It is no surprise that brand owners have registered countless domain names that they don’t need.  Over the past few years, ICANN approved and released TLDs such as .EU, .INFO, and others.  Since there was a lack of real data, brand owners did the only thing they could, which was to register names defensively because of the threat of what might happen.  When .ASIA was released, we saw the number of registrations from brand owners begin to drop – likely a result of being fed up with registrar/registry profit driven domain policies.

The problem is that these prior new TLDs have rightly caused brand owners to be suspect of new launches. After so many sunrise periods that hyped the need for defensive domain name registrations, now it's like the boy who cried wolf- many launches are largely ignored. However, every now and again an important TLD change occurs that does necessitate action by brand owners.  One example of that is .CM.

This landscape of the .CM TLD was just recently formed. When FairWinds published a “Perspectives” on .CM cybersquatting back in 2006, the Cameroonian government was running the .CM registry.  At that time, there were only 200 domain names registered to .CM and all other names ending in .CM resolved to a PPC site.  NETCOM.cm Sari took over control of the registry in 2009 and opened registration of domains in .CM. Trademark owners were allowed to apply for their corresponding domains during a one-month sunrise period between June 14 and July 15 of 2009. Sunrise periods allow those with valid trademarks to register their domain name for a hefty sum before all domains become available to the general public. As of August 1, 2009, .CM domains can be registered on a first come, first serve basis regardless of trademark rights.

Because .CM, the ccTLD for Cameroon, is a very common typo error of .COM, its recent launch of unrestricted domain names opened up a new front on the war against cybersquatters.  As with typosquatting of domain name roots (as in “comcasft.com” for “comcast.com”), this form of typosquatting also involves third parties registering domains containing brand names with the intent of profiting off of users’ typing errors. 

In light of this change, we conducted a study to examine the actual response to .CM’s change.  We drew on the data used for a forthcoming study on general typosquatting to examine this phenomenon.  We began with Quantcast’s list of the most highly trafficked domain names, and from that list, we selected the top 250 that ended in .COM and whose root contained more than six characters.  That initial number expanded to 255 in order to include possible hyphenated versions (i.e., wal-mart.com and walmart.com).  Along with these 255, we included typo variations that receive high volumes of traffic and then checked to see whether each of these domains had been registered in the .CM extension.  A total of 183 had been registered in .CM; 121 domains contained the target root and the remaining 62 were typo variations of those targets. 

Out of the 183 domains, an astounding 97 percent are owned by a third party—only 6 domain names are owned by the target company.

Of those owned by the target company, only 4 resolve to the target site, while one displays search results and the last does not resolve.  In total, 97 of the domains owned by a third party lead to pay-per-click sites, meaning cybersquatters are directly profiting off 55% of those domains. 

Another interesting tidbit was found in four domains that led to sites for competing brands.  Staples.cm resolves to OfficeDepot.com, Travelocity.cm resolves to Expedia.com, Walgreens.cm resolves to DrugStore.com and Walmart.cm resolves to eBay.com.  None of these four domains are owned by the competitor, but rather by third parties.  While cybersquatters are not profiting directly from these sites, they are still causing damage to the brands in question and potentially depriving them of sales. 

When ICANN approved new TLDs in the past and registries held sunrise periods for brand owners, many brands rushed out to buy domain names in TLDs like .PRO and .INFO only to realize later that they held very little value for their business.  Although .CM has opened to the public, the registration rates among brand owners remain low. This may be a result of brand owners being skeptical of the value of a .CM domain name. Some may be failing to realize how different this new TLD is—after all, it is common for Internet users to accidentally type .CM in place of .COM. Others may be distrustful of a new registry sunrise period given that ICANN’s policy of allowing registries to operate however they want has essentially resulted in brand domain names being held for ransom by the registry in the form of sunrise periods. In the case of .CM though, brand owners must learn that even if they have no intention of doing business in Cameroon, owning key names in that extension is critical because users are typing them into the browser bar accidently.

What I take from this situation is that while we are all growing incredibly frustrated with the name space and ICANN policies, we need to be diligent in our review of each change.  It is usually best to be conservative with launches, but there are cases – like .CM – where a more aggressive and targeted strategy is warranted. 

The Progress and Freedom Foundation recently published a paper titled “New gTLDs: Let the Gaming Begin” that described the numerous efforts of different organizations to preempt the gTLD application process by registering gTLD strings as trademarks with patent offices both here in the U.S. and abroad.  The paper calls on ICANN to slow down and analyze such actions that clearly provide a short-term financial benefit for the applicants at the expense of trademark holders and registrants. 

