, made up of jobs board such as Monster.com and CollegeRecruiter.com.
They’re annoyed that the registry licensed 40,000 premium geographic and vocational .jobs domains to DirectEmployers for Universe.jobs, which has started to compete with them.
Jeffrey wrote:

It appears that Employ Media and SHRM, through the Direct Employers Association, intend to use the .JOBS TLD primarily to compete with other internet job boards. Such use is inconsistent with the purpose stated in the .JOBS Charter and represented to the ICANN community.

The deal came as a result of a change to the .jobs registry contract, made through ICANN’s Registry Services Evaluation Process, that allowed Employ Media to lift a rule that restricted registered domain names only to the names of companies.
What the RSEP didn’t do was change the .jobs Charter, which restricts “who” may register .jobs domains. Yet, weirdly, the Charter is partly the basis for ICANN’s threat.
Jeffrey refers to the Charter restrictions, which are easily circumvented, as “specious” and “do not serve the international human resource management community”.
This is the Charter that ICANN approved back in 2005, and which hasn’t changed since, remember.
To come back into compliance, ICANN wants Employ Media to shut down Universe.jobs and get back to selling company-name registrations.
I think it’s likely Employ Media will appeal, possibly by taking the case to arbitration, as its contract allows.

US may break up ICANN powers

The US government is considering taking away some of ICANN’s powers.
The Department of Commerce today kicked off the process of reviewing the so-called IANA contract, from which ICANN currently derives its control over the domain name system root zone.
As I predicted yesterday, Commerce has published a Notice of Inquiry in the Federal Register. It wants input from the public before it officially opens the contract for rebidding.
ICANN has operated the IANA functions, often regarded as intrinsic to and inseparable from its mission, for the last decade. But the contract expires September 30 this year.
Significantly, Commerce now wants to know whether the three IANA functions – IP address allocation, protocol number assignments, and DNS root zone management – should be split up.
The NOI says:

The IANA functions have been viewed historically as a set of interdependent technical functions and accordingly performed together by a single entity. In light of technology changes and market developments, should the IANA functions continue to be treated as interdependent? For example, does the coordination of the assignment of technical protocol parameters need to be done by the same entity that administers certain responsibilities associated with root zone management?

I’m speculating here, but assuming ICANN is a shoo-in for the domain names part of the IANA deal, this suggests that Commerce is thinking about breaking out the IP address and protocol pieces and possibly assigning them to a third party.
The NOI also asks for comments about ways to improve the security, stability and reportable metrics of the IANA functions, and whether relationships with other entities such as regional internet registries and the IETF should be baked into the contract.
The timing of the announcement is, as I noted yesterday, interesting. It could be a coincidence, coming almost exactly five years after the IANA contract last came up for review.
But ICANN’s board of directors and its Governmental Advisory Committee will meet in Brussels on Monday to figure out where they agree and disagree on the new top-level domains program.
While it’s an ICANN-GAC meeting, the US has taken a prominent lead in drafting the GAC’s position papers, tempered somewhat, I suspect, by other governments, and will take a key role in next week’s talks.
Hat tip: @RodBeckstrom.

Government domain veto watered down

A US proposal to grant governments the right of veto over new top-level domains has been watered down by ICANN’s Governmental Advisory Committee.
Instead of giving the GAC the ability to block any TLD application on public policy grounds, the GAC’s official position would now allow the ICANN board of directors to make the final decision.
The move means the chances of a .gay application being blocked, to use the most obvious example, are much lower.
The original US position, which was was leaked last month, read:

Any GAC member may raise an objection to a proposed string for any reason. If it is the consensus position of the GAC not to oppose objection raised by a GAC member or members, ICANN shall reject the application.

If this policy had been adopted, all potentially controversial TLDs could have found themselves pawns of the GAC’s back-room negotiations.
A petition against the US proposal has so far attracted almost 300 signatures.
The newly published official GAC position is based on the language in the US document, but it has been tempered substantially. It now reads:

Any GAC member may raise an objection to a proposed string for any reason. The GAC will consider any objection raised by a GAC member or members, and agree on advice to forward to the ICANN Board.
GAC advice could also suggest measures to mitigate GAC concerns. For example, the GAC could advise that additional scrutiny and conditions should apply to strings that could impact on public trust (e.g. ‘.bank’).
In the event the Board determines to take an action that is not consistent with GAC advice pursuant to Article XI Section 2.1 j and k, the Board will provide a rationale for its decision.

