Cars.com $850 Million Valuation: Methodology Critique

Here is a critical look at a recent online essay about the methodology to estimate the value of the domain name cars.com, which was estimated to be $850 million. Not about estimation of valuation model's parameters' nor whether the estimate is too low or too high. Rather its valuation methodology... The purpose of a valuation is Important. Absolute valuation of any asset is its value when put to its best use. more

Online Reviews Provide Insights into gTLD Customers’ Needs

There is a high degree of uncertainty when launching a product, and new gTLDs are no exception. However, registries that have introduced them -- or will introduce them in the second round of new gTLDs -- can improve their odds. A key move: go to established domain name forums and check out their specialized sections for new gTLDs. What users say there can help companies refine tactics and strategy. more

Do New gTLDs Disrupt .com?

This post examines whether the new gTLDs program is a disruptive innovation to the dominance of .com. I then use the idea of disruptive innovation to explain the relative adoption failure of previous generic Top-Level Domains (gTLDs), such as .biz, .info and .mobi. Harvard Professor Clayton Christensen's theory of disruption explains battles between market entrants and incumbents. Examples of markets transformed by disruptive innovations include classified ads (Craigslist), long-distance calls (Skype), record stores (iTunes), research libraries (Google), encyclopedias (Wikipedia), and taxis (Uber). more

Making Sense of Google’s .xyz gTLD Branding

Google has a newly created parent, a holding company that is now its official owner. Of course, Google will keep using its extremely well-known name for its core search and related businesses. But the company now operates under an entity known as Alphabet -- to give its name with extension, Alphabet.xyz. Here specialists in gTLDs may be scratching their heads. Why .xyz? Why this little-known domain for one of the world's great corporations? more

Costly Domain Name Price Comparison Sites

Price comparison sites, including those for domain registrations, are supposed to benefit buyers. Do they? Recent theory and practice suggest a friend-and-foe relationship. Comparison sites introduce an entire layer of costs, notably including the sites' marketing costs. more

Advantages of Crowdinvesting in Financing New gTLDs

The second-round new gTLD applicants have a tool they don't even know about: "crowdinvesting." That's when a venture sidesteps banks and venture capitalists and instead raises money by selling shares directly to the public. Usually this is done over the Internet, and often enough the investors can hope for a financial return that's far better than what banks and stocks offer. more

Curbing Cyber- and Typosquatting

We need a tax. You don't hear that too often. But right now a tax is the weapon needed by the domain name community. We face way too many cyber- and typosquatters. To drive them back, let's tax parked and unused domain names. Done right -- sized properly and phased in -- the tax will make it much harder for speculators to turn a profit while they keep domains sitting idle or parked. more

Unmet Fundamental Requisites for a Successful gTLDs Program

New pioneering ideas are not always welcomed or requested by consumers... Henry Ford didn't wait until people wanted a mass-market car. Citibank didn't wait until they wanted ATMs, and Jeff Bezos didn't wait until they decided to shop on their computers. But the three innovators did more than follow a vision. Before they made their respective leaps, they pondered what people did want. They asked themselves some hard questions. more

Competition for Monopoly gTLDs

The essay examines some of the new domain name managers' unjustifiable obsession with owning monopoly gTLDs when they should devote more energy and thought to making domain names more value adding. For the last three decades, the discourse regarding competitive advantage has focused on the need to rely on rare/unique resources and capabilities. However, more recently, the focus has shifted to the imperatives of efficient utilization of nonunique resources... more

Metrics for New gTLDs Performance

The essay describes six groups of gTLD performance indicators: (1) the presence of a secondary market; (2) uses of second-level domain names; (3) the identity of the owners of parked and not-in-use domain names; (4) domain name renewals; (5) the market size of the supporting complementary assets; and (6) the character of the person in charge of a given registry. A time-trend of these indicators would convey any price inefficiencies and bubbles, and the health of the industry. more

Framing New gTLDs’ Marketing Message

In an earlier essay, I outlined a focused, cooperative marketing strategy that would be a first step for marketing new gTLDs. After that first initiative, gTLD registries' marketing strategy must focus on the complementarities between .com, and new neutral (such as .global and .web) and branding and labeling gTLDs. The legacy domains and the newcomers can work together nicely. If we don't realize this, all Internet users will lose out. more

