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The ICANN New Generic TLD Process (Las Vegas Edition)

I have not submitted any comments on ICANN’s new gTLD process, mostly because many other people have said more diplomatically what I think, but I thought I could blog about it.

My main concern from the beginning was that the process should allow any serious candidate to run with a reasonable chance to be able to actually start running a gTLD. This includes small and medium sized communities and startup companies with little seed money. This also includes registry models that may not favour mass registrations. For all these, the current model is flawed.

Communities based on values, whether cultural or ethnic are by definition limited in scope. So are communities based on geography, although they could be larger. These communities could get their TLD, if they have strong political support and the attached financing. It this case, the short term profits are not the registration fees themselves, but the prestige linked to a community having its own TLD. I bet the application for the .VLA TLD will succeed, because it has the strong political support of a wealthy community.

For the startup registries wishing to enter the gTLD arena and compete to a certain degree with the incumbents, the skies are cloudy, to say the least. First and foremost: you need money. A lot of it. Anthony Van Couvering at Names@Work has a timeline, which details the associated costs. However, a lot of the costs are not appearing. My personal estimation is that the whole process, up to the contract signing ceremony with ICANN, is USD 1 million at the very minimum. More realistically, you need 50% more to be on the safe side.

400K will go to ICANN and its subcontracted evaluators. The associated costs with the evaluations can quickly add up. At this stage, there is no way to know exactly how much they will cost, because there are many parameters. ICANN tells you these costs will be paid directly to the evaluators, not through ICANN. This will make it even more opaque.

The rest needs to cover consultants, lawyers, salaries, ICANN meeting sponsorships, meetings with your community leaders to gain support for your application (and everything that goes with it: profits sharing, gadgets, gourmet dinners, escorts, you name it) and travel to ICANN meetings for you and your staff.

On top of that, ICANN wants you to be able to guarantee the operation of the TLD for 3 years, even if your TLD is not a success.

Note that this will not guarantee at all that your application will succeed. But at least it will guarantee one an a half year of hard work and travel to exotic places for two or three people, and others on a as-needed basis. Now go out and tell your banker, if he has not gone bankrupt already.

If you are lucky enough to reach the contract signing stage, the real work begins: hire staff, build an infrastructure, convince registrars to carry your TLD, set up a sunrise period . These are another four or five months without a single cent falling on your bank account. In conclusion, this whole new gTLD process will be most profitable for established actors, who will not have to cover many of the above-mentioned costs, or have the reserves to cover them.

Even if ICANN revises parts of their RFP, I am not sure it will attract the 500 applications it expects. This RFP should have been published 8 years ago, at the height of the Internet bubble, when everything related to the Net received full funding. Now, in this recession period, investors and bankers are cautious. It will not be easy to find partners who are willing to potentially loose USD 1.5 million, if it cannot be demonstrated with certainty they can recoup their investment in less than two years.

Good luck. May the farce be with you.

By Patrick Vande Walle, All around Internet governance troublemaker

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I don't think I was very diplomatic Antony Van Couvering  –  Dec 16, 2008 4:59 PM

I don’t think I was very diplomatic ;)

As dire as the process looks (I agree with you), ICANN staff privately portray it as warm butter on hot toast.  I think it will attract a fair number of applications, not least because I suspect they will lower both the application fee and the annual fee. 

But the whole thing is very vague at present.  The lack of clarity into the evaluation process is causing a lot of heartburn; no-one knows how much money they have to raise, whether money in the bank is necessary, or if insurance will do, and so on.  If this is clarified in the next draft of their Guide, it will encourage more applications.

Thanks for the astringent view, always refreshing.

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