donuts-inc-logoReveal day arrived and there is going to be a lot of discussion over the next few weeks about the merits of many of the gTLD registries (for example, what is the plan for .duck and .sucks?), why some companies, such as Facebook, chose to stay on the sidelines, and who the ultimate winner will be for many of the most popular TLDs that have more than one applicant, such as .music, .app, .home., .cloud, inc., and the like.  For a full list of the applicants and the applied for registries click here.

It was the Internet equivalent of Christmas morning, with believers and skeptics alike gathered around the ICANN hearth.  But whatever your opinion on the new gTLDs and whether they are bad, good, ill-timed or simply unnecessary, there was no mistaking that yesterday was a historic event in the development of the Internet as it formally ushered in the era of a vastly larger cyber world which will include hundreds of new stakeholders. It also represented the culmination of years of work by ICANN to develop and fine-tune the new gTLD programs (after spending countless hours and millions of dollars), a program many observers thought would never see the light of day.

The Stats:

Overall, there were a total of 1,930 new TLD applications. The vast majority of the applications came from North America and Europe and roughly 75% of the applications were for generic names that are not tied to a particular brand or trademark. Donuts Inc. applied for a whopping 307 new gTLDs, including .wtf, all of which are for generic or common terms.  Google applied for 101 new registries, including .lol, .goo., and .google.  ICANN has raked in a total of more than $350 million from the application fees alone.

The Announcement

At the ICANN press conference following the registry announcements there were a lot of questions from audience members about the applicant pool and specifically whether the “.sucks” application was indicative of what ICANN was looking to do in reshaping the Internet with the new gTLD program. ICANN’s executives responded by pointing to the goal of the program as creating a broader Internet and that they could not assess the merits of any one application, emphasizing that the new gTLDs would create jobs and spur innovations across multiple industries. Still, there were some odd if not awkward moments during the Q&A (particularly the revelation that all the Arabic names had been listed backwards), along with stark skepticism from the audience concerning ICANN’s review and evaluation system for the new TLDs which is already in progress. Overall however, it seems clear that:

1.) the dominant Internet countries will maintain their positions;

2.) the generic applicants are going to occupy a huge swath of new cyber real estate; and

3.) that ICANN will likely be making changes to the present evaluation system in response to community concerns.

Takeaways From Reveal Day

First, in terms of creating a more globally represented Internet, the numbers above indicate that the already dominant “Internet” countries and companies will continue to exert the same, if not a stronger influence, on how the Internet is shaped. There were a total of 41 new TLD applications from Latin America and Africa combined.  This number has to be a big disappointment to the ICANN brass.  Increasing participation beyond North America and Europe has been a key aspect of the new gTLD program from day one, and the fact that these regions total applications were dwarfed single handedly by Donuts Inc. and does not move forward ICANN’s intended goal of creating a sense of multi-lateral participation in a more internationalized Internet.

Second, the number of generic TLD applications is staggering. For brand managers the greatest potential for trademark abuse and confusion comes from the generic TLD space where the registry owner is operating to maximize its return on investment and therefore is looking to sell the most domain names it can.  This invariably leads to looser intellectual property protections, conflicts and trademark infringement. By contrast, the .brand gTLDs pose much less of a threat because the likelihood is that .google, .ford, .microsoft, .apple, .nfl, and the like, will be used as confined Internet ecosystems where these companies will house their own properties and websites, and will not open them up to the broader public to sell off individual domain names to maximize profit. At the press conference Mr. David Green, a representative from KPMG International, explained that his company saw owning .kpmg as a unique opportunity to optimize consumer identification and that security was a paramount concern for KPMG, stating “[a]ll of the applicants have applied for the right top operate their own secure part of the Internet. They can determine who is in and who is excluded. Secondly these new registry databases have a layer of security called DNSSEC, so the point-to-point communication is a lot more secure.”

However, because most of the applications are for generic TLDs critics of the program will point to this as evidence that the advantages sought by the .brand registries will not create the same opportunities/benefits in the generic space and consequently will simply create a huge brand protection problem for trademark holders.

Third, there was considerable skepticism about the ICANN batching system and how it has planned, at this point, to evaluate and approve the applications going forward.  At present ICANN is using a batching system that pools 400-500 applications together to be evaluated at the same time based on a number of factors including the geographic location of the applicant and the applicant’s score on a time stamping system which is widely referred to as “digital archery.” The digital archery system has been panned as unfair and possibly error prone. Many applicants have complained that the difference between being in the first batch and the fourth, fifth or sixth batch of reviewed applications could force some applicants to wait as long as 2 years to be reviewed. The ICANN brass responded to questions about the system by noting that the first stage of the process would proceed as planned but that there could be changes to the system after the ICANN meeting in Prague on June 24-29, 2012 where ICANN will take time to listen to the community’s concerns. From these comments there seems a strong possibility that ICANN is open to changing the system to make it more effective and allay criticism that it is unfair.

Lingering Doubts?

Lastly, there were a number of attendees that questioned ICANN’s competence and its basic ability to put so many new TLD registries on the Internet and maintain a stable ecosystem. Specifically, the recent security glitch in the TASS application system which caused a long delay in the processing of the TLD applications, the fact that the CEO of ICANN, Rod Beckstrom, is stepping down in a matter of weeks, and the digital archery system, were specific points of concern as to whether ICANN is capable of ensuring the overall stability of the Internet going forward.

In Sum:

Overall, it was a fascinating day which brought to light all of the complexities of introducing so many new possible registries into the system all at once and the vastly different goals of the many stakeholders who will play a part in creating a new Internet. While ICANN can point to the stronger than expected number of applications as proof that there is demand for a broader Internet that can cater to constituents all over the world, it has a long way to go to win over brand owners and trademark holders who think the program is a boondoggle that will create unnecessary confusion and turmoil.

Later in the week we will be writing about what brand owners should be thinking about next as the new gTLD program progresses into the evaluation phase.