We Need a Focused, Cooperative Strategy for Marketing New gTLDs

This essay discusses recent findings on the difficulty of overcoming decision bias, and it argues that this factor, when combined with a diverse and fragmented demand for new gTLDs, makes a focused marketing strategy crucial to the success of the program. In addition, success requires cooperation among registries and resellers when it comes to sales and marketing. Impulse buying aside, a product's sales are driven by the product's utility... more

No Easy Solutions to TLD Branding and Labeling

The introduction of unlimited numbers of new generic Top-Level Domains (gTLDs) has increased customer and company confusion about the role of brand names and their product labels, as noted in an earlier post. This essay outlines the various possible scenarios for coupling TLD branding and labeling, and it explains why duplicating the benefits of branding under.com may be difficult. more

Don’t Confuse Brand and Category-Label New gTLDs

The domain name industry gets brand and label confused. A brand sums up what makes a company unique to its customers. A label tells what category a company goes in; it sums up what the product has in common with other products of that type. Sedan and SUV are category labels; Volvo is a brand, one that means safety to customers. Similarly Tesla Motors has its distinctive "Tesla" brand, but it introduces products to its users as "electric vehicles." more

Choose a gTLD for Love or for Added Value?

The decision to bid for a new gTLD can be driven by reason or by love. Either the applicant practices strategic and financial valuation, or the applicant falls for an idea implicit in the gTLD. The second group had better be very lucky or have some motivation besides profit. They enjoy little chance of economic viability. Worse, they follow up their poor initial selection with similar bad calls about their marketing message. more

More Evidence Why Doing Good Pays Off and Love Doesn’t

The new gTLDs program can't succeed unless two things happen. The approved registries must do good, and ICANN must weed out applicants who are in love. This is to say that registries should put users' good first, and applicants shouldn't get the nod unless their motive is economic and/or social viability. A recent study reveals that leading companies have enjoyed healthy profits because they made doing good their strategic foundation. more

Phishing Costs Companies over $411 Million per Alert

Phishing blindsides businesses' best defenses and takes a toll whose price tag still hasn't been pinned down. Here's one estimate: $441 million per attack, according to a recent study of the cybercrime's effect on stock market data (market value, volume of shares traded, and stock volatility) of global firms. The authors use "event studies" techniques (i.e., analyzing the impact of specific types of events on companies' market performance) to analyze nearly 2,000 phishing alerts by 259 companies in 32 countries... more

Getting New gTLDs’ Sales Drivers Right: Simulations Are Key

The new gTLDs won't survive unless registries learn simulation techniques, the only way to understand how sales drivers interact. Some of the new gTLDs have done dismally. Registry critics, including insiders, blame high registration prices, limited supply, and restrictions on usage, competition, and marketing messages. But these drivers connect with each other. You can't talk about prices without talking about price-setting mechanisms and the number of registrations. more

Go Only for Big Bang gTLD Rebranding

If you're considering rebranding under a new gTLD, go with a comprehensive big bang. A recent study by professors Dale Miller, Bill Merrilees, and Raisa Yakimova ("Corporate Rebranding: An Integrative Review of Major Enablers and Barriers to the Rebranding Process") finds that success comes when senior management makes an unweaving commitment based on proactive analyses of the entire value-chain, with buy-in and input from employees and suppliers. more

Anti-Cybersquatting Lessons from IP Strategy

The post reconsiders a cooperative solution to cybersquatting that I proposed in 2007. I also draw on examples of success and failure of legal actions to protect intellectual property (IP) licensing. Cybersquatting has gone unabated with the new gTLDs despite the introduction of new protection instruments such as the Trademark Cleaning House (TMCH) database and the availability of Uniform Rapid Suspension (URS) services, as well as declarations by registries of their intentions to block unauthorized registrations. more

GTLDs Valuation Components That You Must Not Overlook

This post outlines the valuation pitfalls that need to be avoided when competing for the acquisition of a new generic Top-Level Domain (gTLD). The most widely used financial tools to determine the economic viability of a capital investment project, such as bidding for a new gTLD, are the Internal Rate of Return (IRR) and the Net Present Value (NPV), which measures the expected additional value a project would create if undertaken. more

The Online World Is Not Flat: The Need for Geo gTLDs

This post outlines location factors that make the online world not as flat as some have claimed. I then outline the impact of these factors on the demand for new gTLDs. Domain names can signal geography by means of country-code Top Level Domains (ccTLDs) and new generic TLDs (gTLDs). Location is back in the spotlight for reasons laid out by Professor David R. Bell of the Wharton School in his recent book. more

New gTLDs’ Sales Force a Bottleneck?