These subversive actions qualify as gTLD front running.  Some of you may have heard the term “domain name front running” before.  It refers to the act of using some form of insider information about an Internet user's preference for registering a domain name to preemptively register that domain name.  The “insider information” is gathered by monitoring the attempts of an Internet user to check the availability of a domain name. The term first arose in connection with allegations that ICANN-accredited registrars were using insider information to register domain names in advance of the general public and then using them as PPC sites or reselling them at a higher value.  Similarly, gTLD front running refers to the attempt to gain a leg up on the competition by securing the control of a gTLD before others are able to.  In this case, groups are trying to circumvent the ICANN process by registering gTLD strings as trademarks in an effort to establish their “rights” to those gTLDs. 
Because there is so much more at stake with gTLDs than single domain names, both monetarily and operationally, gTLD front running has even greater consequences for the domain name space than domain name front running.  Interestingly enough, last week ICANN released the results of a study it had commissioned to assess how often domain name front running occurs.  The study examined 600 domains over a ten-month period and found no evidence of front running.
I have to wonder why ICANN would devote its resources to commissioning this study when it has already published papers on domain name front running in 2007 and 2008 and a more complex issue with a greater impact on Internet users has emerged.  Back in June, I blogged about how ICANN’s somewhat limited WHOIS study, while well-intentioned, came too late in the game to provide a meaningful answer to the problem in question.  ICANN needs to address the issue of gTLD front running before it too becomes too big to handle.   

A quick report of some of the most important developments coming out of ICANN’s meeting Sydney:

Despite concerns over the way in which ICANN is moving forward with the new TLD launch, it appears that ICANN is poised to start accepting applications for new TLDs in February 2010. If an application is accepted, it is predicted that it will take about 7.5 months before the TLD can be used.

At the meeting, there has been talk of applications for new TLDs such as .MUSIC, .BERLIN, .WEB, .LOVE, .RADIO, .NYC, .BASKETBALL, .ECO, and .FOOD. Wolfgang Puck was even flown out here to promote .FOOD, which was covered by National Journal: Celebs Endorse ICANN Domain Plan.  Even Sydney’s mayor announced that he is looking to get .SYDNEY. Seeing that there is some interest in new TLDs, it is discouraging that ICANN is not slowing down to make sure that if TLDs are introduced, they are done so in a way that does not jeopardize the safety and stability of the Internet. The TLDs should also add value to the space.

There are still questions hanging over the TLD launch process that should be addressed before any applications are accepted. For example ICANN’s new TLD policy stated that a TLD must be a least three characters. How will they implement this guideline with IDNs (Internationalized Domain Names)? “Characters” function differently when using non-ASCII characters. Does the guideline need adaptation? Furthermore, while IRT discussions are very active here in Sydney, the board canceled their IRT briefing meeting. Since the IRT report concerned itself with protection mechanisms, questions remain as to how they will adapt the report to recommendations offered by the Internet community.

While new TLDs remain the hot topic at the ICANN meeting, other serious policies are also being discussed. ICANN has publicly shown that it is committed to ending the Joint Project Agreement (JPA) that exists between it and the US Government, which is set to expire September 30, 2009.

The meeting has also touched upon the idea of vertical integration, which would allow registrars to become registries and could have major consequences on Internet users and on market performance as competing registrars may resist offering TLDs sponsored by their competitors.

Overall, the policies being discussed at ICANN all address complex issues that require thoughtful and thorough consideration. However, as Steve DeBianco wrote in his own blog entry, “ICANN often deems that meeting its own deadlines is more important than achieving real consensus on serious issues.”

As the debate over new TLDs rages on, more and more people are joining in the discussion and offering their two cents.  Just the other day, former New York City mayor Ed Koch announced that he is behind the .nyc top-level domain.  He went so far as to call .nyc “the best real estate opportunity since the Dutch bought Manhattan,” and asserted that he could not wait to register edkoch.nyc and mayorkoch.nyc.  Koch even noted that .nyc would create jobs and provide much needed money for city programs, a message that has a special resonance in this economic climate. 

Back in March, I wrote a blog post on a similar topic, about Al Gore’s endorsement of a .eco TLD.  Even the Pope weighed in on this issue, arguing that dot-RELIGION domains like .catholic or .buddhist will lead to bitter disputes over who has the right to each of these TLDs. 

The important thing to remember when it comes to this issue, no matter who comes out for or against the new TLDs or how famous that person is, is that the debate is still fraught with uncertainty and disagreement.