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New domain names put name brands in a bind

06 ноября 2008

Worried about having to shell out millions of dollars to protect their brands, several major companies are protesting the launch of a slew of new top-level domains -- the suffixes like ".com" that appear at the end of Web-site names.

Verizon Communications, Marriott International and New York Life Insurance are among the companies arguing that the new domains could open the flood gates to Internet fraud and drastically increase their costs of doing business online. The companies also say there couldn't be a worse time than a down economy to saddle them with the added expense.

The organization that oversees the Internet, the Internet Corporation for Assigned Names and Numbers, plans to start selling the rights to an unlimited number of top-level domains next year. These domains are likely to take their names from popular subjects, types of businesses, geographic locations or even brand names, such as .bank,.hotel,.nyc or .verizon.

Companies fear that if they don't register their trademarks at the new domains, their brand names could be hijacked, leading to mistrust of their brands, as well as Internet scams.

"Companies are in a difficult position. In one sense, they may feel compelled to register their crown jewels in all these locations because if they don't, an infringer will come along, and you will have to deal with the consequences. But at the same time, it's a huge waste of corporate resources," says Sarah Deutsch, vice president and associate general counsel at Verizon.

ICANN, a not-for-profit organization whose members include the registrars who operate the top-level domains, says it is accepting feedback as it rolls out the new domain names, but that the current domains are too crowded. The crowding makes it difficult for newcomers to buy a domain that suits their business.

ICANN says it plans to carefully review any organization that is applying to operate a new top-level domain."No one is saying that there won't be challenges in this, but there are enormous innovation opportunities as well," says Paul Levins, the group's executive officer and vice president of corporate affairs.

Companies are debating whether they should buy up the rights to operate their own brand-specific domains, such as .marriott or .nylife. They also are looking at registering their trademarks for more generic domains. For example, Marriott is considering acquiring the rights to Marriott.nyc, Marriott.travel or Marriott.vacations.

"There is certainly a possibility that someone could create a site that looks like a legitimate New York Life site, then request Social Security numbers to get account information. The New York Life brand would suffer if any scheme like that were successful, and consumers would suffer, too," says Ken Hittel, vice president of New York Life's corporate Internet department.

The application fee to operate a new top-level domain is $185,000. Companies that buy the rights to one would also bear the technical costs of running a registry, as well as the marketing costs of drawing consumers to the new sites.

The application process and the high cost may dissuade an impostor from forking out such an amount for a brand-specific domain like .marriott.

The bigger issue for companies probably would be more-generic domains like .bank, which could attract interest from multiple parties and spark bidding wars.

The companies that end up operating such domains are expected to offer trademark owners the chance to register their trademarks early for about $500 per domain, about 10 times as much as the price to the public.

A typical company might register 20 sites within each new top-level domain, making the total cost to participate in all 200 of them $2 million, says Josh Bourne, managing partner of FairWinds Partners, an Internet-strategy consulting firm.

There currently are 21 generic top-level domains, such as .org,.info and .biz.(This excludes the domains used to designate countries, such as .cn for China or .de for Germany.)

Companies already spend a significant sum each year to buy up domain names connected to their brand.

Industry executives say consumers are likely to stick with their current Web-surfing habits, so they expect the new domains to have little business purpose. Web surfers are more apt to continuing visiting sites with the standard .com suffix, such as NYLife.com, instead of visiting a Web site with the address customerservice.nylife, says New York LIfe's Mr. Hittel.

"It is difficult enough to get consumers to visit any domain name that doesn't end with .com," he says.

Companies say they have been through this before, pointing to earlier launches of such domains as .asia or .eu. They bought up hundreds of thousands of domains pre-emptively but say these sites either sit dormant or fail to generate traffic.

Источник: Total Telecom

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