A number of the new generic Top-Level Domains (gTLDs) have not fared well, as reflected in the dismal domain registrations. Most often we're told the problem is that end users don't know about the gTLDs, or that they don't understand or fully believe in the gTLDs' benefits, or that they demand a tremendous amount of benefits before giving up the familiar for something new (so-called .com-stickiness). My point: Behind all these explanations there may be another, the lack of decent sales force strategies. more

How Buying the Right Domain Name Is Different

This post outlines a typical information-gathering process for online purchasing decisions and demonstrates why a different approach is needed when buying a domain name. Huge amounts of product information are now publicly available on the Internet. When buying most products, consumers rely on that wealth of information. About 70% of consumers make online reviews a key part of their buying choices, according to a 2012 Nielsen survey. more

2nd Round gTLDs: the Good, the Bad, and the Ugly

This post outlines the advantages (good) and threats (bad) that can make or break a gTLD, and the eternal fact that some applications will doom themselves to failure (ugly). The Good... Waiting until the second round to apply for a gTLD may end up being a virtue for the following reasons... more

Critical Look at New gTLD Registries’ Tactics

This post outlines some faulty decisions by new gTLD registries. The purpose is to guide future expansions and, hopefully, adjust some of the decisions that current registries have adopted, including demand prediction, pricing, marketing, doing good versus not doing good, and launch date... GTLDs that have no competition do not need to race to launch. They have the luxury of waiting to better assess prices and postpone investments in capacity. more

Success Factors for New gTLDs Program

The success of the new gTLDs program depends on the actions of the winning registries and on ICANN's allocation policies for the second round of applications. A successful landscape would be dominated by only a few registries but would be less confusing for users. The major players: businesses and Internet users who drive the demand for the gTLDs; the registries who own and run the gTLDs; and ICANN, which sets the rules for determining a winner for each new gTLD. more

Limitations of .Brand Search Engines

The essay outlines the necessary success factors for a niche search engine and raises doubt regarding the role of .Branding in niche engines' success. Some search engines want to target a niche market, not Google. Unlike Google, they're targeted and they are profitable that way. Consider Kayak (travel), Zillow (real estate), Yelp (reviews), and .xxx (adult websites). more

Conditions for Launching your .Brand

The post addresses the factors affecting any decision to rebrand under a new Top-Level Domain (TLD). Depending on the TLDs owned by the competing companies, rebranding can be critical, merely advantageous, or a matter of wait-and-see. (This post does not address signal location/geography, strategies for expanding a brand, or the merits of defensive and offensive domain name registrations under relevant new gTLDs.) First, a simple definition... more

How to Best Enhance Your Brand with New gTLDs

The essay examines the breadth of new generic Top-Level Domain (gTLD) registrations needed for best enhancing a .Brand. And if you don't own .Brand, what should the scope of your new gTLD strategy be? With the introduction of hundreds of new gTLDs, a lot of businesses still don't have reliable information for figuring out which of the newcomers to register under. more

New gTLDs’ Success Drivers

This post demonstrates that success factors differ across generic Top-Level Domains (gTLDs) depending on their implied signal/message. Success drivers can be grouped into four: community, location, generic keywords, and competitors to .com. I discuss their marketing implications... For community gTLDs, their success, as measured by profits, depends on whether the registrants are nonprofit or for-profit organizations. more

Advantages of gTLD Portfolio Ownership

The essay outlines the advantages to owners of managing a portfolio of gTLDs. The advantages can lead to concentrations of ownership in a few hands, which is unavoidable but not necessarily harmful to consumers. Moreover, some of the advantages can lead to profitable complementary business models. Beyond the obvious advantage of economies of scale that lead to reductions in operating costs, there are a number of other sources of advantage. more

The Overlooked Signals of ccTLDs

Two ccTLD signals should get more attention when we're talking about the domains' benefits. Companies in emerging markets can signal their brands to expats and/or westerners. This ability to take the companies' appeal beyond their immediate, national markets deserves a look and some appreciation. Traditionally, Western companies have been the ones who registered ccTLDs to signal target="_blank" operations in overseas markets, while companies in emerging markets use them to signal their local brands to the local market. more

A Single Price Index for Domain Names Is Misleading

Having a single price index for the domain name industry would be worse than useless. Such an index is presented in a recent study by Thies Lindenthal. The index is intended to be a benchmark for domain owners and investors. But it's out of line with other studies and the common sense of how a market operates. A much better barometer to follow is average prices for groups of domain names with similar characteristics. more