This still gives the GAC a key role in deciding the fate of TLD applications, but it’s one that can be overruled by the ICANN board.
To use the .gay example, the GAC could still advise ICANN that the string has been objected to by a handful of backward nations, but it would be up to the ICANN board to decide whether homophobia is a useful policy to embrace in the DNS.
The GAC proposals, which you can read here, are not policy yet, however.
ICANN and the GAC will meet in Brussels next week to figure out what GAC advice is worth implementing in the new TLDs program.
UPDATE: via @gTLDNews, I’ve discovered that US Department of Commerce assistant secretary Lawrence Strickling recently addressed this topic in a speech.
He seems to believe that ICANN “would have little choice but to reject the application” if the GAC raised a consensus objection. According to his prepared remarks, he said:

We have proposed that the ICANN Board use the already-existing GAC process to allow governments collectively to submit objections to individual applications to top level domains. The GAC already operates on a consensus basis. If the GAC reaches a consensus view to object to a particular application, that view would be submitted to the Board.
The Board, in its role to determine if there is consensus support for a given application (as it is expected to do for all matters coming before it), would have little choice but to reject the application.

Does he have a point?
ICANN has never explicitly rejected GAC advice; the forthcoming San Francisco meeting is probably going to be the first time it does so.
My reading of the ICANN bylaws is that the board is able to reject GAC advice whenever it wants, as long as it provides its rationale for doing so.

IANA contract up for rebid this week?

As ICANN’s leadership heads off to Brussels to kick off two days of unprecedented talks about new top-level domains with international governments, one nation has an ace up its sleeve.
The US government could be just a day or two away from putting the IANA contract, from which ICANN derives much of its power over domain names, up for public discussion and rebidding.
It’s a matter of record that the IANA contract expires at the end of September, and that it will have to be renewed this year if ICANN wants to continue functioning as it is today.
But could the rebid process kick off as early as this week? It seems likely. The timing is right, especially if the US wants to make a statement.
It was February 21, 2006, five years ago this week, that the US Department of Commerce put out a “Request For Information” that led to the current five-year IANA deal with ICANN being signed.
No new RFI has been released yet. But Commerce could choose to pull rank, putting pressure on ICANN to recognize its authority, by issuing such a document this week.
There’s also the possibility that Commerce will issue not an RFI but instead a “Notice Of Inquiry”, a different type of public procurement procedure notice that would kick off not just a rebidding process but a whole lot of public argument about ICANN’s role in internet governance.
Over the years, it has not been unheard of for the US government to occasionally remind ICANN that it has a special relationship with it, particularly before important governance decisions are made.
Most recently, shortly before the ICANN meeting in Cartagena last December, Larry Strickling, assistant secretary at Commerce, warned that the new TLDs program wasn’t shaping up quite how the US expected.
Next week, Commerce’s Suzanne Sene is one of several Governmental Advisory Committee representatives expected to take a lead role in the ICANN-GAC negotiations.
One way or the other, the IANA contract is up for renewal this year, and the process may soon start that could see the function, hypothetically at least, change hands this September.
IANA, for Internet Assigned Numbers Authority, is responsible for the high-level management of IP address allocations, protocol numbers, and top-level domains.
If a gTLD or ccTLD wants to make a change to its DNS records it has to go to IANA, in much the same way as domain owners such as you and me have to go to our registrar.
IANA decides whether to redelegate a ccTLD to a new registry, for example. When .co liberalized recently, it only did so after IANA approved the transfer of the domain to .CO Internet from a Bogota university.
It’s also responsible for making the call on adding new TLDs to the root. Assigning the IANA function to an entity other than ICANN could, for example, add latency to the go-live date of new TLDs.
For the last decade, IANA has been pretty much an ICANN in-house department. It’s not at all clear to me what would happen if IANA was contracted to a third party, especially one that disagreed with ICANN’s decisions.
Both the European Commission and the Internet Architecture Board have recently indicated that they believe the IANA-ICANN relationship could be due a rethink, as Milton Mueller of the Internet Governance Project noted last summer.