A Look at Closed vs. Open New gTLDs

The essay analyzes some of the strengths and weaknesses of closed and open new gTLDs. The success of the gTLD to a large degree rests on the successful design and implementation of an effective digital business model. A closed gTLD is one whose owner uses it for exclusive content - for example, the use of .book exclusively for Amazon books. Conversely, if Amazon opens up .book, other book sellers and libraries would be able to set up sub-domains, sites where they controlled content. more

Singular and Plural New gTLDs: Costly Headaches

ICANN has recently stated that it will allow the public to register plural and singular gTLDs that are variants of words already registered as domain names. .Books will be able to join the currently allocated .book, and .pet will be able to join .pets. Of course, a pair like .blue and .blues, two words that look alike but have different meanings, isn't at issue here. The focus is just plurals and singulars. But that leaves plenty of room for trouble, and ICANN has to tackle some tough questions now, before the policy launch. more

Value or Love for New gTLDs?

ICANN has started its historic and controversial program to expand the number of generic Top-Level Domains (gTLDs). This essay outlines the factors needed for the program to create economic value, warns against a cognitive trap that complicates selection of a new gTLD and considers the value contribution of the registries. I will not go into relevant macro measures, but I examine the problems associated with the popular measure of simply counting the number of registrations. more

Fear of New gTLD Monopolies Is Overblown

You should not worry too much if some of the new generic Top-Level Domain names (gTLDs) become monopolies. ICANN and the registries won't charge monopoly prices as long as they have to worry about the government stepping in. Monopolies normally present two problems for consumers: restricted output and higher prices. In the case of the new gTLDs, restricted output is caused only by ICANN's monopoly over approving gTLD applications. more

A New Quality gTLD Can Compete with .COM

If you choose a new generic top-level domain (gTLD), will it be able to compete with .com? A recent academic paper indicates that the answer is yes if your new gTLD is of outstanding quality. "How Quality Drives the Rise and Fall of High-Tech Products" by professors Tellus, Yin, and Niraj in the Sloan Management Review provides evidence that new products can beat out established rivals... more

New gTLD Applicants Must Reduce Cognitive Biases

To improve the viability of your application for the recently approved launch of new generic top-level domains (gTLDs), you must reduce decision biases in estimating a new gTLD's expected revenues. To do so, you must either delegate the responsibility to an independent multi-disciplinary team within your company, or seek input from a consultant. more

Focus on gTLD Niches, Not on the Number of Registrations

Applicants for the recently approved launch of new generic top-level domains (gTLDs) should seriously take into account niche markets instead of focusing on the number of registrations. Drawing on failure and success drivers when it comes to Internet start-ups, it becomes clear that the failures of recently introduced generic top-level domains (gTLDs) - such as .biz and .info - are due to their focus on the number of registrations (i.e., scale) instead of focusing on niche markets. On the other hand, start-up successes have been consequences of prudent initial niche strategies. more

New ICANN Requirements for New gTLDs Are Irrelevant

ICANN is barking up a number of wrong trees with the latest version of its Evaluation and Questions Criteria for generic top-level domains (gTLDs). The document asks for financial projections, the applicant's goals for its TLD, and the benefits the applicant expects to derive. All that information is meaningless. more

Which Internet Extensions (gTLDs) to Apply For?

The number of possible new generic top-level domains (gTLDs) to apply for is daunting. Where do you start? This essay warns against some common pitfalls and outlines three logical steps that you need to follow in making your selection. Remember that there is money to be made in owning the right gTLD. Skeptics focus on the success, or lack of it, of previous expansions such as .name, .biz, and .info. They're using the wrong lens. more

Success Drivers of New gTLD Applications

Being approved by the Internet Corporation for Assigned Names and Numbers (ICANN) as the owner of a new generic top-level domain (gTLD) extension requires considerable analysis before the application is submitted. You must understand the sources of risk, gauge your risk tolerance, and you must obtain an estimate of the value of your proposed TLD's future revenues (with the effects of potential competitors factored in, a step too many applicants ignore). more

New gTLDs Differentiation: Do Good

Congratulations! The Internet Corporation for Assigned Names and Numbers (ICANN) has approved your application for a new generic top-level domain (gTLD) extension. Now what? ...This essay focuses on how to differentiate by being socially responsible. more

A New Internet Extension Can Compete with .COM

The king of extensions is .com, and dethroning it won't be easy. But one day soon .com will have a genuine competitor, and there are two things we already know about the competition. First, the newcomer will have been sold as an underdog. Second, it will have attracted businesses that are passionate about being content-quality leaders. more

.YourBrand Now!

The time is now to make sure your brand makes it onto the list of new top-level domain names. Brand owners should immediately start re-enforcing your brands by promoting ".Your Brand" as a top-level domain (TLD) extension. You must implement the strategy through a two-stage process: free ride on pre-launch discussions and submit your application request with ICANN during the application period. more

Recognizing ICANN’s Failures

The Internet Corporation for Assigned Names and Numbers (ICANN) has failed on a number of fronts, resulting in sub-par products and services in a global monopolistic environment. Failures will continue if not recognized and immediately addressed. Leadership is about the future, a journey into uncharted territory, and it requires vision supported by technical, operational, and mind-changing competencies. ... It does not require a rocket scientist to recognize that ICANN has fallen short because it lacks... more

Scrutinize ICANN’s Thousand New-TLDs Limit

I am skeptical about how ICANN has arrived at a technical limit of a thousand new TLDs per year. The ICANN study driving this number must be made public so that our industry's risk management experts can size up the finding. Why am I skeptical? more

A Case for Limited New TLD Flavors

La Casa Gelato in Vancouver, Canada, is doing just fine by selling a grand total of more than 500 ice cream flavors (wild asparagus, balsamic vinegar, dandelion -- you get the idea). On the other hand, Apple Inc. has built its enviable business on the principle of the fewer options the better. So, what does the confused ICANN need to do with its proposed new top-level domains (TLDs)? My advice: Go the Apple route. more

Undesirable Consequences of Empirical Studies on Cybersquatting

Empirical studies on cyber- and typosquatting (for example, Moore and Edelman's "Measuring the Perpetrators and Funds of Typosquatting") may inadvertently encourage bad behavior. People tend to do what most other people are doing, even when the given act is presented to them as something wrong. more

Comments on Economics Study of ICANN’s New TLDs

ICANN has taken another crack at the question of the economics of launching new top-level domains (TLDs). The first report that the group commissioned on the subject was greeted by a loud and unhappy uproar. Now we have the preliminary draft of a new report, this one by professors Katz, Rosston, and Sullivan. It is insightful and analytic, but the final version needs to consider the theoretical and empirical issues... more

The Path to End Cybersquatting

Dialogue is the only way to end cybersquatting. Distrust between brand owners and domain owners (with an assist from some cockeyed business incentives) has turned a problem into a very expensive vicious cycle. Now that ICANN is about to launch new top-level domains (TLDs), negotiations must start immediately or both sides will pile up further loses. Here's how the problem plays out now. more

Speculation and Investment in Domain Names

There has been an ongoing debate on domain name blogs about the relationship between investment and speculation, but there has been no attempt to clarify and reconcile different views. In this essay, I shed some light on the relationship and analyze the implied value creation of transactions in the secondary markets. more

Don’t Rely on Initial TLD Registration Volumes

When deciding to register a given domain name under any of the new ICANN-proposed top-level domains (TLDs), remember that a relatively high initial registration volume does not necessarily imply that the domain names will command high market value or that demand for them will grow. Below are some of the reasons... more

End of Domain Name Auction Sites

Having eBay has worked out pretty well for the world at large; now it's time for the world of domain names to start using it. We need to throw away the jumble of different auctions and dealer sites. Speculators may not like having their haunts cleaned out, but corporate (end-user) buyers and investors will welcome the chance to deal with one centralized auction mechanism with one set of rules. more

Dot-Biz Saga

Two sides can oppose each other strenuously and still be wrong in exactly the same way. For or against, too much of the debate about the new ICANN top-level domains (TLDs) ignores TLD signaling and uses inappropriate TLD success measures. Here I spotlight the key mistakes by concentrating on ".biz" registrations, and I put forward some possible remedies. more

A Case for Dot-Outlet TLD

This post outlines the correct use of an outlet strategy, points out the value of such a strategy, and the advantages of executing the strategy through a new ICANN top-level domain (TLD) instead of a second-level domain name. Some companies need to signal a brand name with low prices and quality/utility, whether the strategy is for a primary or secondary corporate brand. A successful strategy has to explicitly include lower price and quality. Otherwise, with only a lower price, a brand owner would cannibalize the main brand and cause damage to brand equity. more

Risk of Portfolio Approach to Cybersquatting

A secret weapon is falling into dangerous hands. Organized cybercriminals are building up portfolios of cybersquatting domain names. A smart operator with such a portfolio can go beyond simple stealing and competing full out for traffic and revenues. Rightful brand owners, feeling the squeeze, will find out too late that the bandits have the money to fight legal action. The time to act is now, before pieces of the playing field have been bought up by the enemy. more

Reducing Cybersquatting, Phishing

Solutions to cybersquatting and phishing must target brand customers instead of the trademark infringers, who are in effect liars. This post outlines why online-based traditional solutions fail, and it offers solutions to two types of lying (cybersquatting and phishing). more

Why Distinguish Between Defensive and Offensive Domain Names?

Offensive domain-name registrations require strategic corporate decisions. Second, they require different strategic and tactical remedies when third parties register desired names. Thus, different organizational approaches are necessary to manage domain name risks and rewards. The essay identifies the strategic differences and remedies for the two types of domain names, and outlines the implications for internal work-flow organizational structures. more

ICANN Must Simultaneously Reveal TLD and Second-Level Registration Rules

I outline two possible drawbacks with the idea of first revealing rules for the new proposed Top-Level Domains (TLDs) and then for second-level registrations. I propose a lottery process to initially allocate second-level domain names. A number of people have voiced concerns about the idea of automatically granting the winner of the TLD a monopoly power over second-level domain registrations. We should also be worried about the financial interest ICANN has in not providing the rules for the two-level registrations simultaneously. more

Examininng Value in New ICANN TLDs on Search and Navigation, Companies, Domain Registries

I outline the implications for value presented by ICANN's proposed introduction of new Top-Level Domains (TLDs) on user search and navigation, companies, and registries... For the new tools to be value adding they should facilitate navigation, reduce search cost, or provide actionable branding information through marketing. Unfortunately, the new TLDs bring in a mixed bag of value-adding and -destroying tools. more

A Framework for Selecting New TLDs

Your corporate domain names send implicit messages (signals) through their Top-Level Domains (TLDs) and their second-level words. Shape your domain names so to send the right messages and to avoid sending unintentionally confusing messages. The post focuses on a framework to help bidders determine which TLDs send messages that are potentially profit generating... Soon TLDs such as ".car," ".cars," ".green," and ".eco" will be available to any qualified body whose request is favored by the allocation system. The system being discussed is a combination of beauty contests and auctions. more

Carlton and Kende’s Narrow Understanding of Corporate Domain Registrations

Professor Denis Carlton was asked by the Internet Corporation of Assigned Names and Numbers (ICANN) to submit a report on (or justify!) the impact of new top-level domains (TLDs) on industry competition. After he did so, Dr. Michael Kende posted an elaborate comment on the report on behalf of AT&T, to which Professor Carlton published a rebuttal. This essay outlines some of the errors in Professor Carlton's rebuttal and Dr. Kende's comments. more

Sharing ICANN Can Be Win-Win for the United States

With the Internet's global reach and importance showing exponential growth, pressure on the United States to share control of ICANN is mounting. A number of experts believe that the question is simply how much the United States should give up and how soon. This essay argues that "giving up" can be a win-win solution; i.e., control sharing is not a zero-sum game. more

Valuing Trademarks in Domain Names

My new essay, "Valuing Trademarks in Domain Names," outlines the various approaches to valuing trademarks, pointing out the approaches’ different strengths and weaknesses, with emphasis on domain names. Using court cases, the essay points out that there is no one right way to value intangible assets but there are wrong ways. more

Thoughts on the Toys “R” Us Acquisition of Toys.com

Using the purchase by Toys "R" Us of Toys.com as an example, I outline the problems that come with using the popular ascending auction design and point out some of the potential strategic uses and signals of the domain name acquisition. Toys “R” Us paid $5.1 million in February 2009 for Toys.com. It outbid five others, including National A-1 Advertising and Frank Schilling... more

Blame Yourself, Not ICANN

Domain name owners have traditionally complained that ICANN does not listen to us, and there is indeed plenty of evidence demonstrating the group’s obliviousness to community input. Nevertheless, as domain owners, we need to begin giving ourselves a share of blame too. It’s time to reflect on our failures so we can come up with an actionable solution... more

Comments on ICANN’s Studies on New Proposed TLDs

I outline some general critical comments on the recent commissioned reports for ICANN's proposed introduction of new top-level domain names (TLDs)... The reports cite seminal papers in economics, but the papers' applicability here is dubious. For example, for economists a "good" is a product intended for consumption, which is a different sort of animal than a financial investment. more

Complicating ICANN’s New TLDs Decision

Drawing on standard-setting approaches and the regulatory options at the disposal of the Federal Communications Commission (FCC), I outline three alternative venues to decide on launching new top-level domain names (TLDs). ICANN needs to analyze all these venues before making a final procedural decision. more

Resolving the ICANN-Proposed TLDs Debate

The Internet Corporation for Assigned Names and Numbers (ICANN) has recently decided to allow any entity to register a top-level domain name (TLD). The best mechanism for valuing this decision, a mechanism that outperforms crowdsourcing, blogs, and committee decisions, is the legal and easy-to-implement solution known as prediction markets.
In handing down its TLD decision, ICANN never identified the problem it was trying to solve... more

Domain Name Brand-Sharing Starts With Embracing Web 2.0

Irrespective of which solution to the current domain name brand-sharing impasse ends up being adopted by brand owners (option 1, option 2, or a combination), the owners must first understand and embrace current trends in online communications, information gathering, and entertainment. Thus, for a solution to succeed the corporate mindset toward new technologies needs to change; after that brand owners can work cooperatively with the domain name industry (owners and institutions) to increase the aggregate pie. more

Voluntary Collective Licensing of Brand-Sharing Domain Names

The essay outlines a market-driven and value-adding solution to brand use in domain names. The solution relies heavily on the Electronic Frontier Foundation's remedy to music file sharing. I propose its adoption for new registrations and renewals. Brand sharing in domain names is here to stay; desperate attempts to stop it through legal action are ineffective and will do nothing but destroy value. more

ICANN Responsible for Domain Name Trademark Mess

It is ICANN's responsibility to make sure domain names do not infringe on trademarks. To determine infringement, ICANN should rely in the short term on predictive models. Thus, domain name and trademark owners must start putting pressure on ICANN to assume its trademark responsibility. more

Predicting Domain Name Trademark Infringement

Legal trademark issues related to domain names will take a long time to resolve. Meanwhile, using a statistical model to determine infringement benefits all parties. The legal system has not yet established comprehensive and easy to understand rules under which a domain name is considered to infringe on a third party's trademark. The vacuum allows trademark owners and their agents, such as the Coalition Against Domain Name Abuse (CADNA), to sue domain name owners pretty much at will, but doing so is not always in the best interest of trademark holders. more

ICANN Must Address Domain Tasting Ripple Effects

A registrar who also engages in domain tasting can inadvertently create ripple effects throughout the domain name industry. Thus, domain name owners must exert pressure on ICANN to reduce this risk. We are now experiencing ripple effects from the subprime market and its repercussions on related markets. ...there can be a problem when registrar functions and domain tasting are conducted by the same entity. Unmonitored coupling of seemingly unrelated markets can be devastating to our industry. more

ICA Anti-Phishing Victory Might Be a Curse!

A triumph by the Internet Commerce Association (ICA) over tactics and legislation detrimental to domain name owners might end up being a case of winner's curse, a triumph bought at the expense of the industry. In picking this one battle to win, the association ignores a broader war, the range of issues our industry needs to address. more

Are Domain Names Recession Proof?

We'll only be able to tell whether domain names are recession proof by waiting for the performance of e-commerce sites during the holiday shopping season. Domain name owners and buyers have to remain in suspense a while longer. Some domainers are experiencing drops in sales and prices. However, it is not clear whether those drops are because of changes in valuations by buyers, sellers, or both. more

Who Should Bear Domain Name Risk?

Domain owners are bearing tremendous risk that someone else is better equipped to absorb. In this post, I outline the motivation of risk ownership, the sources of risk associated with owning a domain name, and the ways by which some of these risks have been transferred to institutions that are better equipped to handle them. I close by pointing out that we would be better served by having a trademark risk-management entity. more

Domain Name Lessons from Napster

I first outline a brief history of free file-sharing technology, then draw some general and domain name lessons, then outline the what, how, and why that make your activism effective and necessary... The domain name industry is decentralized and atomic in that anyone from anywhere in the world can register a domain name, keep the ownershp name and address private, and host it from a country where the U.S. and European legal systems don't apply. Thus, legal action will only drive domain owners further underground. more

ICANN’s Allocation Method for New TLDs

ICANN recently commissioned a report from Power Auctions LLC to investigate the merits of auctioning new Top-Level Domains (TLDs). Below I outline some of the issues related to stakeholder interests and mechanism design... Successfully managing the design of an allocation mechanism for new TLDs will entail coordinating functions across various competencies. To rely on a standard auction mechanism for the allocations would be a historic setback for the domain name industry, as successful allocation design is all in the details. more

Domain Name Lessons From iTunes

What do iTunes and a cooperative domain-name Intellectual Property (IP) regime have in common? They are market solutions to illegal activity: free downloading of music and free use of brands in domain names, respectively. The music industry tried to fight the free downloading of copyright-protected music by taking legal action against free downloaders under the pretext that their activity siphons industry revenue... more

Demystifying Statistical Approach to Domain Name Appraisals

Professional domain name appraisals have acquired a dubious reputation, and I understand the rational skepticism regarding their usefulness. In my recent paper, "Statistical Domain Name Appraisal: Same as What You're Doing, +/-," I try to demystify the statistical approach by pointing out its commonality with methods intuitively adopted by active domainers. It will also underscore some of the sources of skepticism toward various appraisal methodologies, and point out the advantages and limitations of statistical models. The paper concludes with a list of the conditions that can make a professional appraisal value adding, and with a plea for transparency. more

Long Live the Neodomainers: The Domain Game, Good or Bad

David Kesmodel's to be released book The Domain Game, irrespective of how it is received, will undoubtedly catapult the industry into a new era: that of the neodomainers, the super crunchers. To analyze the impact of the book on the industry, let's look at stylized exchange scenarios featuring a domainer as intermediary (an intermediary in that he or she acquires from the seller and then hopes to resell to the buyer)... more

Domain-Name Error Redirect: Incentives and Solutions

Some domainers, having forgone parking revenue to avoid any claims of trademark violation, have then found themselves thrown into legal trouble with trademark claimants because of actions taken by a third party (ISPs and PC manufacturers). In addition to the resulting direct legal cost, the possibility of action by a third party heightens uncertainty and steals management's attention away from its real job. The troubles for the domain name owner start when a surfer who enters in the browser an inactive domain name is redirected to a Web page with advertising instead of getting a page that says there is an input error... more

Brand Complementors: Implementing a Cooperative Domain-Name Use

The essay expands a cooperative solution to third-party use of brands in domain names. Like any approach that depends on cooperation, the solution will require both sides to change behavior but also allow both sides to take credit for the resulting benefits, i.e. a triangular solution. If not immediately addressed, the problem of third-party use can become a major threat to the industry. But we already know one thing: when it comes to this issue, legal action and bullying don't work. more

Typosquatting: A Solution

Typosquatting's negative effect on the surfing experience can be easily eliminated, and in a way that allows all parties to make money. What's called for is an affiliate program. You would not be happy if you typed a domain name into your browser and wound up in nowhere land because of a simple misspelling. That's the negative surfing effect of typosquatting... more

Best Approach for Appraising Domain Names

There are two types of domain name appraisers, designated here as type "1" and type "0," with the former being appraisers who rely on a scientific approach. A large number of domain owners use the services of type "0" -- the nonscientific -- or do the appraisal themselves. Approaches used by scientific appraisers include regression-type statistical modeling, discounted cash-flow analysis, and reliance on the Law of Large Numbers. This post looks at some of the typical erroneous arguments against taking a statistical approach and provides an example from law... more

Every Domainer Is Subsidizing Tasting… Abolish Registration Grace Period

One issue that a large number of domainers agree on is that domain tasting under the current ICANN-approved policy is bad for the industry. For one thing, a healthy portion of the practice involves trademark use that not only is illegal but also destroys value. Of course, particular segments of the domain name ecosystem can suffer value destruction because of tasting that doesn't infringe trademarks. But most criticism is directed, and rightly so, at tasting that raises trademark issues. Litigation over the trademark issues has done little to stop the practice and destroys value for trademark holders and domainers alike... more

Third-Level Domain Name Hijacking

A new type of domain-name hijacking is being carried out unnoticed. It involves third-level domain-names associated with affiliate programs. If you had been an online affiliate of, say, company xyz.com, your affiliate Internet address could have looked like YourCompanyName.xyz.com. more